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What changed in AVITA Medical, Inc.'s 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of AVITA Medical, Inc.'s 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+396 added−399 removedSource: 10-K (2025-02-13) vs 10-K (2024-02-22)

Top changes in AVITA Medical, Inc.'s 2024 10-K

396 paragraphs added · 399 removed · 269 edited across 8 sections

Item 1. Business

Business — how the company describes what it does

74 edited+45 added−68 removed34 unchanged
Biggest changeInformation contained on our website is not part of or incorporated into this annual report. 12 Table of Contents ORGANIZATIONAL STRUCTURE Prior to the Corporate Restructuring initiated during fourth quarter, the Company had a total of six subsidiaries and their corporate details and business activities are listed below: Subsidiary Name Place of Incorporation % Held Business Purpose AVITA Medical Pty Limited Australia 100 Operating Company AVITA Medical Americas, LLC Delaware 100 U.S. operations AVITA Medical Europe Limited United Kingdom 100 EMEA operations Visiomed Group Pty Ltd Australia 100 Asia Pacific Operations C3 Operations Pty Ltd Australia 100 Holding company Infamed Pty Ltd Australia 100 Inactive By the end of the fourth quarter of 2023 the business activities of AVITA Medical Pty Limited, AVITA Medical Europe Limited, Visiomed Group Pty Ltd, C3 Operations Pty Ltd and Infamed Pty Ltd were liquidated.
Biggest changeWe maintain a website at www.avitamedical.com. Information contained on our website is not part of or incorporated into this Annual Report. ORGANIZATIONAL STRUCTURE As of December 31, 2023, the business activities of AVITA Medical Pty Limited, AVITA Medical Europe Limited, Visiomed Group Pty Ltd, C3 Operations Pty Ltd and Infamed Pty Ltd were liquidated.
CORPORATE HISTORY AVITA Australia, the former parent company of AVITA Medical, was founded in December 1992. AVITA Australia began trading its American Depositary Shares on the Nasdaq Capital Market (“Nasdaq”) under the symbol “RCEL” on October 1, 2019.
CORPORATE HISTORY AVITA Australia, the former parent company of AVITA Medical, was founded in December 1992. On October 1, 2019, AVITA Australia began trading its American Depositary Shares on the Nasdaq Capital Market (“Nasdaq”) under the symbol “RCEL”.
We cannot make any assurances that once clinical trials are completed by us or a collaborative partner, that we will be able to submit as scheduled a marketing approval request to the applicable governmental regulatory authority, or that such request and application will be reviewed and cleared by such governmental authority in a timely manner, or at all.
We cannot make any assurances that once clinical trials are completed by us or a collaborative partner, we will be able to submit as scheduled a marketing approval request to the applicable governmental regulatory authority, or that such request and application will be reviewed and cleared by such governmental authority in a timely manner, or at all.
After approval, material changes to the approved product, such as adding new indications or other labeling claims, or changes to the manufacturing process, are subject to prior approval by FDA and other regulatory agencies. Medical device manufacturers and their subcontractors are required to register their establishments with the FDA, certain state agencies and international agencies.
After approval, material changes to the approved product, such as adding new indications or other labeling claims, or changes to the manufacturing process, are subject to prior approval by the FDA and other regulatory agencies. Medical device manufacturers and their subcontractors are required to register their establishments with the FDA, certain state agencies and international agencies.
The FCPA also obligates companies whose securities are listed in the U.S. to comply with accounting provisions requiring the companies to maintain books and records that accurately and fairly reflect all transactions of the companies, including international subsidiaries, and to devise and maintain an adequate system of internal accounting controls for international operations.
The FCPA also obligates companies whose securities are listed in the U.S. to comply with accounting provisions requiring companies to maintain books and records that accurately and fairly reflect all transactions of companies, including international subsidiaries, and to devise and maintain an adequate system of internal accounting controls for international operations.
To support PMA supplements in the U.S. or applications for approval in other regions, the completion of additional clinical and non-clinical studies and supporting development activities will likely be required. Clinical trials can take many years to complete and require the expenditure of substantial resources.
To support additional PMAs or PMA supplements in the U.S. or applications for approval in other regions, the completion of additional clinical and non-clinical studies and supporting development activities will likely be required. Clinical trials can take many years to complete and require the expenditure of substantial resources.
Subcontractors are subject to periodic announced and unannounced inspections by the FDA and other agencies for compliance with cGMP requirements. We have established processes in place for categorization of vendor criticality and the associated activities for qualification and monitoring of vendors.
Subcontractors are subject to periodic announced and unannounced inspections by the FDA and other agencies for compliance with cGMP. We have established processes in place for categorization of vendor criticality and the associated activities for qualification and monitoring of vendors.
Surgical wounds are precise incisions intentionally created to access underlying organs, relieve compartmental pressure, excise diseased cutaneous tissue (infected or severely inflamed or necrotic), or to harvest tissue for autografting (flaps and grafts). In the U.S., we estimate there are approximately 12,500 annual procedures that are eligible for treatment with RECELL. Surgical Excisions for Cancer.
Surgical wounds are precise incisions intentionally created to access underlying organs, relieve compartmental pressure, excise diseased cutaneous tissue (infected or severely inflamed or necrotic), or to harvest tissue for autografting (flaps and grafts). In the U.S., we estimate there are approximately 12,500 annual procedures that are eligible for treatment with RECELL. 5 Surgical Resections and Excisions for Cancer.
The Ventura facility has one 3-year option to extend the lease, at our sole option, which allows for a total lease extension period through September 30, 2030. The Company also has an administrative office lease in Irvine, California of approximately 10,700 square feet that is currently leased through the end of July 8 Table of Contents 2028.
The Ventura facility has one 3-year option to extend the lease, at our sole option, which allows for a total lease extension period through September 30, 2030. The Company also has an administrative office lease in Irvine, California of approximately 10,700 square feet that is currently leased through the end of July 2028.
Such laws prohibit medical device manufacturers from offering or providing certain types of payments or gifts to health care providers; and/or require the disclosure of gifts or payments to healthcare providers. Interactions with Foreign Officials and Entities The U.S.
Such guidelines prohibit medical device manufacturers from offering or providing certain types of payments or gifts to health care providers; and/or require the disclosure of gifts or payments to healthcare providers. Interactions with Foreign Officials and Entities The U.S.
These activities include but are not limited to, requiring certification of supplier in conformance to relevant cGMP regulations and other FDA and international agency regulatory requirements, approved supplier lists, and regular Company conducted audits. In addition, all goods and services purchased from suppliers by us must be purchased from only those suppliers on the approved supplier list.
These activities include, but are not limited to, requiring certification of supplier in conformance to relevant cGMP requirements and other FDA and international agency regulatory requirements, approved supplier lists, and regularly Company-conducted audits. In addition, all goods and services purchased from suppliers by us must be purchased from only those suppliers on the approved supplier list.
The public can obtain any documents that we file with the SEC at www.sec.gov . In addition, copies of announcements made by the Company to ASX are available on the ASX website ( www.asx.com.au ) and also, under the heading “Investors: Press Releases” at the following link on our website ( https://ir .avitamedical.com/press-releases). We maintain a website at www.avitamedical.com.
The public can obtain any documents that we file with the SEC at www.sec.gov. In addition, copies of announcements made by the Company to ASX are available on the ASX website (www.asx.com.au) and also, under the heading “Investors: Press Releases” at the following link on our website https://ir.avitamedical.com/press-releases/news-releases.
Similar to the burns indication, full-thickness skin defects are associated with large areas of skin loss and as such, some of the top unmet needs identified by surgeons are closely aligned: • Reduced donor skin harvesting • Reduced scarring • Reduced pain • Uniform pigmentation with surrounding skin Given the interest to reduce donor skin harvesting, just as with the burns indication, we designed a clinical trial to demonstrate the use of less donor skin without compromising healing outcomes relative to conventional autografting.
Similar to burns, full-thickness skin defects are associated with large areas of skin loss and as such, some of the top unmet needs identified by surgeons are closely aligned: • Reduced donor skin harvesting • Reduced scarring • Reduced pain • Uniform pigmentation with surrounding skin Given the benefits of reducing donor skin harvesting, just as with the burns indication, we designed a clinical trial to demonstrate the use of less donor skin without compromising healing outcomes relative to conventional autografting.
The RECELL System is TGA-registered in Australia, received CE-mark approval in Europe, and received Japan’s Pharmaceuticals and Medical Devices Act (PMDA) approval for burns in Japan. HEALTHCARE LAWS AND REGULATIONS AVITA Medical is a manufacturer of a medical device and therefore we are subject to regulations by the FDA and various federal and state healthcare laws and regulations.
The RECELL System is TGA-registered in Australia, received CE-mark approval in Europe, and received Japan’s PMDA approval for burns in Japan. HEALTHCARE LAWS AND REGULATIONS AVITA Medical is a manufacturer of medical devices, and therefore we are subject to regulations by the FDA and various federal and state healthcare laws and regulations.
Furthermore, the Company itself will continue to comply with all relevant FDA requirements and regulations and any applicable international agency regulatory requirements in its continued manufacturing and promotion of its FDA approved commercial product. 10 Table of Contents In addition to FDA approval in the U.S., the RECELL System has received various approvals and registrations in international markets.
Furthermore, the Company itself will continue to comply with all relevant FDA requirements and regulations and any applicable international agency regulatory requirements in its continued manufacturing and promotion of its FDA approved commercial products. In addition to FDA approval in the U.S., the RECELL System has received various approvals and registrations in international markets.
Since becoming a domestic U.S. issuer on July 1, 2020, our filings with the SEC, including without limitation, our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act, are available free of charge on our website under the heading “Investors: Financials _SEC Filings” at the following link on our website ( https://ir.avitamedical.com/financials/sec-filings ), as soon as reasonably practicable after we file or furnish them electronically with the SEC.
Our filings with the SEC, including without limitation, our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act, are available free of charge on our website under the heading “Investors: Financials _SEC Filings” at the following link on our website (https://ir.avitamedical.com/financials/sec-filings), as soon as reasonably practicable after we file or furnish them electronically with the SEC.
In general, we have found that most U.S. burn centers follow the industry-standard process of evaluating the RECELL System and then taking it through their hospital’s Value Analysis Committee (“VAC”) prior to purchasing.
In general, we have found that most U.S. burn centers follow the industry-standard process of evaluating RECELL and then it is reviewed by their hospital’s Value Analysis Committee (“VAC”) prior to purchasing.
Additionally, certain state laws require medical device companies to comply with voluntary guidelines in our interactions with healthcare providers promulgated by global trade associations and relevant compliance guidance issued by the U.S. Department of Health and Human Services, Office of Inspector General.
Additionally, certain state laws require medical device companies to comply with voluntary guidelines in our interactions with healthcare providers promulgated by global trade associations and relevant compliance guidance issued by the HHS, Office of Inspector General.
We are also subject to similar regulations under the Australian bribery laws and other anti-corruption laws that apply in countries where we do business. Federal and State Reporting Pursuant to the federal National Physician Payment Transparence Program (Open Payments) Act, AVITA Medical is required to report annually to the Centers for Medicare and Medicaid Services within the U.S.
We are also subject to similar regulations under the Australian bribery laws and other anti-corruption laws that apply in countries where we do business. 11 Federal and State Reporting Pursuant to the federal National Physician Payment Transparence Program (Open Payments) Act, AVITA Medical is required to report any payments or transfers of value to HCPs annually to the Centers for Medicare and Medicaid Services within the HHS.
In addition to these results, RECELL has been successfully used outside the U.S. for many years and there exist several case reports on the treatment of traumatic injuries that have been the subject of peer-reviewed scientific publications and presentations at medical conferences.
In addition to these results, RECELL has been successfully used to treat full-thickness skin injuries outside the U.S. for many years and there exist several case reports on the treatment of traumatic injuries that have been the subject of peer-reviewed scientific publications and presentations at medical conferences. The approval for the treatment of full-thickness skin defects represents a significant opportunity.
While RECELL complements autografts for the treatment of various wound injuries, split-thickness autografts represent the traditional surgical procedure and the current standard of care. However, based on our clinical trials, we believe that the RECELL system offers sustainable competitive clinical and economic advantages over the traditional surgical procedure.
In the burns and non-burn wound markets, our indirect competitor is primarily split-thickness autografts. While RECELL complements autografts for the treatment of various wound injuries, split-thickness autografts represent the traditional surgical procedure and the current standard of care. However, based on our clinical trials, we believe that RECELL offers sustainable competitive, clinical, and economic advantages over the traditional surgical procedure.
Local and state authorities may conduct periodic inspections in order to review and ensure our compliance with the various regulations. We are not presently aware of any violations or deficiencies. These laws, regulations and permits could potentially require the expenditure by us for compliance or remediation.
Local and state authorities may conduct periodic inspections in order to review and ensure our compliance with the various regulations. We are not presently aware of any material violations or deficiencies. These laws, regulations and permits could potentially impose additional costs related to compliance or remediation.
Surgical excisions for cancer are procedures used to remove and treat various skin cancers. In the U.S., we estimate there are approximately 136,000 annual procedures that are eligible for treatment with RECELL. Chronic Wounds. Chronic wounds are wounds that do not heal within an expected time frame.
Surgical resections and excisions for cancer are procedures used to remove and treat various skin cancers. In the U.S., we estimate there are approximately 136,000 annual procedures that are eligible for treatment with RECELL.
As of December 31, 2023, we had 207 full-time and part-time employees. As of December 31, 2023, 99% of our workforce was based in the United States, with a significant number of our management and professional employees having prior experience with leading medical product, biotech, or pharmaceutical companies. None of our employees are covered by collective bargaining agreements.
As of December 31, 2024, 99% of our workforce was based in the United States (“United States or “U.S.”), with a significant number of our management and professional employees having prior experience with leading medical device, biotech, or pharmaceutical companies. None of our employees are covered by collective bargaining agreements.
It is not uncommon in the treatment of wounds to have rotating staff and it is our commitment for all those working with RECELL to be comfortable with the technology both during the procedure as well as during aftercare.
It is not uncommon in the treatment of wounds to have rotating staff and it is our commitment for all those working with RECELL to be comfortable with the technology both during the procedure as well as during aftercare. Our commercial organization is composed of highly experienced medical sales representatives as well as former burn and trauma nurses.
Any products manufactured or distributed by us pursuant to regulatory approvals are subject to continuing regulation by the FDA and similar agencies in other countries, including maintaining records supporting manufacturing and distribution under cGMP regulations, periodic reporting, advertising, promotion, compliance with any post-approval requirements imposed as a conditional of approval, recordkeeping and reporting requirements, including adverse events experiences.
If any unacceptable side effects were to occur, we may, or regulatory authorities may require us to, interrupt, limit, delay or abort the development of our potential products. 10 Any products manufactured or distributed by us pursuant to regulatory approvals are subject to continuing regulation by the FDA and similar agencies in other countries, including maintaining records supporting manufacturing and distribution under cGMP, periodic reporting, advertising, promotion, compliance with any post-approval requirements imposed as a conditional of approval, recordkeeping and reporting requirements, including adverse events experiences.
The application of these cells stimulates healing and repigmentation throughout the wound bed. The patented and proprietary platform technology underlying the Spray-On Skin Cell suspension originated in Australia, based on the seminal work of Professor Fiona Wood and fellow scientist Marie Stoner.
The patented and proprietary platform technology underlying the Spray-On Skin Cells originated in Australia, based on the seminal work of Professor Fiona Wood and fellow scientist Marie Stoner.
In turn, we believe the reduction in training medical professionals will lead to increased adoption across our indications and the broader market. Additionally, RECELL GO offers us an opportunity to expand our intellectual property portfolio.
This revolutionary design will also reduce training requirements, allowing us to leverage our sales team more effectively. In turn, we believe the reduction in training medical professionals will lead to increased adoption across our indications and the broader market. RECELL GO offers us an opportunity to expand our intellectual property portfolio.
As of December 31, 2023, AVITA Medical’s patent portfolio comprised 22 patent grants and 31 pending patent applications worldwide, with patent coverage either secured or in progress in the U.S., China, Japan, Australia, Brazil, Canada, France, Germany, Hong Kong, Italy, Spain, the United Kingdom, and at the European Patent Office (“EPO”).
