Good afternoon, everybody. Thanks so much for joining us. Matt O'Brien, I cover MedTech here at Piper, as part of a three-person team covering the space. Very fortunate to have AVITA Medical with us, now. And, you know, from the company, we've got Jim, who's the CEO. Jim, thanks so much for coming out here and being with us today. I really do appreciate it. I guess, you know, for maybe for some in the room, might be a little bit new to the AVITA story. So maybe just talk a little bit about the history of the company and kinda where you're at today as far as building the business. Sure. That's a big question, you know? Yeah. Okay. What we do, AVITA, is that we're a regenerative tissue company, and what that really translates into is skin grafting, if you think of it in a broad way. What we do that's really unique and different is we take an autologous sample that we disaggregate and suspend in an enzyme, and we spray on the graft. So it's essentially spray-on skin. And it was created by a physician in Australia who was treating these burn victims from a terrorist event in Bali 20 years ago. Now, where we are today, though, is we're becoming a vibrant commercial company. You know, we've had a burn indication for our technology called RECELL. During the last year, we received an indication in June for full-thickness skin defect, which is virtually every application of skin graft you can imagine, which has changed our world really quite dramatically. We also got approval at that time for a condition called vitiligo, which is an autoimmune condition where you lose pigment. So essentially, you use the same process of that disaggregation to do a transplant of pigment. So a lot of opportunities ahead for us. And in fact, as we sit here today, we just finished a 51% growth quarter. So- Yeah. Um, progress. Got it. Okay, appreciate that. And so I don't wanna, you know, talk about, you know, the negatives because you've got a lot of positives coming up. Mm-hmm. You know, we just had an announcement last week, and, you know, I'm just curious, what happened in the time from, you know, from when you reported to when you pre-announced that, "Hey, things are gonna be a little bit lighter than what we were expecting"? I mean, what was it? You know, I don't know if it was getting through value analysis committees or something else like that, that may have surprised you. Yeah, we did move back guidance about 2%, and you know, really, that was one of those things on us, really. It's a you know, kind of one of those things where you had good news. We got this indication for full-thickness skin defects, and the indication is so much broader than burns. So the company, we had not had, as you know, a new account during the burn indication in almost 18 months. Yeah. When we went to full-thickness skin defects, well, turns out it's not the burn surgeon in the hospital you have to get to, it's a half a dozen surgeons and about ten different indications. We just got ourselves behind the curve on value analysis committee process. What happened is we had them all in the funnel, and we started realizing they're going a little slower than we thought. For us, as you know, in the last year or so, we've been very consistent in our guidance discipline, and we could see that we were gonna miss the low end by a very little bit, but we were gonna miss it. We thought better to fix it now rather than wait till February to tell you. That was the choice we made. It's still gonna result in somewhere 46%-50% growth for the quarter. Right. But a little bit lighter, and on us, we should have seen this one coming. Got it. As far as those VACs go, I mean, they tend to be not just a quarter, right? Slower. Tends to be a little longer than that. Tends to be like 6 months, 9 months sometimes. Do you have confidence that you know you're gonna be able to move through those value analysis committees at a pretty rapid rate, or is it something where maybe it starts to linger a little bit into Q1, a little bit into Q2 as well? Well, the good news is, it's not a static set of funnel, you know. So we have about 100 accounts in the funnel at this moment, but we have, you know, 700 level trauma centers. Right. We're adding to them as we go. In fact, regardless of what the average turns out to be, whether it turns out to be closer to one or two months or 3-4, it'll catch back up to us here shortly. Okay. And so we're not getting no. We're getting, "Oh, did you get Dr. So-and-so, and what about this indication, and what..." You know, that type of questions. "Oh, we can't have it if you don't have all the physicians all lined up," which is normal stuff. That's completely... Like I said, that's a more complex process than I think we anticipated, but we're adjusting to it. Got it. Okay, I appreciate that. So, I wanna get into burn. I'm sorry, I wanna get into soft tissue. I know everybody does. But let's start with the burn business, the core business right now. Something that you've been saying the last couple of quarters that was interesting was the performance that you're starting to see or the progression you're starting to see on the smaller burn side of things, you know, versus kind of, I guess, shifting down the burn curve. Yeah. Where are you at in that process, and how much further do you have to go there? Well, we have a lot of room to grow there. You know, in, there's probably 35,000, what we call RECELL-eligible burn cases in the United States, and right now, and 25,000 of those are in the burn centers. And if you think about them as a pyramid, top of the pyramid being the