Avita Medical, Inc.

Good day, and thank you for standing by. Welcome to the Aveda Medical's first quarter 2022 earnings conference. At this time, all participants are in listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during this session, you'll need to press star 1 on your telephone. Please be advised that today's conference is being recorded. If you require any further assistance, please press star 0. I would now like to hand the conference over to your speaker today, Caroline Corner with Investor Relations. Please go ahead.

Thank you, Operator. Welcome to Abita Medical's fiscal first quarter 2022 earnings call. Joining me on today's call are Mike Perry, Chief Executive Officer, and Michael Holder, Chief Financial Officer. This call will include forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. All statements made on this call that do not relate to matters of historical fact should be considered forward-looking statements, including statements regarding the markets in which Avita Medical operates, trends, demands, and expectations for its products and technology, its expected financial performance, expenses on position in the market, and the impact of COVID-19 on its operations and its customers' operations. These statements are neither promises nor guarantees and involve known and unknown risks and uncertainties that could cause actual results, performance, or achievements to differ materially from any results, performance, or achievements expressed or implied by the forward-looking statements. Please review Evita Medical's most recent filings with the SEC, particularly the risk factors described in Evita Medical's S3 and 10-K filings, and in Evita Medical's quarterly report on Form 10-Q for the first quarter ended September 30, 2021, for additional information. Any forward-looking statements provided during this call, including projections for future performance, are based on management's expectations as of today. Avita Medical undertakes no obligation to update these statements except as required by applicable law. Avita Medical's press release with first quarter results is available on its website, www.avitamedical.com, under the Investors section, and includes additional details about its financial results. Avita Medical's website also has the latest SEC filings, which you are encouraged to review. A recording of today's call will be available on Avita Medical's website by 5 p.m. Pacific time today. Now I'd like to turn the call over to Mike for his comments and first quarter 2022 business highlights.

Thank you, Caroline, and thank you, everyone, for joining us today. We are encouraged by our recent commercial performance and remain extremely excited about the opportunities ahead with our pipeline indications. Here at Avita Medical, we are driven by our primary goal of commercializing our proprietary technology to enable healthcare providers to successfully address skin defects to save lives and improve quality of life for our patients. As we grow from treating burns to trauma to vitiligo to cell and gene therapy and to aesthetics and beyond, our focus is on delivering leading-edge therapeutic skin care restoration solutions to our patients. While the company was founded with Burns treatments in mind, our team is working to leverage our point-of-care autologous spray-on-skin platform across many markets and indications, and I'm very pleased to update you today on our latest developments. With that, I'd like to turn to our Burns business. I'm pleased to report that our commercial revenues were $6.9 million in the first fiscal quarter compared to $6.7 million in the previous quarter ended June 2021. Last Tuesday, the Centers for Medicare and Medicaid Services, or CMS, approved a medicals application for a transitional pass-through payment device category C code. that will provide separate payment for resale used in procedures that are performed in hospital outpatient facilities and in ambulatory surgical centers. The TPT device category code, which is intended to facilitate the adoption of new technology for Medicare beneficiaries by offsetting the cost of the device to facilities, will be effective January 1, 2022. This new code expands resell burn treatment to a new care setting with existing customers and lays a reimbursement foundation for our soft tissue repair indication that we are working towards. As a quick update on the product development front, at the end of June, we submitted to the FDA a PMA supplement application for our new version of the resell device with improved ease of use which we hope will allow us to approach our future markets more readily. We anticipate FDA approval in the first half of calendar 2022 and a commercial launch thereafter. The improved ease-of-use device will allow Aveda Medical to better address our burn outpatient market, facilitated by the new TPT code issuance, as well as our soft tissue repair indication, once approved. More specifically, the ease of use device allows for improved surgeon and staff handling by only requiring one set of hands in the sterile field, as well as a reduction in device handling steps by one third. We've been building our