More broadly, as of December 31, 2024, AVITA Medical’s patent portfolio comprised 29 patent grants and 33 pending patent applications worldwide, with patent coverage either secured or in progress in the U.S., China, Japan, Australia, Brazil, Canada, France, Germany, Hong Kong, Italy, Spain, the UK, and at the EPO, the European Union Intellectual Property Office, and the World Intellectual Property Organization.
Traumatic wounds often arise in high-energy circumstances and result in extensive zones of injury with damage to multiple tissue types. Missing cutaneous tissue, macerated edges, and contamination are common and can complicate wound healing. In the U.S., we estimate there are approximately 122,000 annual procedures that are eligible for treatment with RECELL. Surgical Wounds.
Missing cutaneous tissue, macerated edges, and contamination are common and can complicate wound healing. In the U.S., we estimate there are approximately 122,000 annual procedures that are eligible for treatment with RECELL. Surgical Wounds.
Under the new contract, BARDA shall have access to AVITA Medical’s RECELL inventory in the event of a national emergency. BARDA shall pay for the devices requisitioned under this inventory along with a nominal annual maintenance fee to ensure first right of access. COMPETITION We currently believe that there is no direct competition for the RECELL system.
However, from that date through September 28, 2025, we will provide access to RECELL inventory in the event of a national emergency. BARDA will pay for any devices requisitioned from this inventory along with a nominal annual maintenance fee to ensure first right of access. 9 COMPETITION We currently believe that there is no direct competition for RECELL.
In the future, we may face competition from various sources, including medical device, pharmaceutical, and wound care companies, academic and medical institutions, governmental agencies, medical practitioners, and public and private research institutions, among others.
In the future, we may face competition from various sources, including medical device, pharmaceutical, and wound care companies, academic and medical institutions, governmental agencies, medical practitioners, and public and private research institutions, among others. Consequently, any product that we successfully develop and/or commercialize will compete with both existing therapies and any new therapies that may emerge in the future.
At the forefront of our portfolio is our patented and proprietary RECELL ® System (“RECELL System” or “RECELL”), approved by the United States Food & Drug Administration (“FDA”) for the treatment of thermal burn wounds and full-thickness skin defects, and for repigmentation of stable depigmented vitiligo lesions.
At the forefront of our portfolio is our patented and proprietary RECELL, approved by the United States Food & Drug Administration (“the “FDA”) for the treatment of thermal burn wounds and full-thickness skin defects, and for repigmentation of stable depigmented vitiligo lesions. In 2024, we expanded our product offerings to address additional acute wound care needs.
AVITA Medical Americas LLC was transferred from C3 Operations Pty Ltd to be directly held by the Company in preparation for each of AVITA Medical Pty Limited, AVITA Medical Europe Limited, Visiomed Group Pty Ltd, C3 Operations Pty Ltd and Infamed Pty Ltd to be deregistered during the course of 2024.
AVITA Medical Americas LLC was transferred from C3 Operations Pty Ltd to be directly held by the Company. As of January 28, 2025, AVITA Medical Pty Limited, AVITA Medical Europe Limited, Visiomed Group Pty Ltd, C3 Operations Pty Ltd and Infamed Pty Ltd were deregistered, leaving AVITA Medical Americas, LLC as the sole subsidiary of the Company. 12
For full-thickness burns, treatment using the RECELL System reduced total treatment cost by 3%, or approximately $6,000 for patients with 10% TBSA and by 42% or approximately $243,000, for patients with 40% TBSA.
For deep partial-thickness burns, RECELL reduces total treatment costs by an average of 26%, or approximately $37,000, for patients with 10% TBSA and approximately $150,000, for patients with 40% TBSA. For full-thickness burns, RECELL reduces total treatment cost by 3%, or approximately $6,000 for patients with 10% TBSA and by 42% or approximately $243,000, for patients with 40% TBSA.
Additionally, in adult patients with greater than 50% TBSA (N=318), the RECELL System resulted in a 60% reduction in the mean number of autograft procedures versus NBR data.
Additionally, in adult patients with greater than 50% TBSA (N=318), RECELL resulted in a 60% reduction in the mean number of autograft procedures versus NBR data. 4 In addition to these clinical benefits, RECELL has proven health economic benefits and a compelling cost-effectiveness model.
We plan to further expand our commercial organization to 108 in the first half of 2024. 7 Table of Contents HUMAN CAPITAL AVITA Medical’s investment in the U.S. commercial success of RECELL has led to the development of best-in-class teams supporting sales, clinical education and training, reimbursement, medical affairs, as well as corporate management and infrastructure.
This organization covers both burns and full-thickness skin defects. HUMAN CAPITAL AVITA Medical’s investment in the U.S. commercial success of RECELL has led to the development of best-in-class teams supporting sales, clinical education and training, reimbursement, medical affairs, as well as corporate management and infrastructure. As of December 31, 2024, we had 260 full-time and part-time employees.
As of December 31, 2023, the Directors of the Company were 28.5% female, our senior executive team was 30% female and our total employee base was 50.2% female. In addition to promoting gender diversity, we encourage ethnically diverse talent when recruiting as well as providing employee training and development focusing on workplace diversity and inclusion.
As of December 31, 2024, the Directors of the Company were 33% female, our senior executive team was 40% female and our total employee base was 52.5% female. In addition to promoting gender diversity, we encourage ethnically diverse talent through our recruiting and retention efforts.
In June 2021, the FDA approved expanded use of RECELL in combination of meshed autografting for acute full-thickness thermal wounds in both pediatric and adult patients, and for full-thickness thermal burns greater than 50% total body surface area (“TBSA”).
June 2021 Expanded use of RECELL 1920 Approved for use in combination with meshed autografting for acute full-thickness thermal wounds in both pediatric and adult patients, and for full-thickness thermal burns over 50% total body surface area (“TBSA”). February 2022 RECELL EOU Approved a single-use device providing a more efficient user experience and streamlined workflow.
The Company anticipates that the initial phase of reimbursement coverage will likely begin in the fourth quarter of 2025, with appropriately sized commercial support as coverage is established. SALES AND MARKETING Our commercial organization is focused on clinical case support, staff training, and building awareness to further expand interest in the clinical and economic benefits of RECELL.
SALES AND MARKETING Our commercial organization is focused on clinical case support, staff training, and building awareness to further expand interest in the clinical and economic benefits of RECELL.
Retrospective studies demonstrated that fewer autografting procedures are required for definitive closure of full-thickness burns when using the RECELL System versus conventional autografts. In pediatric cases (N = 284), treatment with the RECELL System resulted in a 56% reduction in the mean number of autograft procedures required compared to National Burn Repository ( “ NBR ” ) data.
In pediatric cases (N = 284), treatment with RECELL resulted in a 56% reduction in the mean number of autograft procedures required compared to National Burn Repository ( “ NBR ” ) data.
Vitiligo Vitiligo is a disease that causes the loss of skin pigmentation, or color, in patches. The extent of color loss from vitiligo is unpredictable, can affect the skin on any part of the body, and may also affect hair and the inside of the mouth.
The extent of color loss from vitiligo is unpredictable, can affect the skin on any part of the body, and may also affect hair and the inside of the mouth. Vitiligo occurs when melanocytes, the pigment-producing skin cells, die or stop producing melanin, the pigment that gives skin, hair, and eyes color.
With each iteration of our RECELL System, we anticipate preservation of the therapeutic power of Spray-on Skin Cells, deployed in devices that become appropriate for use in an increasing range of clinical settings.
With each iteration of our RECELL device, we anticipate preservation of the therapeutic power of Spray-on Skin Cells, deployed in devices that become appropriate for use in an increasing range of clinical settings. On June 28, 2024, we submitted a PMA supplement for RECELL GO mini, which is designed to address small wounds up to 480 cm 2 .
To ensure continuity of supply, we maintain multiple sources of supply for key components, subassemblies and materials, and the majority of critical raw materials and services have multiple qualified suppliers.
AVITA Medical sources multiple components, sub-assemblies, and materials from third-party suppliers, who are required to meet our cGMP quality specifications and associated regulatory requirements. To ensure continuity of supply, we maintain multiple sources of supply for key components, subassemblies and materials, and the majority of critical raw materials and services have multiple qualified suppliers.
From a reimbursement perspective, the same DRG code that is currently being used to treat inpatient burns is now being applied for the treatment of full-thickness skin defects. Additionally, the outpatient TPT “C” code we have been granted for RECELL can also be utilized for the treatment of full-thickness skin defects in the outpatient setting.
Additionally, the outpatient TPT “C” code we have been granted for RECELL can also be utilized for the treatment of full-thickness skin defects in the outpatient setting. Vitiligo Vitiligo is a disease that causes the loss of skin pigmentation, or color, in patches.
The model shows that treatment using the RECELL System reduces annual total treatment costs from approximately $39.4 million to $32.6 million, saving 17% or approximately $6.8 million per year.
We developed a budget impact model showing that, in a burn center with 200 patients, treatment using RECELL reduces annual total treatment costs from approximately $39.4 million to $32.6 million, saving 17% or approximately $6.8 million per year compared to conventional autografting alone.
Each RECELL System can treat up to 10% TBSA, and many patients require more than one device. AVITA Medical has a policy of providing the RECELL System to a provider only after they have been certified, which includes extensive training in the use of the product and in the aftercare of the patient.
Our vision is clear: to redefine healing, improve outcomes, and transform lives for patients worldwide. AVITA Medical has a policy of providing the RECELL System to a provider only after they have been certified, which includes extensive training in the use of the product and in the aftercare of the patient.
Also included in the BARDA contract was a provision for procurement of the RECELL System under a vendor-managed inventory system to bolster emergency preparedness in the amount of $7.6 million and an additional $1.6 million to support the logistics of emergency deployment of RECELL Systems for use in mass casualty or other emergency situations.
In addition to the clinical support provided by BARDA, we managed an inventory system of RECELL Devices for BARDA to bolster emergency preparedness and support the logistics of emergency deployment of RECELL Systems for use in mass casualty or other emergency situations.
We expect that our research and development pipeline, strategic partnerships, and improvements to the RECELL System and RES will result in additional and diverse patent applications in the next calendar year. In 2019, AVITA Medical filed a Patent Term Extension (“PTE”) application with the U.S. Patent and Trademark for U.S.
We expect that our research and development pipeline, strategic partnerships, and improvements to RECELL GO have the potential to result in additional patent applications in the next calendar year.
INTERNATIONAL STRATEGY In international markets, the RECELL System has received various approvals and registrations to promote skin healing in a wide range of applications including, burns, full-thickness skin defects, and vitiligo. These endorsements include TGA registration in Australia, CE mark approval in Europe, and PMDA approval in Japan under the Pharmaceuticals and Medical Devices Act for burns.
The full commercialization launch is expected to begin in the second quarter of 2025. INTERNATIONAL STRATEGY In international markets, the RECELL System has received various approvals and registrations to promote skin healing in a wide range of applications including burns and full-thickness skin defects.
Additionally, AVITA Medical owns and defends a global trademark portfolio comprising 142 registered trademarks, common or state law trademarks, and pending trademark applications, including “AVITA Medical,” the AVITA Medical logo, “RECELL,” “Spray-On Skin,” the RECELL System logo, “RES,” and others in the U.S. and international markets.
These assets cover the all-in-one RECELL product, RECELL GO, methods of using the RECELL System, methods of evaluating the therapeutic potential of Regenerative Epidermal Suspension (“RES”), a cell-free and allogeneic RES supernate, and methods of preparing a cell suspension with exogenous agents to promote wound healing. 8 Additionally, AVITA Medical owns and defends a global trademark portfolio comprising 148 registered trademarks, common or state law trademarks, and pending trademark applications, including “AVITA Medical,” the AVITA Medical logo, “RECELL,” “RECELL GO”, the RECELL GO logo, “Spray-On Skin,” the RECELL System logo, “Cohealyx,” the Cohealyx logo, and others in the U.S. and international markets.
From time-to-time we may also store small quantities of the RECELL System at satellite distribution sites within the U.S. to better support access of the RECELL System to our U.S. customers. BARDA CONTRACT We have a contract with BARDA, under the Assistant Secretary for Preparedness and Response, within the U.S. Department of Health and Human Services.
AVITA Medical serves the U.S. burn market by shipping the RECELL System directly from our Ventura facility to customers. From time-to-time we may also store small quantities of the RECELL System at satellite distribution sites within the U.S. to better support access of the RECELL System to our U.S. customers.
With FDA approval for full-thickness skin defects, we are expanding into these trauma centers, with the goal of capturing approximately 30% of RECELL-eligible burn injuries that are treated outside of dedicated burn centers.
Historically, our target market was burn centers, which represented about 25,000 RECELL-eligible burn injuries. However, with FDA approval for full-thickness skin defects, we are now expanding into trauma centers to address the additional 10,000 RECELL-eligible burn injuries treated outside dedicated burn centers.
Further, we are expanding our burn market opportunity by virtue of our approval for full-thickness skin defects as we are extending our reach to include trauma centers. 5 Table of Contents We anticipate RECELL being used in both the inpatient & outpatient settings across a wide range of wound sizes.
Given approximately 50% of the U.S. burn centers are classified as trauma centers, this indication opens doors in trauma centers already using RECELL for burn care. Further, we are expanding our burn market opportunity by virtue of our approval for full-thickness skin defects as we are extending our reach to include trauma centers.
We believe that our current manufacturing capacity at the Ventura facility is sufficient to meet the expected commercial demand for the RECELL System for burns, as well as other indications under development, for the foreseeable future. AVITA Medical serves the U.S. burn market by shipping the RECELL System directly from our Ventura facility to U.S. burn centers.
We believe that our current manufacturing capacity at the Ventura facility is sufficient to meet the expected commercial demand for the RECELL System for burns, full-thickness skin injuries, and other indications under development, for the foreseeable future. Additionally, in the second half of 2024, we implemented lean manufacturing methods to increase efficiencies in the production of the RECELL System.
It may also be caused by heredity factors or a triggering event, such as sunburn, stress, or exposure to industrial chemicals. Vitiligo affects people of all skin types, but it may be more noticeable in people with darker skin. It is estimated that worldwide vitiligo prevalence is between 0.5 to 2% of the population.
Vitiligo affects people of all skin types, but it may be more noticeable in people with darker skin. It is estimated that worldwide vitiligo prevalence is between 0.5 to 2% of the population. Following FDA approval, we conducted a post-market study and initiated a health economics study to capture the longitudinal healthcare costs for a vitiligo patient.
Although the use of STSG has been a standard treatment for more than 50 years, autografting is associated with significant pain, itching, infection, dyschromia, dyspigmentation, delayed healing, and hypertrophic scarring of the donor site. The clinical benefits of earlier wound closure are well recognized and include increased survival, reduced hospital length of stay, decreased pain duration, and reduced infection-related complications.
However, donor-site creation in a STSG, or autograft, procedure is associated with significant pain, risk of infection, scarring, delayed healing, and increased healthcare costs. The clinical benefits of closing wounds quickly are well recognized and include increased survival, shorter hospital stays, decreased pain duration, and reduced infection-related complications.
TONE will evaluate repigmentation using the RECELL device and will also seek to measure the improvement in the quality-of life following treatment of stable vitiligo with RECELL.
On December 23, 2024, the FDA approved our PMA supplement for RECELL GO mini. 7 In 2024, we completed a post-market study to evaluate repigmentation using RECELL and seek to measure the improvement in the quality-of life following treatment of stable vitiligo with RECELL.
These Spray-On Skin Cells are prepared at the point of care in as little as 30 minutes, providing a new way to treat thermal burn wounds and full-thickness skin defects. The regenerative skin cell suspension includes the patient's own skin cells, including keratinocytes, fibroblasts, and melanocytes, all of which play critical roles in skin regeneration.
This suspension is prepared at the point of care in as little as 30 minutes and includes the patient's own skin cells, keratinocytes, fibroblasts, and melanocytes, all critical to acute wound healing and repigmentation through the wound bed.
RECELL is FDA approved for the treatment of thermal burn wounds and full-thickness skin defects, and for repigmentation of stable depigmented vitiligo lesions. The platform technology of the RECELL System enables a thin split-thickness skin sample from the patient to be processed and prepared, producing an autologous cellular suspension called Spray-On Skin Cells.
How RECELL Works The core platform technology of RECELL enables clinicians to harvest a thin split-thickness skin sample from the patient and process it into an autologous cellular suspension, Spray-On Skin Cells.