highest total body surface area, base being the smaller, let's say 10% or less, we're moving down the curve. And the way we see that is the number of patients treated and the number of RECELL kits per case. So a RECELL kit covers one, a TBSA of 10%. Yeah. So we're seeing the ratio coming down, number of patients going up, and sales going up. So right now, we think we're in the low 20% range of cases being treated, and we've been growing at over 40% last, you know, on a year-to-date basis, just there. So we think that with our continued adoption, which is happening on its own, RECELL GO, when it comes in mid-next year, it'll even get easier for the burn market to adopt. Okay, and where do you think, just to back up a little bit on RECELL GO- Mm-hmm. The timeframe that you've laid out for kinda middle of next year is still on track? Still on track. Okay. How much of that 20% can you get to with RECELL GO, do you think? Or not the 20%, of the 100, you're at 20. Where can that number kinda top out with GO? I'm not clear in a precise way about the time- Yeah ... but I surely think we can get to 40%-50% of burn cases. Because right now, it is not lost on anybody that they take a much smaller tissue sample to- Yeah ... to do it. Yeah. The fact that the patients get out of the hospital 30% faster, it saves everybody money, which means the patients are healing faster. So we just really think that simplifying with RECELL GO will make a big difference on adoption. Got it. So you can double the burn business? We think so. Okay. Yep. Got it. All right. So lots of room to grow there. What about on the soft tissue side? I know it's early, but what are you seeing, hearing so far? Well, what's really surprised us is how much pull there is. So you recall that it was originally defined soft tissue repair, and FDA redefined it as full-thickness skin defects, which pulls in all the chronic applications like venous leg ulcers, diabetic foot ulcers, the biggest ones, cancer incisions. So what we're seeing is those that we expected. We expected degloving, we expected necrotizing fasciitis avulsions. We were expecting those kinds of cases. What we're getting pulled to is all these other indications, and that's with complications of PMA process, incidentally. Yeah. So, we're seeing good acceptance and very willing to do something new and different, particularly given the benefits of RECELL. If you ask a patient who's getting a cancer excision, "Would you like to have a large biopsy taken or a small one? Right. It's kind of like this, you know, crazy question. Yeah. Right? The large one, right? Yeah, well, you always, always make a bigger wound- Yeah ... if you can. Okay. And then, you know, I know part of the strategy is going after the existing centers that you're already in- Yeah ... on the trauma side. Where are you at in terms of getting, you know, some adoption on the soft tissue side in those centers? Well, back to your whole original question, what really made our third quarter drive was that we were already approved for all those indications in half of those burn centers because they're trauma centers. Yeah. So that's where that growth really took off right away, and now we're in the broader trauma market. And we're working our way through, and it's through the VAC on those. We expect to get and replenish those 100 that are in our pipeline. So I think the adoption we'll see here in the coming couple quarters will be really strong. Okay. And then how do we think about the progression of getting into all the centers? Is that something you can get through a majority of them in 2024, or is that gonna bleed into 2025? Oh, I think it'll bleed into 2025. Okay. You know, one thing that's a reality is, you might recall, I'm an advocate of smaller territory size. You know- Yeah ... smaller revenue, smaller geography, no planes, hotels, short driving, right? Yeah. So we still have reps who drive three, four, five, six hours, have to spend the night. So I think we'll be looking as we approach a $2 million average per territory to expand our sales force further during 2024. Okay. And that will allow us to get to all those centers within 2025. Got it. How many more reps do you think you need? I'd say in the order of 30 more than our current. Okay. We're at 70 in the field today. Got it. And then do you think those 100 reps eventually can do $2 million a piece on average or a little bit more? For sure think that. Okay. Got it. Okay, very helpful. What about international side? You talked about expanding internationally. What is the plan there? Well, you know, we guided to our strategy being disclosed in this most recent call. We've decided that we're going to go with third-party partners, first of all. Yep. We've decided we had a filter for the countries we chose. Mm-hmm. They had to have a healthcare system that could accommodate the use of RECELL. They had to have adequate population, and they have to have, have the economics to pay for it, you know, because it, it isn't an inexpensive treatment. It's not like a gauze pad. So that leads us to Australia, Japan, and most of Western Europe. Okay. We just signed a distributorship agreement with PolyMedics, which is a German-based company, and it's for Germany, Austria, and Switzerland, which we're really excited about. They're a very broad-based wound company. They call on our call point. And one of the reasons to use this strategy is they bring to us the local expertise. They bring to us knowledge on reimbursement, business practices. They bring to... you know, they bring to us the local market. Yeah. That'll