burns focused sales force for three years and believe we have the largest and most experienced burns dedicated sales force in the market. However, at this time, due largely to COVID, our sales force is selling into a system which is experiencing staffing shortages. Our surgeons rely heavily on their experienced nursing staff and high turnover and early retirements are impacting resale procedures. In response to this situation, we have prioritized our training and education efforts and hope to see improvement in procedure rates as the pandemic continues to abate. Our commercial focus is on driving utilization and broadening penetration within our footprint of over 100 hospitals and over 250 trained physicians. Revenue from our top 20 accounts increased approximately 7.7 percent in fiscal Q1 over fiscal Q4, driven by growth in the top five accounts, which saw 18.3% growth. Our top five accounts have been less impacted by the staffing shortages being larger and with dedicated burn staff, which has enabled our growth here. It's clear that nursing training has a tremendous impact on a hospital's ability to perform procedures, and the nursing staff therefore has a substantial influence on the use of resale. While we are continuing to train physicians, we are approaching our training efforts with a strong focus on advanced practice providers. Training includes local, regional, and national events for both surgeons and their staff. In addition, in the last quarter, we have held almost 550 hands-on trainings in the field, and we are currently performing approximately 200 in-hospital training sessions per month. Last weekend, we presented 10 abstracts at the ABA Southern Region Burn Conference, the largest ABA region and the largest U.S. burn conference next to the annual ABA meeting in the spring. The presentations covered topics such as small burns, pediatric burns, and topics of integration of resell into practice such as synergistic combinations with resell, and health economics. Additional, later this week, we will have two resale presentations at the Northeast Region Burn Conference. Interest in resale remains high, and despite the pressure on procedure rates, we are completing cases and delivering on our mission to save and improve patients' lives. In the first quarter during Hurricane Ida, a family suffered Severe burns when their gas grill they were using due to power outages exploded. The pregnant mother, her husband, and their toddler were all burned. The family was taken to University Medical Center in New Orleans, where they were treated by three different surgeons. All were successfully treated with resale. Today, I'm very pleased to tell you that all family members are recovering successfully. and the mother who suffered burns to her legs is able to climb the stairs to her third floor home and to carry her toddler. While a commercial focus to date has been in burns, another area of important impact for us is injuries not originating from burns. The reopening of the economy and the corresponding increase in accidents meant that in our fiscal fourth quarter and first quarter, enrollment in our soft tissue reconstruction trial materially accelerated. This trial involved injuries such as the resection of necrotizing soft tissue infections and the gloving injuries, which are wounds that commonly present at the same trauma centers where we're currently treating our burn patients. If you recall, we had our first patient in this pivotal trial enrolled in March 2020, and we saw slow enrollment for the first year due to the pandemic. Today, we have 19 of the 20 planned sites up and enrolling, with 58 of 65 subjects enrolled to date. In October alone, we enrolled 10 new subjects spanning broad geographies. Since the close of the June quarter, a resounding 40% of the required 65 subjects have been enrolled. Assuming current trends continue and allowing for the typical slowdown in clinical research during the holiday season, we now plan to complete recruitment by Q1 of 2022, well ahead of our last update. With a six-month follow-up for patients in this trial, we're aiming for an approval by the end of 2023. As a reminder, based on our internal calculations, we foresee a serviceable addressable market, or SAM, for trauma and soft tissue injury of $450 million. Patients presenting with a requirement for skin grafting and resell, whether for burns, trauma, or other skin repair, are routinely treated by the same surgeons within an institution. We plan to address this market through our existing hospital accounts and with the addition of 220 Level 1 and Level 2 trauma centers. After we have U.S. FDA approval, we plan to quickly leverage our existing trauma and burn center sales relationships to launch into trauma and acute wounds, and we will incrementally expand our sales force to address this opportunity. Moving on now from burns and trauma to our continued progress in vitiligo. For those unfamiliar with the condition, vitiligo is a skin disorder characterized by deep pigmented areas of skin that appear as white spots or patches and which are primarily attributed to an underlying autoimmune disorder in the patient. There are