However, in large burn injuries, the patient may have insufficient donor skin available to allow for immediate and complete treatment of the entire burn injury area when using traditional grafting techniques. The lack of available healthy donor skin in patients with large burn injuries is often the central problem impacting time to autografting and definitive closure of the wounds.
However, for large burn injuries, the patient may not have enough healthy donor skin available right away to complete treatment of the entire burn injury area when using traditional grafting techniques. In extensively burned patients, donor sites must heal so they can re-harvest from the same sites, resulting in delays in treatment and closure, multiple procedures, and lengthened hospital stays.
The RECELL GO system aims to control the current manual process of cell disaggregation and filtration, as well as soak time, reducing variability across medical providers compared to the current device. This revolutionary design will also reduce training requirements, allowing us to leverage our sales team more effectively.
RECELL GO maintains the FDA Breakthrough Device designation from predecessor devices. RECELL GO is comprised of a reusable durable base unit and a single-use sterile cartridge. The RECELL GO system aims to control the current manual process of cell disaggregation and filtration, as well as soak time, reducing variability across medical providers compared to the current device.
The majority of patients treated on an inpatient basis in the U.S. are treated in specialized burn centers. Severe burns (typically defined as second- and third-degree) are commonly treated with autologous split-thickness skin grafts (“STSGs”) to achieve definitive closure of the burn wound. In a STSG, or autograft, donor skin is harvested from a healthy area of the patient’s skin.
Market Opportunity Burn Injuries In the U.S., approximately 40,000 people have burn injuries severe enough to require hospital admission annually, with an inpatient mortality rate of 2.7%. Severe burns (typically defined as second- and third-degree) often require autologous split-thickness skin grafts (“STSGs”) to achieve definitive closure of the burn wound.
The pivotal studies leading to the RECELL System’s FDA PMA for the treatment of acute thermal burns demonstrated that the RECELL System treated burns used 97.5% less donor skin when used alone in second-degree burns, and 32% less donor skin when used with autograft for third-degree burns, compared to standard of care autografting.
RECELL has demonstrated the ability to reduce donor-site harvesting requirements while maintaining or improving clinical outcomes. Pivotal clinical studies indicated that using RECELL significantly reduced donor-skin requirements by up to 97.5% for second-degree burns and 32% for third-degree burns when used with autografts, compared to standard of care autografting, without comprising healing.
Vitiligo occurs when melanocytes, the pigment-producing skin cells, die or stop producing melanin, the pigment that gives skin, hair, and eyes color. Vitiligo is believed to be an autoimmune disorder in which a patient’s immune system attacks and destroys the melanocytes in the skin.
Vitiligo is believed to be an autoimmune disorder in which a patient’s immune system attacks and destroys the melanocytes in the skin. It may also be caused by heredity factors or a triggering event, such as sunburn, stress, or exposure to industrial chemicals.
The overall cost of treatment with STSG is expensive - for example it would cost 3 Table of Contents approximately $579,000 and 59.4 days in hospital for a patient with a 40% TBSA mixed-depth burn injury to recover and return to normal day to day activities.
While waiting for donor skin, these burn wounds may be temporarily covered with allograft (cadaver skin) or xenograft (typically pig skin). As such, treatment with STSGs is expensive, costing around $579,000 and 59.4 days in hospital for a patient with a 40% TBSA burn injury to recover and return to normal day to day activities.
The BARDA contract also supported the Company’s clinical trial in soft-tissue reconstruction, which led to the full-thickness skin defect indication.
BARDA CONTRACT BARDA, under the Assistant Secretary for Preparedness and Response, within the U.S. Department of Health and Human Services (“HHS”) has supported our company since 2015. A contract with BARDA provided funding for the development of the RECELL System. The BARDA contract also supported the Company’s clinical trial in soft-tissue reconstruction, which led to the full-thickness skin defect indication.
INTELLECTUAL PROPERTY We seek to protect our intellectual property, core technologies, and other know-how through a combination of patents, trademarks, trade secrets, confidentiality agreements, licenses, and IP assignments with our employees, consultants, business partners, suppliers, customers, and others.
INTELLECTUAL PROPERTY We protect our intellectual property, core technologies, and other know-how through a combination of patents, trademarks, trade secrets, and IP protection clauses in our agreements. Additionally, we rely on our research and development program, clinical trials, know-how and marketing programs to advance our products and product candidates, and to expand our intellectual property rights.
Refer to Footnote 20 for further details • Establish commercial payor coverage for the RECELL System in the U.S. for the treatment of vitiligo lesions; initial phase of coverage expected during the fourth quarter of 2025 PRODUCT PORTFOLIO RECELL Platform RECELL is a single use, stand-alone, battery operated, autologous cell harvesting device containing enzymatic and buffer solutions, sterile surgical instruments, and actuators.
We expect the RECELL GO platform to serve as a growth driver, further advancing our strategy to expand our impact on patient care. • RECELL Autologous Cell Harvesting Device (“RECELL 1920”): The first RECELL device offered in the U.S. is a single-use, stand-alone, battery operated, autologous cell harvesting device containing enzymatic and buffer solutions, sterile surgical instruments, and actuators.
We continue to commit resources to product development to ensure the RECELL system continues to evolve and that we maintain robust patent protection. In June 2023, we submitted a PMA supplement to the FDA for RECELL GO™. RECELL GO is comprised of a reusable durable base unit and a single-use sterile cartridge.
We continue to commit resources to product development to ensure the RECELL platform continues to evolve and that we maintain robust patent protection. On May 29, 2024, the FDA approved our PMA supplement for RECELL GO, our next generation autologous cell harvesting device for the treatment of thermal burn wounds and full-thickness skin defects.
Full-thickness skin defects include traumatic avulsion (e.g. degloving), surgical excision (e.g. necrotizing soft tissue infection), or resection (e.g., skin cancer). The cause or origin of the wound directly impacts healing potential, response to treatment options, and likely complications. Traumatic Wounds. Traumatic wounds are subdivided by mechanism of injury into lacerations, abrasions, avulsions, crush, penetrating, or bites.
Full-Thickness Skin Defects A wound is a breach in the integrity of the skin, with full-thickness wounds extending through the dermal layer into deeper tissues. These acute wounds can arise from traumatic avulsions, surgical excisions, or resections. The cause or origin of the wound directly impacts healing potential, response to treatment options, and likely complications.
In these studies, a statistically significant reduction in donor skin required to treat burn patients with the RECELL System was realized without any associated compromise to healing or safety outcomes. Donor site outcomes from the clinical trial for second-degree burns also revealed a statistically significant reduction in patient-reported pain, increased patient satisfaction and improved scar outcomes.
Additionally, the clinical trial for second-degree burns revealed a statistically significant reduction in patient-reported pain, increased patient satisfaction, and improved scar outcomes. Retrospective studies demonstrated that fewer autografting procedures are required for definitive closure of full-thickness burns when using the RECELL versus conventional autografts alone.
In September 2018, the FDA approved RECELL as a Class 3 device through a premarket approval (“PMA”) for the treatment of second and third-degree 2 Table of Contents acute thermal burn injuries in patients 18 years and older. Following receipt of our original PMA, we commenced commercialization of the RECELL System in January 2019 in the United States.
FDA Regulatory Approvals Date Device / Indication Description September 2018 RECELL 1920 Indicated for treating second- and third-degree acute thermal burns in patients 18 years and older. Commercialization commenced in January 2019 in the U.S.
These cost reductions are attributed to decreasing the length of hospital stay, reducing the number of procedures required to close the burn wound, and minimizing the donor site size and associated wound care. All of these cost savings estimates are net of the cost of the RECELL System.
These savings are achieved through shorter hospital stays, fewer procedures, and minimized donor site sizes. All of these cost savings estimates are net of the cost of the RECELL device.
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Item 1. BUSINESS OVERVIEW AVITA Medical is a commercial-stage regenerative medicine company transforming the standard of care in wound care management and skin restoration with innovative devices.
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Item 1. BUSINESS OVERVIEW AVITA Medical is a leading therapeutic acute wound care company delivering transformative solutions. Our technologies are designed to optimize skin restoration procedures, effectively accelerating patient healing and recovery. Our solutions improve the healing outcomes for patients with traumatic injuries and surgical repairs, addressing critical healing needs that arise from unpredictable and life-changing events.
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Today, our common stock trades on the Nasdaq under the symbol “RCEL” and our CHESS Depositary Interests (“CDIs”) are traded on the ASX under the symbol “AVH.” STRATEGY AVITA Medical is focused on becoming the leading provider of regenerative medicine addressing unmet medical needs in burn injuries, full-thickness skin defects, and in skin repigmentation, such as vitiligo.
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Our offerings currently include our core technology platform, RECELL ® (“RECELL”), as well as PermeaDerm ® and Cohealyx ™ , each designed to target acute wound care needs.
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We will continue to drive commercial revenue growth to generate positive cash flow and achieve operating profit.
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In January, we signed an exclusive multi-year distribution agreement with Stedical Scientific, Inc. (“Stedical”) to market, sell, and distribute PermeaDerm, a biosynthetic wound matrix in the U.S.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeA person or entity does not need to have actual knowledge of the federal Anti-Kickback Statute or specific intent to violate it to have committed a violation; in addition, the government may assert that a claim including 21 Table of Contents items or services resulting from a violation of the federal Anti-Kickback Statute constitutes a false or fraudulent claim for purposes of the civil False Claims Act; • the federal false claims laws including the civil False Claims Act, which can be enforced through civil whistleblower or qui tam actions, and civil monetary penalties laws, which impose criminal and civil penalties against individuals or entities for knowingly presenting, or causing to be presented to the federal government, claims for payment that are false or fraudulent, knowingly making, using or causing to be made or used, a false record or statement material to a false or fraudulent claim, or knowingly making, or causing to be made, a false statement to avoid, decrease or conceal an obligation to pay money to the federal government; in addition, the government may assert that a claim including items and services resulting from a violation of the federal Anti-Kickback Statute constitutes a false or fraudulent claim for purposes of the civil False Claims Act; • HIPAA imposes criminal and civil liability for, among other things, knowingly and willfully executing, or attempting to execute, a scheme to defraud any healthcare benefit program or making false or fraudulent statements relating to healthcare matters.
Biggest changeA person or entity does not need to have actual knowledge of the federal Anti-Kickback Statute or specific intent to violate it to have committed a violation; in addition, the government may assert that a claim including items or services resulting from a violation of the federal Anti-Kickback Statute constitutes a false or fraudulent claim for purposes of the civil FCA. • False Claims Act : the federal false claims laws including the civil False Claims Act, which can be enforced through civil whistleblower or qui tam actions, and civil monetary penalties laws, which impose criminal and civil penalties against individuals or entities for knowingly presenting, or causing to be presented, to the federal government, claims for payment that are false or fraudulent, knowingly making, using or causing to be made or used, a false record or statement material to a false or fraudulent claim, or knowingly making, or causing to be made, a false statement to avoid, decrease or conceal an obligation to pay money to the federal government; in addition, the government may assert that a claim including items and services resulting from a violation of the federal Anti-Kickback Statute constitutes a false or fraudulent claim for purposes of the civil False Claims Act. • Data/Privacy Protection : a number of federal, state and foreign laws, regulations, guidance and standards that impose requirements regarding the protection of consumer information that are applicable to or affect our operations. • Physician Payment Sunshine Act : the federal transparency requirements regarding payments in the healthcare industry, sometimes referred to as the “Sunshine Act,” require certain manufacturers of drugs, devices, biologics, and medical supplies for which payment is available under federal government healthcare programs, to report annually to CMS information related to payments or other "transfers of value" made to HCPs and nurse practitioners. • Anti-Corruption Laws : Our operations are subject to anti-corruption laws, including laws combating foreign bribery in Australia and the FCPA in the U.S., and other anti-corruption laws that apply in countries where we do business.
If we are not able to maintain our distribution network, if our distribution network is not successful in marketing and selling our products, or if we experience a significant reduction in, cancellation, or change in the size and timing of orders from our distributors, our revenues could decline significantly and lead to an inability to meet operating cash flow requirements, which would have a material adverse effect on our business, financial condition, and results of operations.
If we are not able to maintain our distribution network, if our distribution network is not successful in marketing and selling our products, or if we experience a significant reduction, cancellation, or change in the size and timing of orders from our distributors, our revenues could decline significantly and lead to an inability to meet operating cash flow requirements, which would have a material adverse effect on our business, financial condition, or results of operations.
If we are not able to successfully complete clinical trials or are not able to do so in a timely and cost-effective manner, we will not be able to obtain regulatory approval for the use of our RECELL System for additional applications, all of which could have a material adverse effect on our business, financial condition and results of operations.
If we are not able to successfully complete clinical trials or are not able to do so in a timely and cost-effective manner, we will not be able to obtain regulatory approval for the use of our RECELL System for additional applications, all of which could have a material adverse effect on our business, financial condition, or results of operations.
The severity and length of time that a downturn in economic and financial market conditions may persist, as well as the timing, strength and sustainability of any recovery from such downturn, are unknown and are beyond our control.
The severity and length of time that a downturn in economic and financial market conditions may persist, as well as the timing, strength, and sustainability of any recovery from such downturn, are unknown and beyond our control.
Limited liquidity in the trading markets for our common stock and CDIs may adversely affect a stockholder’s ability to sell its shares of our common stock or our CDIs at the time it wishes to sell them or at a price that it considers acceptable.
Limited liquidity in the trading markets for our common stock and CDIs may adversely affect a stockholder’s ability to sell its shares of our common stock or CDIs at the time it wishes to sell them or at a price that it considers acceptable.
If research analysts publish unfavorable commentary or downgrade our common stock or CDIs it could adversely affect our share price and trading volume. The trading market for our common stock and CDIs depends, in part, on the research and reports that research analysts publish about us and our business and industry.
If research analysts publish unfavorable commentary or downgrade our common stock or CDIs, it could adversely affect our share price and trading volume. The trading market for our common stock and CDIs depends, in part, on the research and reports that analysts publish about us and our business and industry.
Likewise, any investigation of any potential violations of these laws by respective government bodies could also have an adverse impact on our reputation, our business, results of operations and financial condition. Item 1B. UNRESOLVE D STAFF COMMENTS None
Likewise, any investigation of potential violations of these laws by respective government bodies could also have an adverse impact on our reputation, our business, financial condition, and results of operations. Item 1B. UNRESOLVE D STAFF COMMENTS None
In addition, any security breach or attempt thereof could result in liability for stolen assets or information, additional costs associated with repairing any system damage, incentives offered to clients or other business partners to maintain business relationships after a breach, and implementation of measures to prevent future breaches, including organizational changes, deployment of additional personnel and protection technologies, employee training and engagement of third-party experts and consultants.
In addition, any security breach or attempt thereof could result in liability for stolen assets or information, additional costs associated with repairing any system damage, incentives offered to clients or other business partners to maintain business relationships after a breach, and implementation of measures to prevent future breaches, including organizational changes, deployment of additional personnel and protection technologies, increased employee training, and engagement of third-party experts and consultants.
Events that may prevent successful or timely commencement, enrollment or completion of clinical development or a regulatory application include: • delays in raising, or inability to raise, sufficient capital to fund the planned trials; • delays in reaching a consensus with regulatory agencies on trial design; • changes in trial design; • inability to identify, recruit and train suitable clinical investigators; • inability to add new clinical trial sites; • delays in reaching agreement on acceptable terms for the performance of the trials with prospective clinical research organizations and clinical trial sites; • delays in recruiting suitable clinical sites and patients (i.e., subjects) to participate in clinical trials; • imposition of a clinical hold by regulatory agencies for any reason, including negative clinical results, safety concerns or as a result of an inspection of manufacturing or clinical operations or trial sites; • failure by any relevant parties to adhere to clinical trial requirements; • failure to perform in accordance with the FDA’s Good Clinical Practice (“GCPs”), or applicable regulatory guidelines in other countries; • delays in the testing, validation, manufacturing and delivery of the product candidates to the clinical sites; • delays caused by clinical trial sites not completing a trial; • failure to demonstrate adequate effectiveness; • occurrence of serious adverse events in clinical trials that are associated with the product candidates that are viewed to outweigh its potential benefits; • changes in regulatory requirements and guidance that require amending or submitting new clinical protocols; • adverse events, safety issues, product recalls, manufacturing or supply chain interruptions, or poor clinical outcomes where the RECELL System is being used commercially; and • disagreements with regulatory agencies in the interpretation of the data from our clinical trials.