be a net contribution margin to the company versus a, you know, a three- to five-year, $20 million-type investment. So that's one of the criteria that we used in evaluating how we were gonna execute the strategy. Okay. So we expect two or three more partnerships next year? We should expect that, yes. Okay. How big is this international market? And is it just, is it, I can't recall, is it just burn? No. Can you do both right off the bat? Actually, our CE Mark covers burns, the full-thickness indication, and vitiligo. Okay. So actually, the international market, if you just take it by population, it's, there's every reason to imagine it as being as big as the U.S. market. So it, you know, there's 400 million people in the E.U., right? Yeah. In Japan, there's a few hundred million people. There's not quite, but 250, and then there's Australia. So that we, we think there's a, a substantial opportunity, even as a distributor model, and, and more importantly, that's contribution margin, not net cost, you know- Yep ... net, net spending. Yep. So let's talk a little bit about that. When you say contribution, beneficial, how do we think about, like, when do you get to that point where it's actually beneficial? Is it, is it fairly early in the process, or does it take a little while to get to that point? Oh, I think within the first year in each case. Okay. Within the first year in each case. Got it. We'll have some front-end training costs, but in fact, you know, as they sell, we will not be spending money like we would be as if we built our own organization. Okay. Okay. So it seems like pretty, you know. And is it more like 25 when you start to really see the top-line benefits from the international investments? I'd say certainly the second half of 2024, and then 2025 will be some more substantial. Okay. Okay, got it. Let's shift to vitiligo for a second. Sure. You got the approval. Yes. Are you gonna have any, just kind of, you know, if somebody wants to go ahead and pay for it themselves, they can pay for it, or is it really, "No, we're gonna do the work, get the reimbursement before we really push here? The simple answer is, no, we're gonna do the work and get the reimbursement and really make it a business. The you know, the case for coverage here is the average patient's 40 years old. Our, our FDA study focused on safety and effectiveness, but didn't really focus on the dysmorphia and mental health challenges of vitiligo patients. They suffer enormously. And we initiated the TONE Study, which is a 100-patient post-market study. It'll be fully enrolled by January, so just within six months after approval. We'll follow that. We'll have that publishable by the end of 2024, because the six months is the core repigmentation follow-up date for the vitiligo specialty. That's their standard. We are also doing a healthcare economic study to demonstrate the cost of caring for these vitiligo patients over their lifetime. Key word, lifetime- Yep ... because these drugs that are coming out are lifetime drugs. Yep. Having vitiligo actually cured is really a longitudinal benefit. So the case for coverage here is safe and effective FDA. TONE Study demonstrates the mental health benefit of being cured. Health economics make it so the case for coverage for the payer is that their 1.5% of their beneficiary population has it, and they can succeed by cost avoidance- Yep ... from a payer point of view. Is there the opportunity to get a significant bump in terms of how much you can charge for vitiligo patients? Because, like you mentioned, just keeping them off the drugs. There may be. I think it would be a... You know, we have an 85% gross profit with RECELL as it is. Yep. I think for us, adoption would be the superior choice versus ASP gain. Okay. And so is it still fair to think about vitiligo kicking in in 2026? I think 2026 is realistic. Okay. I think the last half of 2025. You know, if you think about the commercial payer world, CMS won't have a beneficiary here. They're 40 years old. Yeah. Right? So we'll have to go after it region by region, and it'll be big states by big states. That has a secondary benefit because it'll cause us to roll out the commercial organization, allow us to achieve profitability and pay for it ourselves sooner and within the resources we have. Okay. I'll get to profitability in a second, but maybe just to kind of sum up everything, Jim, a bit. I mean, how big is the burn market? How big is soft tissue, and how big is vitiligo? I think that's just gonna help everybody kind of appreciate where you're going- Mm ... from an organizational perspective. Well, depending on how you measure, the burn market is somewhere in the $300 million-$400 million U.S. market. Yep. The full-thickness skin defect market is somewhere in the $1 billion-$1.5 billion market. Yep. The vitiligo market, in an absolute sense, is 1%-1.5% of population times some ASP, so it's in the $ billions. Yep. From a platform point of view here, we have a multibillion-dollar TAM. Yep. Halfway, the burns and full-thickness drive growth for five years. So vitiligo coming along will really give us an extended growth curve for a long time. Okay, got it. And then what about... Yeah, I mean, it's just, you know, you're still small in, as far as in, in terms of revenue base today versus your- Mm-hmm ... versus your TAM. Are there any other companies that are working on something like this? Is that ever a risk that you can see? Yes, it's really interesting. I recently did an IP and regulatory review, and we did an exercise to imagine if someone copied