an estimated 100 million sufferers of vitiligo worldwide, including up to 6.5 million Americans. Of those in the U.S., we estimate approximately 1.3 million have stable vitiligo, our target population, meaning that their underlying autoimmune disease is being well managed and that their disease is not continuing to spread. On October 22nd, the Global Vitiligo Foundation and the online community my-vitiligo-team hosted a public webinar on clinical trials for patients with vitiligo. As a proud sponsor of the GVF, our trial was featured and we've been very pleased with interest levels. Today, all 15 sites are up and running and eight of 23 subjects have been enrolled. We continue to plan for completion of enrollment at the end of this calendar year and approval in 2023. To support the vitiligo opportunity, our products team is developing a new fully automated version of the resell system tailored for the dermatology setting. Dermatologists see high volumes of vitiligo patients, and this version of resell will automate some steps and specifically the skin scraping step to make best use of physician and nursing staff time. Work progresses in our collaborations with the University of Colorado Gates Center for Regenerative Medicine and Epidermolysis Bullosa, or EB, and with the Houston Methodist Research Institute for rejuvenation. Both groups have preliminary proof of concept experiments ongoing. The work to date gives us confidence that the methods developed will yield successful proof of concept in animal models by the end of this calendar year. I'd now like to walk you through the growth drivers we see ahead. We continue to drive forward on provider engagement and education, whether in person or virtual. Our discussions have shifted from whether or not to use Resell, and today our focus is on optimizing the use of Resell, as well as training and refining the expertise of support staff. Our commercial team will be continuing to drive penetration into our burn center accounts. We are VAC approved in what we believe is a critical mass of burn centers, and with that, we are focused on penetration within those accounts. We have shown that our strategy of driving into smaller burns results in overall broader resell usage. To underscore our approach, today over one-third of resell procedures involve burns that are less than 10% TVSA or total body surface area, and these smaller burns represent about three quarters of burn admissions. On November 2nd, CMS published the 2022 Medicare outpatient prospective payment system with payment going into effect in January of 2022. Based on this, A C code will be assigned to resell, which we anticipate will cover the cost of the device for all Medicare patients. We plan to then commence a pilot launch at key sites to ensure coverage with commercial carriers before proceeding with a broader nationwide launch in mid-2022. Our pipeline initiatives are continuing to move forward. More specifically, we are excited about progress within our vitiligo trial, which should complete enrollment at year-end, as well as our soft tissue trial, which now has 58 of 65 patients enrolled, with the uptick driven by the recent increase in trauma-related accidents. We continue to be optimistic about our preclinical pipeline work in epidermolysis bullosa and rejuvenation, and we are on track to demonstrate proof of concept by the end of the calendar year. We are determining our future steps and path forward with the FDA. Our next goal is to review the GLP data requirements to submit an IND application for first in human treatment. And once timelines are clear, I will update you accordingly. Moving to our last growth driver, We plan to broaden our geographic footprint over the coming years. Cosmotech, our commercial partner in Japan, has revised its approval strategy to focus on burns initially based on Japanese Health Authority or PMDA feedback. The Japanese Health Authority is working through a backlog of applications, and we have been advised to expect approval in the first half of 2022. Upon approval, Cosmotech will meet next year with the Japanese Ministry of Health, Labor, and Welfare, or MHLW, to present resale for reimbursement review, which we anticipate will occur in June. Cosmotech will then launch to burn customers shortly thereafter. Once we have vitiligo and soft tissue data from our U.S. pivotal trials, Cosmotech will seek regulatory and reimbursement approval for those indications as well. In summary, despite continued pressure on procedures, largely due to recent hospital staffing challenges, we have made substantial progress across our business. While we anticipate continued staffing headwinds in the near term, I'm pleased with how our commercial team has responded, driving advanced practice training and keeping resale front and center in the minds of burn care practitioners. Finally, and looking further ahead, the substantial progress in our clinical trials for vitiligo and soft tissue trauma reflect a groundswell of interest in and the potential of these larger market opportunities. With that, I'll now turn it over to Michael for details on our financial performance in the quarter. Michael?