Events that may prevent successful or timely commencement, enrollment or completion of a clinical study or a regulatory application include: • delays in raising, or inability to raise, sufficient capital to fund the planned trials; • delays in reaching a consensus with regulatory agencies on trial design; • changes in trial design; • inability to identify, recruit, and train suitable clinical investigators; • inability to add new clinical trial sites; 15 • delays in reaching agreement on acceptable terms for the performance of the trials with prospective clinical research organizations and clinical trial sites; • delays in recruiting suitable clinical sites and patients (i.e., subjects) to participate in clinical trials; • imposition of a clinical hold by regulatory agencies for any reason, including negative clinical results, safety concerns or as a result of an inspection of manufacturing or clinical operations or trial sites; • failure by any relevant parties to adhere to clinical trial requirements; • failure to perform in accordance with the FDA’s Good Clinical Practice (“GCPs”), or applicable regulatory guidelines in other countries; • delays in the testing, validation, manufacturing, and delivery to the clinical sites of the product candidates; • delays caused by clinical trial sites not completing a trial; • failure to demonstrate adequate effectiveness; • occurrence of serious adverse events in clinical trials associated with the product candidates that are viewed to outweigh its potential benefits; • changes in regulatory requirements or guidance that require amending or submitting new clinical protocols; • adverse events, safety issues, product recalls, manufacturing or supply chain interruptions, or poor clinical outcomes where the RECELL System is being used commercially; and • disagreements with regulatory agencies in the interpretation of the data from our clinical trials.
If threat actors are able to circumvent or breach our security systems, they could steal any information located therein or cause serious and potentially long-lasting disruption to our operations. Security breaches or attempts thereof could also damage our reputation and expose us to a risk of monetary loss and/or litigation, fines and sanctions.
If threat actors are able to circumvent or breach our security systems, they could steal any information located therein or cause serious and potentially long-lasting disruption to our operations. Security breaches or attempts thereof could also damage our reputation and expose us to a risk of litigation, sanctions, and/or monetary loss.
Mergers and acquisitions in the pharmaceutical, medical device, and biotechnology industries or wound care markets may result in increased concentration of resources among a smaller number of our competitors. Other early-stage companies may also prove to be significant competitors, particularly through collaborative arrangements with large and established companies.
Mergers and acquisitions in the medical device, pharmaceutical, and biotechnology industries, or specifically in the wound care markets, may result in increased concentration of resources among a smaller number of our competitors. Other early-stage companies may also prove to be significant competitors, particularly through collaborative arrangements with large and established companies.
It may not be possible for us to manufacture our products at a cost or in quantities sufficient to make these products commercially viable or to maintain current operating margins, all of which could have a material adverse effect on our business, financial condition and results of operations.
It may not be possible for us to manufacture our products at a cost or in quantities sufficient to make these products commercially viable or to maintain current operating margins, all of which could have a material adverse effect on our business, financial condition, or results of operations.
Any failure to manage future growth effectively could have a material adverse effect on our business and results of operations. Our growth and success depend on our ability to attract and retain additional highly qualified and skilled sales and marketing, research and development, operational, managerial and finance personnel.
Any failure to manage future growth effectively could have a material adverse effect on our business and results of operations. Our growth and success depend on our ability to attract and retain additional highly qualified and skilled sales and marketing, research and development, operational, managerial, legal, and finance personnel.
As such, those funds in bank deposit accounts in excess of the standard FDIC insurance limits are uninsured and subject to the risk of bank failure. Currently, we have full access to all funds in deposit accounts or other money management arrangements.
As such, those funds in bank deposit accounts in excess of the standard FDIC insurance limits are uninsured and subject to the risk of bank failure. 25 Currently, we have full access to all funds in deposit accounts or other money management arrangements.
We may be unsuccessful in commercializing our RECELL System, or other future products, due to unfavorable pricing regulations or third-party coverage and reimbursement policies. We cannot guarantee that we will receive favorable pricing and reimbursement for use of our products.
We may be unsuccessful in commercializing our RECELL System or other future products due to unfavorable pricing regulations or third-party coverage or reimbursement policies. We cannot guarantee that we will receive favorable pricing or reimbursement for use of our products.
Such laws include: • the federal Anti-Kickback Statute prohibits, among other things, persons and entities from knowingly and willfully soliciting, offering, receiving or providing remuneration, directly or indirectly, in cash or in kind, to induce or reward, or in return for, either the referral of an individual for, or the purchase, lease, order or recommendation of, any good, facility, item or service, for which payment may be made, in whole or in part, under a federal healthcare program such as Medicare and Medicaid.
Such laws include: 21 • Anti-Kickback Statute : the AKS prohibits, among other things, persons and entities from knowingly and willfully soliciting, offering, receiving or providing remuneration, directly or indirectly, in cash or in kind, to induce or reward, or in return for, either the referral of an individual for, or the purchase, lease, order or recommendation of, any good, facility, item or service, for which payment may be made, in whole or in part, under a federal healthcare program such as Medicare and Medicaid.
If one or more research analysts downgrade our shares or CDIs, publish unfavorable commentary about the Company or cease publishing reports about us or our business, the price of our common stock and CDIs could decline.
If one or more analysts downgrade our shares or CDIs, publish unfavorable commentary about the Company or cease publishing reports about us or our business, the price of our common stock and CDIs could decline.
Complying with these numerous and complex regulations is expensive and difficult, and failure to comply with these regulations could result in regulatory scrutiny, fines, civil liability or damage to our reputation.
Complying with these numerous and complex regulations is expensive and difficult, and failure to comply with these regulations could result in regulatory scrutiny, civil liability and related fines, or damage to our reputation.
Further federal and state proposals and healthcare reforms are likely, which could limit the prices that can be charged for the RECELL System and may further limit our commercial opportunity.
Continued federal and state proposals and healthcare reforms are likely, which could limit the prices that can be charged for the RECELL System and may further limit our commercial opportunity.
Accordingly, we continue to evaluate the effect that the Affordable Care Act has on our business. There also may be future changes unrelated to the IRA that result in reductions in potential coverage and reimbursement levels for our product and we cannot predict the scope of any future changes or the impact that those changes would have on our operations.
Accordingly, we continue to evaluate the effect that the Affordable Care Act has on our business. There also may be future changes unrelated to the IRA that result in reductions in potential coverage and reimbursement levels for our products, and we cannot predict the scope of any future changes or the impact that those changes would have on our operations.
Obtaining and maintaining regulatory approval for a product candidate in one jurisdiction does not mean that we will be successful in obtaining regulatory approval for that product candidate in other jurisdictions.
Obtaining and maintaining regulatory approval for a product in one jurisdiction does not mean that we will be successful in obtaining regulatory approval for that product in other jurisdictions.
Risks Relating to our Industry and Intellectual Property We face competition from the existing standard of care and any future potential changes in medical practice and technology and the possibility that our competitors may develop products, treatments or procedures that are similar, more advanced, safer or more effective than ours.
Risks Relating to our Industry and Technology We face competition from the existing standard of care and any future potential changes in medical practice and technology and the possibility that our competitors may develop products, treatments or procedures that are similar, more advanced, safer or more effective than ours.
For example, even though the FDA has granted marketing approval for use of our RECELL System for the treatment full-thickness skin defects and vitiligo, comparable regulatory authorities in foreign jurisdictions must also approve the manufacturing, marketing and promotion of the product candidate in those countries if not currently approved.
For example, even though the FDA has granted marketing approval for use of our RECELL System for the treatment of full-thickness skin defects and vitiligo, comparable regulatory authorities in foreign jurisdictions must also approve the manufacturing, marketing, and promotion of the product in those jurisdictions if not currently approved.
Any denial of private or government payer coverage, such as the Affordable Care Act, the IRA, as well as other federal, state, and foreign healthcare reform measures that have been and may be adopted in the future, or inadequate reimbursement could harm our business and reduce our revenue.
Any denial of private or government payer coverage, such as the Affordable Care Act or the IRA, as well as other federal, state, and foreign healthcare reform measures that have been and may be adopted in the future, or inadequate reimbursement, could reduce our revenue and business prospects.
Any determination to pay dividends in the future on our common stock and CDIs will be made at the discretion of our Board of Directors and will depend on our results of operations, financial conditions, contractual restrictions, restrictions imposed by applicable law, capital requirements, and other factors that our Board of Directors deems relevant.
Any determination to pay dividends in the future on our common stock and CDIs will be made at the discretion of our Board of Directors and will depend on our results of operations, financial condition, contractual restrictions, restrictions imposed by applicable law, capital requirements, and other factors that our Board of Directors deems relevant.
Obtaining and maintaining regulatory approval for a product in one jurisdiction does not guarantee that we will be able to obtain or maintain similar approval in other jurisdictions, while a failure or delay in obtaining regulatory approval in one jurisdiction may have a negative effect on the regulatory approval process in others.
Obtaining and maintaining regulatory approval for a product in one jurisdiction does not guarantee that we will be able to obtain or maintain similar approval in other jurisdictions; further, a failure or delay in obtaining regulatory approval in one jurisdiction may have a negative effect on the regulatory approval process in others.
If any of our relationships with these third-party CROs terminate, we may not be able to enter into arrangements with alternative CROs or to do so on commercially reasonable terms. Further, switching or adding additional CROs involves additional costs and requires management time and focus. In addition, there is a natural transition period when a new CRO commences work.
If any of our relationships with these third-party CROs terminate, we may not be able to enter into arrangements with alternative CROs or to do so on commercially reasonable terms. Further, switching or adding additional CROs involves additional costs and requires management resources. In addition, there is a natural transition period when a new CRO commences work.
To secure marketing authorization, an applicant generally is required to submit an application that includes the data supporting preclinical and clinical safety and effectiveness as well as detailed information on the manufacturing and control of the product, proposed labeling and other additional information.
To secure marketing authorization, an applicant generally is required to submit an application that includes the data supporting pre-clinical and clinical safety and effectiveness as well as detailed information on the manufacturing and control of the product, proposed labeling, and other additional information.
If such claims are successful, our business and operating results could be harmed, and even if the claims do not result in litigation or are resolved in our favor, these claims, and the time and resources necessary to resolve them, could divert the resources of our management and harm our business and operating results.
If such claims are successful, and even if the claims do not result in litigation or are resolved in our favor, these claims, and the time and resources necessary to resolve them, could divert the resources of our management and harm our business and operating results.
While we currently do not believe it to be the case, third parties may claim that we are employing their proprietary technology without authorization or that we are infringing on their patents. If such claims were made, we could incur substantial costs coupled with diversion of our management and key technical personnel in defending against these claims.
While we currently do not believe it to be the case, third parties may claim that we are employing their proprietary technology without authorization or that we are infringing on their patents. If such claims were made, we could incur substantial costs coupled with diversion of key technical personnel in defending against these claims.
The continued successful commercialization of the RECELL system for FDA approved and pending indications, will depend in part on the extent to which government authorities and health insurers establish adequate reimbursement levels and pricing policies.
The continued successful commercialization of the RECELL System for FDA approved and pending indications, will depend in part on the extent to which government authorities and healthcare insurers establish adequate reimbursement levels and pricing policies.
Continued sales of the RECELL System depend in part on the availability of coverage and reimbursement from third-party payers such as government insurance programs, including Medicare and Medicaid, private health insurers, health maintenance organizations and other health care related organizations, who are increasingly challenging the price of medical products and services.
Continued sales of the RECELL System depend in part on the availability of coverage and reimbursement from third-party payers such as government insurance programs, including Medicare and Medicaid, private health insurers, health maintenance organizations and other healthcare-related organizations, who are increasingly challenging the price of medical device products and services.
Due to the cost and regulatory requirements associated with qualifying multiple suppliers, in the prior year we single-sourced some of our material components. To the extent that any of these single-sourced suppliers experience disruptions in deliveries due to production, quality, or other issues, we are potentially subject to similar production delays or unfavorable cost increases.
Due to the cost and regulatory requirements associated with qualifying multiple suppliers, in 2023, we single-sourced some of our material components. To the extent that any of these single-sourced suppliers experience disruptions in deliveries due to production, quality, or other issues, we are potentially subject to similar production delays or unfavorable cost increases.
As a result, we may not achieve the expected clinical milestones necessary for approval by the FDA, or other regulators, for the use of our RECELL System for additional applications in the United States or other countries. 15 Table of Contents A failure in a clinical study or regulatory application can occur at any stage.
As a result, we may not achieve the expected clinical milestones necessary for approval by the FDA, or other regulators, for the use of our RECELL System for additional applications in the United States or other countries. A failure in a clinical study or regulatory application can occur at any stage.
If we cannot attract and retain skilled scientific and operational personnel for our research and development and manufacturing operations on acceptable terms, we may not be able to develop and commercialize our products. Further, any failure to effectively integrate new personnel could prevent us from successfully growing our company.
If we cannot attract and retain skilled scientific and operational personnel for our research and development and manufacturing operations on acceptable terms, we may not be able to develop and commercialize our products. Further, any failure to effectively onboard and train new personnel could prevent us from successfully growing our company.
For example, on August 16, 2022, President Biden signed the Inflation Reduction Act 22 Table of Contents of 2022, or the IRA, into law, which among other things, extends enhanced subsidies for individuals purchasing health insurance coverage in Affordable Care Act marketplaces through plan year 2025.
For example, on August 16, 2022, President Biden signed the Inflation Reduction Act of 2022, or the IRA, into law which, among other things, extends enhanced subsidies for individuals purchasing health insurance coverage in Affordable Care Act marketplaces through plan year 2025.
This means that our stockholders could experience a decrease in the value of their common stock or CDIs regardless of our operating performance or prospects. The market prices of securities of companies operating in the medical device and biotech sectors have often experienced fluctuations that have been unrelated or disproportionate to the operating results of these companies.
This means that our stockholders could experience a decrease in the value of their common stock or CDIs regardless of our operating performance or prospects. The market prices of securities of companies operating in the medical device sectors have often experienced fluctuations that have been unrelated or disproportionate to their operating results.
If our CROs do not successfully carry out their contractual duties or obligations, fail to meet expected deadlines, or if the quality or accuracy of the clinical data they obtain is compromised due to the failure to adhere to our clinical protocols or regulatory requirements, or for any other reasons, our clinical trials may be extended, delayed or terminated, and we may not be able to obtain regulatory approval for, or successfully commercialize, our product candidates.
If our CROs do not successfully carry out their contractual duties or obligations, fail to meet expected deadlines, or if the quality or accuracy of the clinical data they obtain is compromised due to the failure to adhere to our clinical protocols or regulatory requirements, or for any other reasons, our clinical trials may be extended, delayed or terminated, and we may not be able to obtain or maintain regulatory approval for, or successfully commercialize, our products.
We may not be able to obtain these licenses at a reasonable cost, if at all. Defense of any lawsuit or failure to obtain any of these licenses could prevent us from commercializing available products and have a material negative effect on our business.
We may not be able to obtain these licenses at a reasonable cost, if at all. Defense of any lawsuit or failure to obtain any of these licenses could prevent us from commercializing available products and have a material negative effect on our financial condition and business prospects.
Cost control initiatives may decrease coverage and payment levels and, in turn, the price that we will be able to charge and/or the volume of our sales. We are unable to predict all changes to the coverage or reimbursement methodologies that will be applied by private or government payers.
Cost control initiatives may decrease coverage and payment levels and, in turn, impact the prices that we will be able to charge and/or the volume of our sales. We are unable to predict all changes to the coverage or reimbursement methodologies that will be applied by private or government payers.
Our ability to comply with these covenants in future periods will largely depend on the success of our products, and our ability to successfully implement our overall business strategy. We may be unsuccessful in obtaining waivers or amendments to restrictions and covenants in the agreements.
Our ability to comply with these covenants in future periods will largely depend on the success of our products, and our ability to successfully implement our overall business strategy. We may be unsuccessful in obtaining waivers or amendments to restrictions and covenants in certain agreements with our customers or counterparties.
Many of our current or future competitors may have significantly greater financial resources and experience and expertise in research and development, manufacturing, preclinical testing, conducting clinical trials, obtaining regulatory approvals and marketing approved products than we may have.
Many of our current or future competitors may have significantly greater financial resources and experience in research and development, manufacturing, pre-clinical testing, conducting clinical trials, obtaining regulatory approvals, and marketing approved products than we may have.