it. It would take them seven years from a regulatory point of view before they would run into the patents. Uh-huh. So they are it would be so difficult... Yeah. to very quickly come out to compete with us, because the patents that will matter will be those on RECELL GO. Because when RECELL GO basically takes the work out of it and takes the variability of the surgeon and the variability of the soak time away, and the work. Yep. You just put it at the biopsy, and you fill the reservoir, and you press the button. That's what they have to overcome. That would take seven years to get to that from a PMA point of view. Right. Got it. Okay. So it's really quite a protected market. Yeah, absolutely. As we think about 2024, this is another thing I've been trying to figure out, because you've been saying, we've taken a little step back on Q4, I guess. Mm-hmm. Q3 was great. Little step back in Q4. But you've been saying you thought that 2024 could accelerate from a growth perspective. Was that before all this value-added committee stuff? Or is it still, "Look, we just have so much opportunity in core burn plus soft tissue that we can accelerate? Yeah. The slight pullback in Q4's guidance didn't reflect failure in those VACs. In fact, it reflected delay. Yeah. And so they're still coming, and we'll have very strong growth and higher growth rate than we had this year in 2025- Okay. or 2024. Okay. Excuse me. And twenty-five. And 2024. And 2025. And 2025. Okay, got it. And then, I think David reiterated the profitability outlook for the business. Yes. Can you talk a little bit more about the levers that you have to pull on the profitability side? Yeah. Well, we have some significant levers. First of all, our cost of goods is half fixed cost. And although we're moving RECELL GO manufacturing there, the absorption is, you know, very simple. We double volume over prior year, for example, which about happens from last year. You actually reduce your cost by 25%. Right. So our gross profit position really gives us a strong lever. And so when you look at that, it leads us to an earlier breakeven point than most companies at our revenue size, because they don't, what they say is, "Well, we'll grow into our gross profit." But we're there now. Yep. We'll just get there a little bit more. We actually intend to guide in February to the quarter in which we cross over in 2025. We intend to achieve, on a quarterly basis, EBITDA positive in 2025. Okay, on one of the quarters. Okay, what about the bottom line? This is an overly capital-intensive business- Yeah. but what about bottom line and then cash flow? They'll be very close to each other, all three of those. Oh, really? Oh, yeah. Interesting. Okay. Very close. That's pretty unique, I would say, in- Yeah - in small-cap pet tech. Yeah, we don't have a big capital base investment that's needed. Okay. When vitiligo comes, will you need to get more aggressive on the DTC side? Because obviously, the drug companies go that direction. We certainly will. We will invest in DTC. There's a lot of work to do before then. There's advocacy groups. You know, this is a disease that affects you know, across all ethnicities. And so there's a lot of equality, access to care, that we will invest in. Mm-hmm. Because I think the more people know about it, the more they will want to change their life and change how they feel about their life. Okay, I appreciate that. Two more for me. On the... Oh, do you have a question?... Well, for sure we are. For sure we are. It's really a very straightforward... I've done a lot of VAC work in my lifetime, and it is a very pro-- If you took all the things that a VAC wants and you put them just right here, you don't get a new request very often. This becomes like your library of what they request. This is not the problem. The problem is making sure you identify the high-grafting specialties in the hospital. So we can do that, and we acquired that data, and we acquired the data through CPT code. So we know when we enter a hospital at this point, who all the high-grafting specialties are, so we can go to them. The first call really is to the VAC chairman. Get the requirements, prepare your packet. Packet's not the problem. Champions and the fact that there's multiple specialties involved, that's the business challenge. So we've done that through our analytical process, where we identify those high-grafting coders, and we could do that by physician. So that's actually the key. Knock this one off first, and then go get your champions, and that'll make it go better for us. Last minute or so, talk about the balance sheet of the company at this point and what's, what's needed. So last quarter, we're sitting on $60 million in cash before the financing that we did with OrbiMed. We took down $40 million, as you know, so we're sitting on a very strong cash position. We have an option for two $25 million tranches. Without going into the detail of them, they're our option. We don't have an express purpose for them at the moment, therefore, no intention to bring them down. The $100 million that we have, we think is more than sufficient to get us through profitability and to pay down the $40 million with our own cash. Okay. So we're really feeling bullish about our cash position. Doing it in this marketplace was, you know, one of those challenges, right? Yeah. A lot of companies struggle with that. And with that behind us, we're really confident that we can fund our growth. Okay. Okay. Well, as I look at the clock here, I think we're out of time, so we'll have to, we'll have to close it out there.