We also face risks associated with security breaches affecting third parties that conduct business with us or our customers and others who interact with our data. While we maintain insurance that covers certain security incidents, we may not carry appropriate insurance or maintain sufficient coverage to compensate for all potential liability.
We also face risks associated with security breaches affecting third parties that conduct business with us or our customers and others who interact with our data. While we maintain insurance that covers certain security incidents, we may not carry appropriate insurance or maintain sufficient coverage to compensate for damage from all events and related potential liability.
We rely on clinical research organizations (“CRO”), and clinical trial sites to ensure our clinical trials are conducted properly and on time. While we will have agreements governing their activities, we will have limited influence over their actual performance. CROs manage and monitor the clinical trials, duties and functions, and we will control only certain aspects of our CROs’ activities.
We rely on clinical research organizations (“CROs”) and clinical trial sites to ensure our clinical trials are conducted properly and on time. While we have agreements governing their activities, we have limited influence over their actual performance. CROs manage and monitor the duties and functions pertaining to clinical trials and we control only certain aspects of our CROs’ activities.
The FDA, and comparable foreign regulatory authorities, enforces these GCPs through periodic inspections of trial sponsors, principal investigators and clinical trial sites.
The FDA, and comparable foreign regulatory authorities, enforce these GCPs through periodic inspections of trial sponsors, principal investigators, and clinical trial sites.
The policies of 14 Table of Contents the FDA or other regulatory authorities may change, and additional government regulations may be enacted that could prevent, limit or delay the necessary approval of any products we may develop and commercialize.
The policies of the FDA or other regulatory authorities may change, and additional government regulations may be enacted that could prevent, limit or delay the necessary approval of any products we may develop and commercialize.
If we are unable to promptly obtain coverage and profitable payment rates from hospital budget, government-funded and private purchasers for the RECELL System or any future products, this could have a material adverse effect on our operating results, our ability to raise capital needed to commercialize products and our overall financial condition.
If we are unable to promptly obtain coverage and profitable payment rates from hospital budgets, as well as from either government-funded or private purchasers, for the RECELL System or any future products, this could have a material adverse effect on our operating results, our ability to raise capital needed to commercialize products, and our overall financial condition.
Despite the implementation of security measures, our internal computer and information technology systems and those of our vendors and customers are vulnerable to attack and damage from computer viruses, malware, denial of service attacks, unauthorized access, or other harm, including from threat actors seeking to cause disruption to our business.
Despite the implementation of security measures, our IT systems and those of our vendors and customers are vulnerable to attack and damage from computer viruses, malware, denial of service attacks, unauthorized access, or other harm, including from threat actors seeking to cause disruption to our business.
As long as we remain subject to the rules of the ASX and of Nasdaq, we will be unable to access equity capital without stockholder approval if such equity capital sales would result in an equity issuance above regulatory thresholds and consequently, we may be unable to obtain financing sufficient to sustain our business if we are unsuccessful in soliciting requisite stockholder approvals.
As long as we remain subject to the rules of the Australian Securities Exchange (“ASX”) and of Nasdaq, we will be unable to access equity capital without stockholder approval if such equity capital sales would result in an equity issuance above regulatory thresholds, and consequently, we may be unable to obtain financing sufficient to sustain our business if we are unsuccessful in soliciting requisite stockholder approvals.
We expect to make significant investments to facilitate our future growth through, among other things: • new product development; • commercial development of our RECELL System to such areas full-thickness skin defects and vitiligo; • clinical trials for additional indications; and • funding of our marketing and sales infrastructure.
We expect to make significant investments to facilitate our future growth through, among other things: • new product development; • commercial development of our RECELL System to include full-thickness skin defects; • clinical trials for additional indications; and • funding of our marketing and sales infrastructure.
These laws regulate the business or financial arrangements and relationships through which we conduct our operations, including how we research, market, sell and distribute our products for which we obtain marketing approval.
These laws regulate our business as well as the financial arrangements and relationships through which we conduct our operations, including how we research, market, sell, and distribute our products for which we obtain marketing approval.
Our other patents have expected expiration dates ranging from 2032 to 2033, while our pending patent applications, if granted, would have expiration dates ranging from 2032 to 2042. Furthermore, the patent protections we have been granted may not be broad enough to prevent competitors from producing products similar to ours.
Our patents have expected expiration dates ranging from 2032 to 2033, while our pending patent applications, if granted, would have expiration dates ranging from 2034 to 2043. Furthermore, the patent protections we have been granted may not be broad enough to prevent competitors from producing products similar to ours.
If any such event were to occur, our financial results and the commercial prospects for our product candidates would be harmed, our costs could increase, and our ability to generate revenues could be delayed.
If any such event were to occur, our financial results and the commercial prospects for our products would be harmed, our costs could increase, and our ability to generate revenues could be delayed.
Some specific factors that could negatively affect the price of our common stock and CDIs or result in fluctuations in their price and trading volume include: • actual or expected fluctuations in our operating results; • actual or expected changes in our growth rates or our competitors’ growth rates; • results of clinical trials of our product candidates; • results of clinical trials of our competitors’ products; • regulatory actions with respect to our products or our competitors’ products; • reports of one or more patient serious adverse events; • publication of research reports by securities analysts about us or our competitors in the industry; • our failure or the failure of our competitors to meet analysts’ projections or guidance that we or our competitors may give to the market; • fluctuations of exchange rates between the U.S. dollar and the Australian dollar; • issuances by us of debt or equity securities; • litigation involving our company, including stockholder litigation; • investigations or audits by regulators into the operations of our company; • proceedings initiated by our competitors or clients; • strategic decisions by us or our competitors, such as acquisitions, divestitures, spin-offs, joint ventures, strategic investments or changes in business strategy; • sales or perceived potential sales of the common stock or CDIs by us, our directors, executive management team or our stockholders in the future; • short selling or other market manipulation activities; • announcement or expectation of additional financing efforts; • terrorist acts, acts of war or periods of widespread civil unrest; 24 Table of Contents • natural disasters and other calamities; • changes in market conditions for biopharmaceutical stocks; • our inability to raise additional capital, limiting our ability to continue as a going concern; • changes in market prices for our product or for our raw materials; • changes in market valuations of similar companies; • changes in key personnel for us or our competitors; • speculation in the press or investment community; • changes or proposed changes in laws and regulations affecting our industry; and • conditions in the financial markets in general or changes in general economic conditions.
There can be no assurance that the market price of our common stock and CDIs will not fluctuate or significantly decline in the future. 23 Some specific factors that could negatively affect the price of our common stock and CDIs or result in fluctuations in their price and trading volume include: • actual or expected fluctuations in our operating results; • actual or expected changes in our growth rates or our competitors’ growth rates; • results of clinical trials of our product candidates; • results of clinical trials of our competitors’ products; • regulatory actions with respect to our products or our competitors’ products; • reports of one or more patients experiencing adverse events; • publication of research reports by analysts about us or our competitors in the industry; • our failure or the failure of our competitors to meet analysts’ projections or guidance that we or our competitors may give to the market; • fluctuations of exchange rates between the U.S. dollar and the Australian dollar; • issuance by us of debt or equity securities; • litigation involving our company, including stockholder litigation; • investigations or audits by regulators into the operations of our company; • proceedings initiated by our competitors or clients; • strategic decisions by us or our competitors, such as acquisitions, divestitures, spin-offs, joint ventures, strategic investments or changes in business strategy; • sales or perceived potential sales of the common stock or CDIs by us, our directors, executive management team or our stockholders in the future; • short selling or other market manipulation activities; • announcement or expectation of additional financing efforts; • terrorist acts, acts of war or periods of widespread civil unrest; • natural disasters and other calamities; • changes in market conditions for medical device stocks; • our inability to raise additional capital, limiting our ability to continue as a going concern; • changes in market prices for our product or for our raw materials; • changes in market valuations of similar companies; • changes in key personnel for us or our competitors; • speculation in the press or investment community; • changes or proposed changes in laws and regulations affecting our industry; and • conditions in the financial markets in general or changes in general economic conditions.
Though we carefully manage our relationships with our CROs, there can be no assurance that we will not encounter challenges or delays in the future or that these delays or challenges will not have a material adverse impact on our business, financial condition and prospects.
Though we carefully manage our relationships with our CROs, there can be no assurance that we will not encounter challenges or delays in the future or that these challenges or delays will not have a material adverse impact on our business, financial condition, or results of operations.
If these third parties do not successfully carry out their contractual duties or meet expected deadlines, we may not be able to obtain regulatory approval for or commercialize our drug product candidates and our business could be substantially harmed.
If these third parties do not successfully carry out their contractual duties or meet expected deadlines, we may not be able to obtain or maintain regulatory approval for or commercialize our products and our business could be substantially harmed.
Nevertheless, we will be responsible for ensuring that each of our clinical trials is conducted in accordance with the applicable protocol, legal, regulatory and scientific standards, and our reliance on the CROs does not relieve us of our regulatory responsibilities.
Nevertheless, we remain responsible for ensuring that each of our clinical trials is conducted in accordance with applicable protocol, legal, regulatory, and scientific standards, and our reliance on CROs does not relieve us of our such responsibilities.
If the FDA determines that our marketing activities constitute off-label promotion, the FDA could impose fines and penalties on the Company and our executives, withdraw or recall our approved product from the market, as well as limit our product from off-label usage.
If the FDA determines that our marketing activities constitute off-label promotion, the FDA could impose civil fines or even criminal penalties on the Company and our executives, withdraw or recall our approved product from the market, as well as limit our products from such off-label usage.
Our success will be heavily dependent on our ability to obtain and maintain meaningful patent protection for our technologies and products throughout the world. Patent law relating to the technology fields in which we will operate is still evolving. The amount of ongoing protection for our proprietary rights therefore is uncertain.
Our success will be heavily dependent on our ability to obtain and maintain meaningful patent protection for our technologies and products throughout the world. Patent law relating to the technology fields in which we operate continues to evolve. The amount of protection to maintain over our proprietary rights, therefore, is uncertain.
Defending against any such actions can be costly, time-consuming and may require significant financial and personnel resources. Therefore, even if we are successful in defending against any such actions that may be brought against us, our business may be impaired.
Defending against any such actions can be costly, time-consuming and may require significant financial and personnel resources. Therefore, even if we are successful in defending against any such actions that may be brought against us, our financial condition and operations, as well as business prospects, may be impaired.
Our future financial performance and ability to successfully commercialize our products, which is not guaranteed, and to compete in the market will depend, in part, on our ability to manage any future growth effectively.
Our future financial performance and ability to successfully commercialize our products and to compete in the market will depend, in part, on our ability to manage any future growth effectively.
If we are slow or unable to adapt to new or changed requirements, or if we are not able to maintain regulatory compliance, we may lose any marketing approval that we may have obtained, and we may not achieve or sustain profitability.
If we are slow or unable to adapt to new or changed requirements, or if we are not able to maintain regulatory compliance, we may lose any marketing approval that we may have obtained, which may impact our ability to achieve or sustain profitability.
Additionally, the costs incurred to remediate any security incident could be substantial. We cannot assure you that any of our third-party service providers with access to our, or our customers and/or employees’ personally identifiable and other sensitive or confidential information will not experience security breaches or attempts thereof, which could have a corresponding effect on our business.
The costs incurred to remediate any security incident could be substantial. In addition, we cannot assure you that any of our third-party service providers with access to our sensitive or confidential information, or to that of our customers and/or employees, will not experience security breaches or attempts thereof, which could have a corresponding effect on our business.
However, we will require additional clinical data or approvals from regulatory authorities within these countries to market the product for the treatment of other indications, and from any other jurisdictions in which we seek to market the product. This process can be time-consuming and complicated and may be unsuccessful or otherwise result in unanticipated delays or fail altogether.
However, we will require additional clinical data or approvals from regulatory authorities within these jurisdictions to market improved versions of RECELL for the same or additional indications, and from any other jurisdictions in which we seek to market the product. This process can be time-consuming and complicated, and may result in unanticipated delays or fail altogether.
We are also subject to other risks relating to our manufacturing capabilities, including: • quality and reliability of components, sub-assemblies and materials that we source from third-party suppliers, who are required to meet our quality specifications, some of whom are our single-source suppliers for the products they supply; • failure to secure raw materials, components and materials in a timely manner, in sufficient quantities or on commercially reasonable terms; • inability to secure raw materials, components and materials of sufficient quality to meet the exacting needs of medical device manufacturing; • inability to increase production capacity or volumes to meet demand; and As demand for our products increases, we will have to invest additional resources to purchase raw materials and components, sub-assemblies and materials, hire and train employees and enhance our manufacturing processes.
We are also subject to other risks relating to our manufacturing capabilities, including: • quality levels and reliability of components, sub-assemblies, and materials that we source from third-party suppliers, who are required to meet our quality specifications, some of whom are our single-source suppliers for the products they supply; • failure to secure raw materials, components, and materials in a timely manner, in sufficient quantities or on commercially reasonable terms; • inability to secure raw materials, components, and materials of sufficient quality to meet the exacting needs of medical device manufacturing; • inability to increase production capacity or volumes to meet demand.
Sarbanes-Oxley Act of 2002 (the “Sarbanes-Oxley Act”), the Dodd-Frank Act and the listing standards and the rules and regulations of Nasdaq. We are also subject to the reporting requirements under the ASX Listing Rules due to the listing of our CDIs on ASX.
As a public company, we are subject to the reporting requirements of the Exchange Act, the U.S. Sarbanes-Oxley Act of 2002 (the “Sarbanes-Oxley Act”), the Dodd-Frank Act, and the listing standards and the rules and regulations of Nasdaq. We are also subject to the reporting requirements under the ASX Listing Rules due to the listing of our CDIs on ASX.
The markets for our products are highly competitive and our competitors may develop products that may more effectively compete with our products, thus negatively impacting our sales, financial conditions and business prospects. Our competitors may have significantly more financial and other resources to invest in product development.
The markets for our products are highly competitive and our competitors may develop products that may more effectively compete with our products. Our competitors may have significantly more financial and other resources to invest in product development.
For as long as we continue to be an emerging growth company, we may take advantage of certain exemptions and relief from various U.S. reporting requirements that are applicable to other public companies that are not emerging growth companies, including (i) not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, (ii) having the option of delaying the adoption of certain new or revised financial accounting standards, (iii) reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements and (iv) exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved.
We are an emerging growth company, and the reduced disclosure requirements applicable to emerging growth companies may make our common stock less attractive to investors. • We are an “emerging growth company,” as defined in the Jumpstart Our Business Startups Act of 2012, and as such, have taken advantage of certain exemptions and relief from various U.S. reporting requirements that are applicable to other public companies that are not emerging growth companies, including (i) not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, (ii) having the option of delaying the adoption of certain new or revised financial accounting standards, (iii) reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, and (iv) exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved.
For example, we presently benefit from various reimbursement codes, including the following: • for hospitals in inpatient services using Medicare Severity Diagnosis-Related Groups (“MS-DRGs”). • Specific International Classification of Disease, 10th revision, Procedure Classification System (“ICD-10-PCS”) code series describing our “cell suspension technique” for the use of the RECELL System. • CPT codes to support physician reimbursement for professional healthcare services, ambulatory surgical center (“ASCs”) reimbursement for facility services and hospital reimbursement for outpatient department services.
For example, we presently benefit from various reimbursement codes, including the following: • Medicare Severity Diagnosis-Related Groups (“MS-DRGs”), for hospitals with inpatient services. • Specific International Classification of Disease, 10th revision, Procedure Classification System (“ICD-10-PCS”) code series describing our “cell suspension technique” for the use of the RECELL System. • CPT codes that describe “skin cell suspension autograft to support physician reimbursement by professional healthcare services and for facility services at ambulatory surgical centers (“ASCs”), and Ambulatory Payment Classifications (“APCs”) for hospital reimbursement for outpatient department services.
We will rely on patents to protect a significant part of our intellectual property and to enhance our competitive position. However, our presently pending or future patent applications may be denied, and any patent previously issued to us or our subsidiaries may be challenged, invalidated, held unenforceable or circumvented.
Further, the validity and enforceability of our patent portfolio cannot be predicated with certainty. We will rely on patents to protect a significant part of our intellectual property and to enhance our competitive position. However, our presently pending or future patent applications may be denied, and any patent previously issued to us may be challenged, invalidated, held unenforceable or circumvented.
Our business operations and current and future relationships with investigators, healthcare professionals, consultants, third-party payors and customers may expose us to broadly applicable fraud and abuse and other healthcare laws and regulations.
Our business operations, as well as our current and future relationships with regulators, healthcare professionals, third-party payors, customers, and consultants may expose us to healthcare laws and regulations, as well as to other laws and regulations addressing fraud and abuse.
We may not be able to engage in any of these activities or engage in these activities on desirable terms, which could result in a default on our debt obligations.
We may not be able to engage in any of these activities, or such activities may only be available to the Company on undesirable terms, which could result in a default on our debt obligations.
Approval procedures vary among jurisdictions and can involve requirements and administrative review periods different from, and greater than, those in the United States, including additional preclinical studies or clinical trials as clinical trials conducted in one jurisdiction may not be accepted by regulatory authorities in other jurisdictions.
Approval procedures vary among jurisdictions and can involve requirements and administrative review periods different from, and greater than, those in the United States, including the requirement in such jurisdictions of additional clinical studies due to clinical trials conducted in one jurisdiction not being accepted by regulatory authorities in other jurisdictions.
In addition, there is a risk that a court will decide that these patents are invalid or unenforceable and that we do not have the right to stop the other party from using the inventions or, even if the validity or enforceability of these patents is upheld, the court may refuse to stop the other party because the competitors’ activities do not infringe our rights.
In addition, there is a risk that a court will decide that our patents are invalid or unenforceable and that we do not have the right to stop the other party from using the inventions or, even if the validity or enforceability of these patents is upheld, the court may refuse to stop the other party because the competitors’ activities do not infringe our rights. 20 We could be subject to product liability lawsuits, which could result in costly and time-consuming litigation and significant liabilities.
A material cyberattack or security incident could cause interruptions in our operations and could result in a material disruption of our business operations, damage to our reputation, financial condition, results of operations, cash flows and prospects. 18 Table of Contents We receive, collect, process, use and store a large amount of information from our customers and our own employees, including personal information, protected health and other sensitive and confidential information.
A material cyberattack or security incident could cause interruptions in our operations and could also damage our reputation, financial condition, and results of operations. We receive, collect, process, use, and store a large amount of information from our customers and our own employees, including personal information and other sensitive and confidential information.
Risks Relating to Our Common Stock and CDIs We have never paid a dividend on our common stock and CDIs and do not intend to do so in the foreseeable future, and consequently, investors’ only opportunity to realize a return on their investment in the Company is through the appreciation in the price of our common stock and CDIs.
Poor economic conditions could harm our business, financial condition, operating results, and cash flows. 22 Risks Relating to Our Common Stock and CDIs We have never paid a dividend on our common stock and CDIs and do not intend to do so in the foreseeable future, and consequently, investors’ only opportunity to realize a return on their investment in the Company is through the appreciation in the price of our common stock and CDIs.
In addition, if the Company’s net revenue does not equal or exceed a certain amount for upcoming fiscal periods as set forth in the Credit Agreement, then the Company will be required to repay five percent of the outstanding principal amount of its indebtedness in equal quarterly installments, in addition to a repayment fee and a prepayment fee.
In addition, if the Company’s net revenue does not equal or exceed a certain amount for upcoming fiscal periods as set forth in the Credit Agreement, then the Company will be required to repay 5% of the outstanding principal amount of its indebtedness (along with interest accrued on that principal amount if not already paid) in equal quarterly installments, in addition to paying both a repayment fee and a prepayment fee with each quarterly installment.
The rules and regulations that govern pricing and reimbursement for medical products vary widely from country to country or from indication to indication, and within the United States, can also vary widely from one health system or hospital to the next. In some foreign jurisdictions, including the EU, the government largely controls pricing of medical products.
The rules and regulations that govern pricing and reimbursement for medical products vary widely from country to country or from indication to indication, and within the United States, can also vary widely from one health system or hospital to the next.
We may require additional financing in the future to continue the development and commercialization of our RECELL System or any future products, which may cause dilution to our existing stockholders. If additional financing is not available, we may have to postpone, reduce or cease operations.
We may require additional financing in the future to continue the development and commercialization of our RECELL System or any future products, which may cause dilution to our existing stockholders.
We regularly maintain domestic cash deposits in Federal Deposit Insurance Corporation ( “FDIC” ) insured banks, which exceed the FDIC insurance limits. We also maintain cash deposits in foreign banks where we operate, some of which are not insured or are only partially insured by the FDIC or other similar agencies.
We also maintain cash deposits in foreign banks where we operate, some of which are not insured or are only partially insured by the FDIC or other similar agencies.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeFinally, cybersecurity is integrated into the Company’s training as all employees are required to take security awareness training. Disclosure of the Board’s Responsibility While management is primarily responsible for assessing and managing cybersecurity risks on a day-to-day basis, the Company’s Board of Directors oversees management’s efforts to assess and manage risk.
Biggest changeDisclosure of the Board’s Responsibility While management is primarily responsible for assessing and managing cybersecurity risks on a day-to-day basis, the Company’s Board of Directors oversees management’s efforts to assess and manage risk. The Board of Directors (through the Audit Committee) monitors the cybersecurity risk assessment and response process.
We also conduct internal phishing campaigns and perform an independent penetration test on an annual basis. In addition, we conduct regular security awareness training and testing of our employees. The Company has not had any material cybersecurity incidents. All related activities ISMC activities have been structured into a framework consisting of: 1.
We also conduct internal phishing campaigns and perform an independent penetration test on an annual basis. In addition, we conduct regular security awareness training and testing of our employees. The Company has not had any material cybersecurity incidents. 26 All related activities ISMC activities have been structured into a framework consisting of: 1.
Disclosure of Management’s Responsibility The Company’s Chief Financial Officer is primarily responsible for overseeing the Cybersecurity Risk Management Program and leading the Company’s efforts to mitigate technology risks in partnership with various business leaders in the organization. For qualifications of the CFO refer to Item 10 of the form 10-K.
Disclosure of Management’s Responsibility The Company’s Chief Financial Officer is responsible for overseeing the Cybersecurity Risk Management Program and leading the Company’s efforts to mitigate technology risks in partnership with various business leaders in the organization. For qualifications of the CFO refer to Item 10 of the Form 10-K.
Risk Communications- Results of the risk assessment are communicated to appropriate level of management. Report includes the identified risk and vulnerability summaries. Updates will include treatment plans and status updates. 6. Risk Monitoring and Review -Continuously performed to evaluate any changes or the need for changes.
Risk Communications- Results of the risk assessment are communicated to appropriate levels of management. Report includes the identified risk and vulnerability summaries. Updates will include treatment plans and status updates. 6. Risk Monitoring and Review - Continuously performed to evaluate any changes or the need for changes.
Once a risk, threat or vulnerability is identified, the Company establishes a risk treatment plan to take corrective action to prevent risks that can be avoided and minimize the ones that cannot. We engage an independent third-party cybersecurity services and consulting firm to continuously review our information security.
Once a risk, threat or vulnerability is identified, the Company establishes a risk treatment plan to take corrective action to prevent risks that can be avoided and minimize the ones that cannot. We engage an independent third-party cybersecurity services and consulting firm to continuously review our information security and provide technical oversight.
The briefing may include discussions on topics such as: information security and technology risks, cybersecurity risk assessment process and updates, information risk management strategies, and progress on cybersecurity and data protection training initiatives for employees, among others.
The Audit Committee is briefed by our Chief Financial Officer on our cybersecurity ISMS program and the overall cybersecurity risk environment. The briefing may include discussions on topics such as: information security and technology risks, cybersecurity risk assessment process and updates, information risk management strategies, and progress on cybersecurity and data protection training initiatives for employees, among others.
Additionally, we have a cybersecurity incident response plan in place that provides a documented framework for handling high and low severity security incidents and facilitates coordination across 27 Table of Contents multiple parts of the business. We have engaged an external consultant to provide oversight and technical expertise to our ISMS process.
Additionally, we have a cybersecurity incident response plan in place that provides a documented framework for handling high and low severity security incidents and facilitates coordination across multiple parts of the business. Finally, cybersecurity is integrated into the Company’s training as all employees are required to take security awareness training.
Removed
The Board (in conjunction particularly with the Audit Committee) monitors the cybersecurity risk assessment and response process. The Audit Committee is briefed by our Chief Financial Officer on our cybersecurity ISMS program and the overall cybersecurity risk environment.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeThe Company also has an administrative office lease in Irvine, California of approximately 10,700 square feet that is currently leased through the end of July 2028. We do not own any real property. We believe that leased facilities are adequate to meet current needs and that additional facilities will, if required, be available for lease to meet future needs.
Biggest changeWe extended the lease through December 31, 2025 and have an option to extend the lease for an additional year through December 31, 2026. We do not own any real property. We believe that leased facilities are adequate to meet current needs and that additional facilities will, if required, be available for lease to meet future needs. 27
Our production plant in Ventura, California is a 27,480 square foot facility that we lease through September 30, 2027 with the right to extend the lease, at our sole option, as a result of two, three-year options that allow us to extend the lease up to an additional six years in total.
Our production plant in Ventura, California is a 27,480 square foot facility that we lease through September 30, 2027 with the right to extend the lease, at our sole option, up to an additional three years.
Added
The Company also has an administrative office lease in Irvine, California of approximately 10,700 square feet that is currently leased through the end of July 2028. On January 1, 2024, we also began leasing a 3,400 square foot storage facility adjacent to our existing production plant in Ventura.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeFrom time to time, as an operating business, we are involved in routine disputes (both formal and informal) with customers, manufacturing partners and employees. Item 4. MINE SAF ETY DISCLOSURES Not applicable. 28 Table of Contents PART II
Biggest changeFrom time to time, as an operating business, we are involved in routine disputes (both formal and informal) with customers, manufacturing partners and employees. Item 4. MINE SAF ETY DISCLOSURES Not applicable. 28 PART II

Item 4. Mine Safety Disclosures

Mine Safety Disclosures — required of mining issuers

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Biggest changeItem 4. Mine Safety Disclosures 28 PART II 29 Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 29 Item 6. [Reserved] 29 Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations 30 Item 7A. Quantitative and Qualitative Disclosures About Market Risk 39 Item 8.
Biggest changeItem 4. Mine Safety Disclosures 28 PART II 29 Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 29 Item 6. [Reserved] 29 Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations 30 Item 7A. Quantitative and Qualitative Disclosures About Market Risk 41 Item 8.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeHolders As of January 31, 2024, the Company had approximately 4 unique stockholders of record of our common stock (which includes 20,497 holders of record of the Company’s CDIs, with each representing 1/5 of a share of common stock, and CHESS Depositary Nominees Pty Ltd, holds the legal title to all of the outstanding common stock underlying the CDIs of the Company).
Biggest changeHolders As of January 27, 2025, the Company had approximately 4 unique stockholders of record of our common stock (which includes 19,321 holders of record of the Company’s CDIs, with each representing 1/5 of a share of common stock, and CHESS Depositary Nominees Pty Ltd, holds the legal title to all of the outstanding common stock underlying the CDIs of the Company).

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeTo achieve this objective, we plan to: • Become the standard of care in the U.S. burns industry by increasing RECELL System penetration in burn centers • Continue to commercialize the RECELL System in the U.S. for treatment of full-thickness skin defects • Expand our global presence within the European Union and Australia through the exclusive use of third-party distributors. • Launch RECELL GO following FDA approval to increase market adoption, expand our customer base, and facilitate international commercialization • Establish commercial payor coverage for the RECELL System in the U.S. for the repigmentation of stable depigmented vitiligo lesions, which we expect will begin during the fourth quarter of 2025 • Further invest in our RECELL System platform to automate and improve workflow, speed, and ease of use as it relates to specific indications, as well as to build upon our intellectual property estate • Continue to build upon commercial activities in Japan through our partnership with COSMOTEC Company, Ltd with our current PMDA approval for RECELL with an indication in burns • Develop and pursue viable commercial activities outside of the U.S. and Japan following the FDA approvals of the RECELL System for full-thickness skin defects and repigmentation of stable depigmented vitiligo lesions • Pursue business development opportunities that are complementary to our core RECELL System indications and/or our targeted markets • Improve our margins and profitability by leveraging our current team and infrastructure across an expanding base of business in burns and in future indications • With the successful execution of the exclusive distribution agreement with Stedical Scientific, Inc., we will begin distribution of the PermeaDerm ® Biosynthetic Wound Matrix in the United States using our existing sales force.
Biggest changeTo achieve these objectives, we intend to: • Become the standard of care in the U.S. burn care market by increasing penetration and adoption in burn centers with our recently FDA-approved RECELL GO • Expand adoption of RECELL technology for the treatment of full-thickness skin defects in the U.S. with RECELL GO • Launch RECELL GO mini, which is designed to address smaller wounds, following FDA approval in December of 2024 • Launch Cohealyx ™ after FDA 510(k) clearance received in December of 2024 • Expand our global presence within Australia, the European Union, Japan, and the U.K.through the exclusive use of third-party distributors • Continue to grow commercial activities in Japan through our partnership with COSMOTEC Company, Ltd (“COSMOTEC”) by leveraging our current Pharmaceuticals and Medical Devices Act approval for RECELL with an indication in burns • Continue to pursue business development opportunities that are complementary to our core RECELL technology and/or our targeted markets, such as our exclusive distribution agreements with Stedical and Regenity • Expect post-market study, TONE, and the health care economics study, both related to our vitiligo initiative to be published in early 2025 30 Business Environment and Current Trends The macroeconomic environment may have unexpected adverse effects on businesses and healthcare institutions globally that may negatively impact our consolidated operating results.
Year-Ended Year-Ended $ % Statement of Operations Data: December 31, 2023 December 31, 2022 Change Change Revenues $ 50,143 $ 34,421 15,722 46 % Cost of sales (7,780 ) (6,041 ) (1,739 ) (29 )% Gross profit 42,363 28,380 13,983 49 % BARDA income 1,428 3,215 (1,787 ) (56 )% Operating expenses: Sales and marketing (37,291 ) (21,913 ) (15,378 ) (70 )% General and administrative (28,334 ) (23,330 ) (5,004 ) (21 )% Research and development (20,821 ) (13,857 ) (6,964 ) (50 )% Total operating expenses (86,446 ) (59,100 ) (27,346 ) (46 )% Operating loss (42,655 ) (27,505 ) (15,150 ) (55 )% Interest expense (1,143 ) (16 ) (1,127 ) *nm Other income, net 8,483 892 7,591 *nm Loss before income taxes (35,315 ) (26,629 ) (8,686 ) (33 )% Income tax expense (66 ) (36 ) (30 ) (83 )% Net loss $ (35,381 ) $ (26,665 ) (8,716 ) (33 )% *nm = not meaningful Total net revenues increased by 46%, or $15.7 million, to $50.1 million, compared to $34.4 million in the year-ended December 31, 2022.
Year-Ended Year-Ended $ % Statement of Operations Data: December 31, 2023 December 31, 2022 Change Change Revenues $ 50,143 $ 34,421 15,722 46 % Cost of sales (7,780 ) (6,041 ) (1,739 ) (29 )% Gross profit 42,363 28,380 13,983 49 % BARDA income 1,428 3,215 (1,787 ) (56 )% Operating expenses: Sales and marketing (37,291 ) (21,913 ) (15,378 ) (70 )% General and administrative (28,334 ) (23,330 ) (5,004 ) (21 )% Research and development (20,821 ) (13,857 ) (6,964 ) (50 )% Total operating expenses (86,446 ) (59,100 ) (27,346 ) (46 )% Operating loss (42,655 ) (27,505 ) (15,150 ) (55 )% Interest expense (1,143 ) (16 ) (1,127 ) *nm Other income, net 8,483 892 7,591 *nm Loss before income taxes (35,315 ) (26,629 ) (8,686 ) (33 )% Income tax expense (66 ) (36 ) (30 ) (83 )% Net loss $ (35,381 ) $ (26,665 ) (8,716 ) (33 )% *nm = not meaningful 33 Total net revenues increased by 46%, or $15.7 million, to $50.1 million, compared to $34.4 million in the year-ended December 31, 2022.
The simplified method was chosen because the we have limited historical option exercise experience due to its short operating history of awards granted, the first plan was established in 2016 and was primarily used for Executives awards.
The simplified method was chosen because we have limited historical option exercise experience due to its short operating history of awards granted, the first plan was established in 2016 and was primarily used for Executives awards.
Compensation expense for performance-based awards is measured based on the number of shares ultimately expected to vest, estimated at each reporting date based on management’s expectations regarding the relevant performance criteria. We estimate the fair value of stock options on the date of grant using the Black-Scholes option pricing model.
Compensation expense for performance-based awards is measured based on the number of shares ultimately expected to vest, estimated at each reporting date based on management’s expectations regarding the relevant performance criteria. We estimate the fair value of stock options on the 38 date of grant using the Black-Scholes option pricing model.
ASC 825-10, provides FVO election that allows companies an irrevocable election to use fair value at the date of issuance and subsequently remeasure every reporting period. The fair value of the debt is reported in the Consolidated Balance Sheets. Changes in fair value are reported in earnings in Other income in the Consolidated Statements of Operations.
ASC 825 provides FVO election that allows companies an irrevocable election to use fair value at the date of issuance and subsequently remeasure every reporting period. The fair value of the debt is reported in the Consolidated Balance Sheets. Changes in fair value are reported in earnings in Other income in the Consolidated Statements of Operations.
The increase in salaries and benefits and recruitment fees are due to the preparation of the commercial launch of full-thickness skin defects in June 2023. Higher commissions and travel costs were directly associated with the increase in revenues.
The increase in salaries and benefits and recruitment fees were due to the preparation of the commercial launch of full-thickness skin defects in June 2023. Higher commissions and travel costs were directly associated with the increase in revenues.
The following assumptions were used in the valuation of stock options. • Expected volatility – determined using the historical volatility using daily intervals over the expected term. • Expected dividends – None, based on the fact that we have never paid cash dividends and does not expect to pay any cash dividends in the foreseeable future. • Expected term – the expected term of our stock options for tenure only vesting has been determined utilizing the “simplified” method as described in the SEC’s Staff Accounting Bulletin No. 107 relating to stock-based compensation.
The following assumptions were used in the valuation of stock options: • Expected volatility – determined using the historical volatility using daily intervals over the expected term. • Expected dividends – None, based on the fact that we have never paid cash dividends and do not expect to pay any cash dividends in the foreseeable future. • Expected term – the expected term of our stock options for tenure-only vesting has been determined utilizing the “simplified” method as described in the SEC’s Staff Accounting Bulletin No. 107 relating to stock-based compensation.
The fair value of the warrant liability, which is reported within Warrant liability on the Consolidated Balance Sheets, is estimated by the Company based on the Black-Scholes option pricing model with the following inputs (Level 3): • Price of common stock • Estimated expected term • Estimated exercise price • Estimated expected volatility • Estimated risk free interest rate • Estimated expected dividend rate Long-term debt We elected the fair value option (“FVO”) of accounting under ASC 825-10 , Financial Instruments (“ASC 825”), to account for the debt.
The fair value of the warrant liability, which is reported within Warrant liability on the Consolidated Balance Sheets, is estimated by us based on the Black-Scholes option pricing model with the following inputs (Level 3): • Price of common stock • Estimated expected term • Estimated exercise price • Estimated expected volatility • Estimated risk free interest rate • Estimated expected dividend rate Long-term debt We elected the fair value option (“FVO”) of accounting under ASC 825-10 , Financial Instruments (“ASC 825”), to account for the debt.
We also recognized $1.7 million and $0.7 million of non-cash charges due to the change in fair value of the debt and the warrant liability, respectively.
We also recognized $1.6 million and $0.7 million of non-cash charges due to the change in fair value of the debt and the warrant liability, respectively.
The increase in gross profit margin is largely driven by higher production along with lower shipping costs. BARDA income consisted of funding from BARDA, under the Assistant Secretary for Preparedness and Response, within the U.S. Department of Health and Human Services, under ongoing USG Contract No. HHSO100201500028C.
The increase in gross profit margin was largely driven by higher production along with lower shipping costs. BARDA income consisted of funding from BARDA, under the Assistant Secretary for Preparedness and Response, within the U.S. Department of Health and Human Services, under ongoing USG Contract No. HHSO100201500028C.
Changes in fair value related to instrument specific credit risk for the debt are included in Other comprehensive income in the Consolidated Balance Sheet. Net loss increased by $8.8 million, to $35.4 million, over the $26.7 million recognized in the year ended December 31, 2022.
Changes in fair value related to instrument specific credit risk for the debt are included in Other comprehensive income in the Consolidated Balance Sheets. Net loss increased by $8.8 million, to $35.4 million, over the $26.7 million recognized in the year ended December 31, 2022.
The increase in deferred compensation expense is driven by our deferred compensation liability which generally tracks the movements in the stock market. Severance costs in the current year were due to the termination of three former executive officers, partially offset by the termination of a former executive officer in the prior year.
The increase in deferred compensation expense was driven by our deferred compensation liability which generally tracks the movements in the stock market. Severance costs in the current year were due to the termination of three former executive officers, partially offset by the termination of a former executive officer in the prior year.
We regularly review our capital structure and seek to take advantage of available opportunities to improve outcomes for us and our stockholders. For the year-ended December 31, 2023, there were no dividends paid and we have no plans to commence the payment of dividends.
We regularly review our capital structure and seek to take advantage of available opportunities to improve outcomes for us and our stockholders. For the year-ended December 31, 2024, there were no dividends paid and we have no plans to commence the payment of dividends.
Further, we do not have sufficient history of exercises in the U.S. market given our redomiciliation from Australia to the United States in 2020. • Risk-free interest rate – the risk-free interest rate is based on the U.S. Treasury yield in effect at the time of grant for a period approximately equal to the expected term of the award.
Further, we do not have sufficient history of exercises in the U.S. market given our re-domiciliation from Australia to the United States in 2020. • Risk-free interest rate – the risk-free interest rate is based on the U.S. Treasury yield in effect at the time of grant for a period approximately equal to the expected term of the award.
The increase was primarily due to higher clinical trial costs associated with the TONE study as well as other research and development costs associated with furthering our pipeline, and the development of the next generation 31 Table of Contents RECELL GO for preparation of Spray-On Skin Cells, which resulted in a PMA submission in June 2023.
The increase was primarily due to higher clinical trial costs associated with the TONE study as well as other research and development costs associated with furthering our pipeline, and the development of the next generation RECELL GO for preparation of Spray-On Skin Cells, which resulted in a PMA submission in June 2023.
The fair value of RSUs is based on the closing stock price as determined per Nasdaq at the date of grant. 36 Table of Contents Determining the estimated fair value at the grant date requires judgment in determining the appropriate valuation model and assumptions, including, risk-free rate, volatility rate, annual dividend yield and the expected term.
The fair value of RSUs is based on the closing stock price as determined per Nasdaq at the date of grant. Determining the estimated fair value at the grant date requires judgment in determining the appropriate valuation model and assumptions, including, risk-free rate, volatility rate, annual dividend yield and the expected term.
See Note 15 to our Consolidated Financial Statements included in this Annual Report for additional detail on share-based compensation.
See Note 14 to our Consolidated Financial Statements included in this Annual Report for additional detail on share-based compensation.
Warrants Warrants are accounted for in accordance with applicable accounting guidance provided in ASC Topic 815 , Derivatives and Hedging – Contracts in Entity’s Own Equity (“ ASC 815 ”) , as a liability based on the specific terms of the warrant agreement and recorded at fair value.
Warrants Warrants are accounted for in accordance with applicable accounting guidance provided in ASC 815 , Derivatives and Hedging – Contracts in Entity’s Own Equity (“ASC 815”), as a liability based on the specific terms of the warrant agreement and recorded at fair value.
The increase in net loss was driven by higher operating expenses as described above, partially offset by higher revenue. Liquidity and Capital Resources Overview We expect to utilize cash reserves until U.S. sales of our products reach a level sufficient to fund ongoing operations.
The increase in net loss was driven by the higher operating expenses, partially offset by higher revenues and the non-cash charges as described above. 34 Liquidity and Capital Resources Overview We expect to utilize cash reserves until U.S. sales of our products reach a level sufficient to fund ongoing operations.
In addition, we have no off-balance sheet arrangements (as defined in the rules and regulations of the SEC) that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to investors.
In addition, we have no material off-balance sheet arrangements (as defined in the applicable rules and regulations established by the SEC) that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources.
The preparation of consolidated financial statements in conformity with U.S. Generally Accepted Accounting Practices, or U.S. GAAP, requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.
Generally Accepted Accounting Practices, or U.S. GAAP, requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.
The below assumptions were used in the Monte Carlo simulation (Level 3): • Estimated risk free interest rate • Estimated revenue volatility • Estimated revenue discount rate • Estimated future revenue projection 37 Table of Contents • Estimated expected dividend rate Income Taxes Income taxes are accounted for using the liability method.
The below assumptions were used in the Monte Carlo simulation (Level 3): • Estimated risk free interest rate • Estimated revenue volatility • Estimated revenue discount rate • Estimated future revenue projection • Estimated expected dividend rate 39 Income Taxes Income taxes are accounted for using the liability method.
See Note 16 to our Consolidated Financial Statements included in this Annual Report for additional detail on income taxes. Recent accounting pronouncements See discussion of recent accounting pronouncements in Note 2 of the Consolidated Financial Statements located in Item 8 in this Annual Report. 38 Table of Contents
See Note 15 to our Consolidated Financial Statements included in this Annual Report for additional detail on income taxes. Recent accounting pronouncements See discussion of recent accounting pronouncements in Note 2 of the Consolidated Financial Statements located in Item 8 in this Annual Report. 40
At the forefront of our portfolio is our patented and proprietary RECELL® System, approved by the United States Food & Drug Administration (“FDA”) for the treatment of thermal burn wounds and full-thickness skin defects, and for repigmentation of stable depigmented vitiligo lesions.
At the forefront of our portfolio is our patented and proprietary RECELL ® System (“RECELL System” or “RECELL”), approved by the U.S. Food & Drug Administration (the “FDA”) for the treatment of thermal burn wounds and full-thickness skin defects, and for repigmentation of stable depigmented vitiligo lesions.
The indebtedness under the Credit Agreement will be secured by substantially all of our assets and will accrue interest at a rate equal to the greater of (a) forward-looking one-month term SOFR rate and (b) four percent (4%) per annum, plus eight percent (8%).
All revenue covenants for subsequent quarters remain in effect. The indebtedness under the Credit Agreement is secured by substantially all of our assets and will accrue interest at a rate equal to the greater of (a) forward-looking one-month term SOFR rate and (b) four percent (4%) per annum, plus eight percent (8%).
The following table summarizes our cash flows for the periods presented: Year-Ended (In thousands) December 31, 2023 December 31, 2022 Net cash used in operations $ (38,011 ) $ (19,090 ) Net cash provided by/(used in) investing activities 1,607 (19,332 ) Net cash provided by financing activities 40,374 900 Effect of foreign exchange rate on cash and cash equivalents (16 ) (26 ) Net increase/(decrease) in cash and cash equivalents 3,954 (37,548 ) Cash and cash equivalents at beginning of the period 18,164 55,712 Cash and cash equivalents at end of the period 22,118 18,164 Net cash used in operating activities was $38.0 million during the year-ended December 31, 2023, and $19.1 million during the year-ended December 31, 2022.
The following table summarizes our cash flows for the periods presented: Year Ended (in thousands) December 31, 2024 December 31, 2023 Net cash used in operations $ (48,939 ) $ (38,011 ) Net cash provided by investing activities 37,363 1,607 Net cash provided by financing activities 3,508 40,374 Effect of foreign exchange rate on cash and cash equivalents - (16 ) Net increase/(decrease) in cash and cash equivalents (8,068 ) 3,954 Cash and cash equivalents at beginning of the period 22,118 18,164 Cash and cash equivalents at end of the period 14,050 22,118 Net cash used in operating activities was $48.9 million and $38.0 million during the years-ended December 31, 2024 and 2023, respectively.
AVITA Medical has funded its research and development activities, and more recently its substantial investment in sales and marketing activities, through raising capital by issuing securities and the issuance of debt. As of December 31, 2023, the Company had approximately $22.1 million in cash and cash equivalents and $66.9 million in marketable securities.
AVITA Medical has funded its research and development activities, and more recently its substantial investment in sales and marketing activities, through the issuance of debt. As of December 31, 2024, the Company had approximately $14.1 million in cash and cash equivalents and $21.8 million in marketable securities.
In the event that the Company does not meet certain twelve-month trailing revenue targets at the end of certain fiscal quarters, the outstanding balance of the loan must be repaid in equal quarterly installments of 5% of the funded amount through the maturity date. The Credit Agreement contains representations, warranties and covenants that are customary for this type of agreement.
In the event that the Company does not meet certain twelve-month trailing revenue targets at the end of future fiscal quarters, the outstanding balance of the loan must be repaid in equal quarterly installments of 5% of the funded amount through the maturity date.
The Credit Agreement provides for a five-year senior secured credit facility in an aggregate principal amount of up to $90.0 million (the “Loan Facility”), of which $40.0 million was borrowed on the Closing Date (the “Initial Commitment Amount”).
The Credit Agreement provides for a five-year senior secured credit facility in an aggregate principal amount of up to $90.0 million (the “Loan Facility”), of which $40.0 million was borrowed on the Closing Date, less certain fees and expenses payable to or on behalf of the Lender.
Revenue Recognition We recognize revenue when its customers obtain control of promised goods or services, in an amount that reflects the consideration which we expect to be entitled in exchange for those goods or services.
As such, we recognize revenue when our customers obtain control of promised goods or services, in an amount that reflects the consideration which we expect to be entitled in exchange for those goods or services. Revenue is recognized net of volume discounts (variable consideration).
Healthcare institutions may take actions to mitigate any persistent pressures on their budgets and such actions could impact the future demand for our products. Geopolitical conditions may also impact our operations.
Changes in reimbursement rates by third party payors may place additional financial pressure on hospitals and the broader healthcare system. Healthcare institutions may take actions to mitigate any persistent pressures on their budgets and such actions could impact the future demand for our products. Geopolitical conditions may also impact our operations.
On October 18, 2023, as discussed above, we issued to an affiliate of the Lender a warrant to purchase up to 409,661 shares of our common stock, at an exercise price of $10.9847 per share, with a term of 10 years from the issuance date.
As a condition to the execution of the Fourth Amendment, we issued to the Lender a warrant to purchase up to 145,180 shares of our common stock, at an exercise price of $0.01 per share, with a term of 10 years from the issuance date.
The following discussion and analysis of our financial condition and results of operations for the years-ended December 31, 2023 and 2022, should be read in conjunction with our consolidated financial statements and related notes included in this Annual Report.
The following discussion and analysis of our financial condition and results of operations for the years-ended December 31, 2024 and 2023, should be read in conjunction with our consolidated financial statements and related notes included in this Annual Report. Overview AVITA Medical, Inc. (“we”, “our”, “us”) is a leading therapeutic acute wound care company delivering transformative solutions.
We have no committed plans to issue further shares on the market but will continue to assess market conditions. 34 Table of Contents Critical Accounting Policies and Estimates The SEC defines “critical accounting policies” as those that require the application of management’s most difficult, subjective, or complex judgments, often as a result of the need to make estimates about the effect of matters that are inherently uncertain and may change in subsequent periods.
Critical Accounting Policies and Estimates The SEC defines “critical accounting policies” as those that require the application of management’s most difficult, subjective, or complex judgments, often as a result of the need to make estimates about the effect of matters that are inherently uncertain and may change in subsequent periods. The preparation of consolidated financial statements in conformity with U.S.
The increase primarily resulted from higher operating costs, partially offset by increased revenues. Net cash provided in investing activities was $1.6 million during the year-ended December 31, 2023 and cash used in investing activities was $19.3 million during the during the year-ended December 31, 2022. Cash flows provided by investing activities were primarily attributable to maturities of marketable securities.
The increase primarily resulted from higher operating costs, partially offset by increased revenues. Net cash provided by investing activities was $37.4 million and $1.6 million during the years-ended December 31, 2024 and 2023, respectively.
We have no purchase commitments or long-term contractual obligations, except for lease obligations as of December 31, 2023. Refer to Note 7 of our Consolidated Financial Statements for further details on our lease obligations.
With the exception of the milestone payments related to our exclusive development and distribution agreement with Regenity, we do not have any other purchase commitments or long-term contractual obligations, except for lease obligations as of December 31, 2024. Refer to Note 7 of our Consolidated Financial Statements for further details on our lease obligations.
Although we do not have operations in Russia, Ukraine or in the Middle East, the continuation of the Russia-Ukraine military conflict and the conflict in the Middle East, and potential escalation of the conflicts beyond their current scope may further weaken the global economy and could result in additional inflationary pressures and supply chain constraints. 30 Table of Contents Results of Operations Year-Ended December 31, 2023, compared to the Year-Ended December 31, 2022 The table below summarizes the results of our operations for each of the periods presented (in thousands).
Although we do not have operations in Russia, Ukraine or in the Middle East, the continuation of the military conflicts in these regions and/or an escalation of the conflicts beyond their current scope may further weaken the global economy that could result in additional inflationary pressures or supply chain constraints.
The Warrant contains customary share adjustment provisions, as well as weighted average price protection in certain circumstances. 33 Table of Contents As of the date these financial statements were issued, we believe we have sufficient cash reserves to fund operations for the next 12 months.
As of the date these financial statements were issued, we believe we have sufficient cash reserves to fund operations for the next 12 months.
Gross profit margin was 82% and relatively flat compared to the year-ended December 31, 2021. BARDA income consisted of funding from BARDA, under the Assistant Secretary for Preparedness and Response, within the U.S. Department of Health and Human Services, under ongoing USG Contract No. HHSO100201500028C.
BARDA income in the prior year consisted of funding received from the Biomedical Advanced Research and Development Authority, under the Assistant Secretary for Preparedness and Response, within the U.S. Department of Health and Human Services, under ongoing USG Contract No. HHSO100201500028C.
Research and development expenses decreased by 12%, or $1.8 million, to $13.9 million, compared to $15.7 million recognized in the year-ended December 31, 2021.
Research and development expenses decreased by 2%, or $0.5 million, to $20.3 million, compared to $20.8 million in the year-ended December 31, 2023.
We have further applied the practical expedient to exclude sales tax in the transaction price and expense contract acquisition costs such as commissions and shipping and handling expenses as incurred. For revenues related to the BARDA contract within the scope of ASC 606, we identified two performance obligations (i) the procurement of 5,614 RECELL units, (ii) emergency preparedness services.
We have further applied the practical expedient to exclude sales tax in the transaction price and expense contract acquisition costs such as commissions and shipping and handling expenses as incurred.
The increase in net loss was driven by the higher operating expenses, partially offset by higher revenues and the non-cash charges as described above. Year-Ended December 31, 2022, compared to the Year-Ended December 31, 2021 The table below summarizes the results of our operations for each of the periods presented (in thousands).
Year-Ended December 31, 2023, compared to the Year-Ended December 31, 2022 The table below summarizes the results of our operations for each of the periods presented (in thousands).
Total operating expenses increased by 10% or $5.5 million to $59.1 million, compared to $53.6 million in the year-ended December 31, 2021. Sales and marketing expenses increased by 35%, or $5.6 million, to $21.9 million, compared to $16.3 million recognized in the year-ended December 31, 2021.
Total operating expenses increased by 29% or $25.3 million to $111.8 million, compared with $86.4 million in the year-ended December 31, 2023. Sales and marketing expenses increased by 56%, or $20.9 million, to $58.2 million, compared to $37.3 million in the year-ended December 31, 2023.
Cash flows used in investing activities for the year-ended December 31, 2022 is primarily attributable to purchase of marketable securities. Net cash provided by financing activities was $40.4 million and $0.9 million for the years-ended December 31, 2023 and 2022, respectively. The increase in cash provided by financing activities was due to the issuance debt.
The increase in capital expenditures in the current year is primarily related to the leasehold improvement in the Ventura production facility to enhance manufacturing output and materials related to our RECELL GO RPDs. Net cash provided by financing activities was $3.5 million and $40.4 million for the years-ended December 31, 2024 and 2023, respectively.
As such, revenue is recognized only to the extent a significant reversal of revenues is not expected to occur in subsequent periods. For our contracts that have an original duration of one year or less, we used the practical expedient applicable to such contracts and does not consider the time value of money.
For our contracts that have an original duration of one year or less, since contract inception and customer payment occur within the same period we do not consider the time value of money.
Total commercial revenue, which excludes BARDA revenue, increased by 36% or $9.0 million to $34.0 million in the year-ended December 31, 2022, compared to $25.1 million in the year-ended December 31, 2021. The growth in commercial revenues was largely driven by deeper penetration within individual customer accounts along with the commencement of commercial sales with our partner COSMOTEC in Japan.
Our commercial revenue was $64.0 million for the year-ended December 31, 2024, an increase of $14.2 million, or 29%, compared to $49.8 million in the year-ended December 31, 2023. The growth in commercial revenues was largely driven by deeper penetration within customer accounts and new accounts for full-thickness skin defects.
Once the contract is determined to be within the scope of ASC 606, we assess the goods or services promised with each contract, determines whether those are performance obligations and the related transaction price. We then recognize the sale of goods based on the transaction price that is allocated to the respective performance obligation when the performance obligation is satisfied.
We then allocate the transaction price to each performance obligation based on the relative SSP and recognize as revenue the amount of the transaction price that is allocated to the respective performance obligation when (or as) control is transferred to the customer and the performance obligation is satisfied. Most of our contracts have a single performance obligation.
Year-Ended Year-Ended $ % Statement of Operations Data: December 31, 2022 December 31, 2021 Change Change Revenues $ 34,421 $ 33,025 1,396 4 % Cost of sales (6,041 ) (6,104 ) 63 1 % Gross profit 28,380 26,921 1,459 5 % BARDA income 3,215 1,590 1,625 102 % Operating expenses: Sales and marketing (21,913 ) (16,267 ) (5,646 ) (35 )% General and administrative (23,330 ) (21,693 ) (1,637 ) (8 )% Research and development (13,857 ) (15,669 ) 1,812 12 % Total operating expenses (59,100 ) (53,629 ) (5,471 ) (10 )% Operating loss (27,505 ) (25,118 ) (2,387 ) (10 )% Interest expense (16 ) (29 ) 13 45 % Other income, net 892 47 845 *nm Loss before income taxes (26,629 ) (25,100 ) (1,529 ) (6 )% Income tax expense (36 ) (42 ) 6 14 % Net loss $ (26,665 ) $ (25,142 ) (1,523 ) (6 )% *nm = not meaningful Total net revenue increased by 4% or $1.4 million to $34.4 million, compared to $33.0 million in the year-ended December 31, 2021, which included $7.9 million from our delivery of units to managed inventory for BARDA (of the Office for the Assistant Secretary for Preparedness and Response) for emergency response preparedness.
Year Ended Statement of Operations Data: December 31, 2024 December 31, 2023 $ Change % Change Sales revenue $ 63,893 $ 50,143 13,750 27.4 % Lease revenue 358 - 358 100.0 % Total revenues 64,251 50,143 14,108 28.1 % Cost of sales (9,094 ) (7,780 ) (1,314 ) (16.9 )% Gross profit 55,157 42,363 12,794 30.2 % BARDA income - 1,428 (1,428 ) (100.0 )% Operating expenses: Sales and marketing (58,195 ) (37,291 ) (20,904 ) (56.1 )% General and administrative (33,195 ) (28,334 ) (4,861 ) (17.2 )% Research and development (20,360 ) (20,821 ) 461 2.2 % Total operating expenses (111,750 ) (86,446 ) (25,304 ) (29.3 )% Operating loss (56,593 ) (42,655 ) (13,938 ) (32.7 )% Interest expense (5,361 ) (1,143 ) (4,218 ) *nm Other income, net 163 8,483 (8,320 ) (98.1 )% Loss before income taxes (61,791 ) (35,315 ) (26,476 ) (75.0 )% Income tax expense (54 ) (66 ) 12 (18.2 )% Net loss $ (61,845 ) $ (35,381 ) (26,464 ) (74.8 )% *nm = not meaningful Total revenues increased by 28%, or $14.1 million, to $64.3 million, compared to $50.1 million in the year-ended December 31, 2023.
Contract costs to fulfil the performance obligation are incremental and expected to be recovered are capitalized and amortized on a straight-line basis over the term of the contract. Contract costs are included in other long-term assets. See Note 5 to our Consolidated Financial Statements included in this Annual Report for additional detail on revenue recognition.
The RPD depreciation has a direct relationship to the number of RPK units sold. Based on customer usage, each purchase of an RPK unit results in a 1/200 depreciation to the RPD. See Note 5 to our Consolidated Financial Statements included in this Annual Report for additional detail on revenue recognition.
Removed
Overview AVITA Medical is a commercial-stage regenerative medicine company transforming the standard of care for skin restoration with innovative devices and autologous cellular therapies.
Added
Our technologies are designed to optimize skin restoration procedures, effectively accelerating patient healing and recovery. Our solutions improve the healing outcomes for patients with traumatic injuries and surgical repairs, addressing critical healing needs that arise from unpredictable and life-changing events.
Removed
Our objective is to become the leading provider of regenerative medicine addressing unmet medical needs in burn injuries, full-thickness skin defects, and in skin repigmentation, such as vitiligo.
Added
In the United States, we also hold the rights to market, sell, and distribute PermeaDerm ® , a biosynthetic wound matrix, under the terms of an exclusive multi-year distribution agreement (the “Stedical Agreement”) with Stedical Scientific, Inc. (“Stedical”). We also entered into an exclusive multi-year development and distribution agreement with Collagen Matrix, Inc. dba Regenity Biosciences (“Regenity”).
Removed
Refer to Note 20 of our Consolidated Financial Statements for further details Business Environment and Current Trends Changes in reimbursement rates by third party payors may place additional financial pressure on hospitals and the broader healthcare system.
Added
Regenity will manufacture and supply Cohealyx ™ , an AVITA Medical-branded, FDA-cleared, collagen-based dermal matrix. Under the agreement, we will hold the exclusive rights to market, sell, and distribute Cohealyx in the U.S., with potential expansion into the European Union, Australia, and Japan.
Removed
Under the BARDA 32 Table of Contents contract, income of $3.2 million was recognized during the year-ended December 31, 2022, compared to income of $1.6 million for the year-ended December 31, 2021. BARDA income increased as a result of funding by BARDA for the pivotal trial for use of the RECELL System for soft tissue repair.
Added
The single-use RECELL Autologous Cell Harvesting Device (“RECELL Ease-of-Use” or “RECELL EOU”) is approved by the FDA for the treatment of thermal burn wounds and full-thickness skin defects, and repigmentation of stable depigmented vitiligo lesions. Our next-generation device, RECELL GO ™ Autologous Cell Harvesting Device (“RECELL GO”), is FDA-approved to treat thermal burn wounds and full-thickness skin defects.
Removed
Increased costs in the current year were primarily driven by higher selling costs, pre-commercialization costs and higher salaries and benefits. Higher selling costs are attributable to increased commissions due to increased revenue and higher costs for travel, hands-on professional education, and training. Increased pre-commercialization costs are driven by activities related to future RECELL launches in soft tissue repair and vitiligo.
Added
RECELL GO introduces enhanced features that streamline the preparation of Spray-On Skin Cells and improves workflow efficiency in the operating room. It consists of two components: the RECELL GO Processing Device (the “RPD”) and the RECELL GO Preparation Kit (the “RPK”). The RPD is a multi-use, AC-powered device that controls the RPK.
Removed
Higher salaries and benefits were primarily due to additional field personnel added to deepen penetration within individual customer accounts. General and administrative expenses increased by 8%, or $1.6 million, to $23.3 million, compared to $21.7 million recognized in the year-ended December 31, 2021. The increase was primarily driven by higher salaries and benefits and share-based compensation expenses.
Added
The RPK is a single-use cartridge that contains the RECELL Enzyme ™ . The RPD regulates the pressure applied to disaggregate the cells and precisely controls the incubation time of the RECELL Enzyme to optimize cell yield and promote cell viability.
Removed
Higher salaries and benefits costs were due to the expansion of our workforce to support overall operations along with severance costs associated with the termination of a former executive officer.
Added
We are focused on becoming the leading provider of therapeutic acute wound care solutions addressing unmet medical needs in burn injuries and full-thickness skin defects. We will continue to drive commercial revenue growth to generate free cash flow and achieve operating profit.
Removed
Higher share-based compensation expense was due to the new equity grants in the current period, partially offset by the reversal of expense for unvested awards related to the termination of a former executive officer in the current year.
Added
There remains significant uncertainty in the current macroeconomic environment due to factors including supply chain shortages, increased cost of healthcare, changes to inflation rates, a competitive labor market, and other related global economic conditions and geopolitical conditions. If these conditions continue or worsen, they could adversely impact our future operating results.
Removed
Research and development costs were lower due to the following: pediatric burn study was closed for enrollment, soft tissue repair and vitiligo trial participants were in less costly follow-up phases this period compared to more costly recruitment and treatment phases in the prior period, and lower expense for sponsored research toward pipeline development in the current period.
Added
Recent Developments On January 10, 2024, we entered into an exclusive multi-year distribution agreement with Stedical to commercialize PermeaDerm® Biosynthetic Wound Matrix (“PermeaDerm”) in the United States. PermeaDerm is cleared by the FDA as a transparent matrix for use in the treatment of a variety of wound types until healing is achieved.
Removed
This is partially offset by higher development expenses in the current year from ongoing development of next generation devices for preparation of Spray-On Skin™ Cells as compared to the prior year due to early prototype development and testing. Net loss increased by 6%, or $1.5 million, to $26.7 million, over the $25.1 million recognized in the year-ended December 31, 2021.
Added
Under the terms of the Stedical Agreement, we hold the exclusive rights to market, sell, and distribute PermeaDerm products, including any future enhancements or modifications, within the United States. The initial term is for five years, with the option to renew for an additional five years, contingent upon meeting certain minimum requirements.
Removed
In addition, an aggregate of $50.0 million will be made available in two separate $25.0 million tranches, at the Company’s discretion, subject to certain net revenue requirements. The first tranche of $25.0 million will be made available on or before December 31, 2024.
Added
On February 16, 2024, we amended our contract with the Biomedical Advanced Research and Development Authority (“BARDA”), under the Assistant Secretary for Preparedness and Response, within the U.S. Department of Health and Human Services, dated September 29, 2015, to extend the term through September 28, 2025.
Removed
The second tranche of $25.0 million will be made available on or prior to June 30, 2025, only if the first tranche was drawn upon. On the Closing Date, the Company closed on the Initial Commitment Amount, less certain fees and expenses payable to or on behalf of the Lender.
Added
Under the modified contract, BARDA will have access to our RECELL inventory in the event of a national emergency. In the case of a national emergency, BARDA will pay for RECELL devices at a reduced price for the first 1,000 units and will then pay retail price for any additional units.
Removed
Financing Activities On April 14, 2023, we entered into a Sales Agreement with Cowen and Company, LLC pursuant to which the Company may sell from time-to-time up to 3,799,164 shares of its common stock (the “2023 ATM Program”). During the year-ended December 31, 2023, we did not make any sales under the 2023 ATM Program.
Added
No additional inventory build will be required as part of this modification as we have sufficient inventory in stock to fulfill this requirement. BARDA will pay us approximately $333,000 in maintenance fees over the term of the contract to ensure its first right of access to our RECELL inventory.
Removed
On October 18, 2023, as discussed above, we completed a Credit Agreement with the Lender for an aggregate amount up to $90.0 million. On the closing date of the agreement we drew $40.0 million.
Added
On May 29, 2024, the FDA approved our premarket approval (“PMA”) supplement for RECELL GO, our next generation autologous cell harvesting device, to treat thermal burn wounds and full-thickness skin defects. Following this approval, we shipped the first RECELL GO order on May 30, 2024, to accommodate the first case for its use on May 31, 2024.
Removed
Given the above, we believe there is presently sufficient working capital to support our committed activities, our research and development programs and other activities over the next twelve months.
Added
On June 28, 2024, we submitted a PMA supplement for RECELL GO mini, which is designed to address small wounds up to 480 cm 2 . This version retains the same multi-use processing units as RECELL GO but features a smaller cartridge designed for the smaller donor skin samples needed for smaller wounds.
Removed
Our revenue consists primarily of the sale of the RECELL System to hospitals or other treatment centers, COSMOTEC and to BARDA (collectively, “customers”), predominately in the United States.

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