Avita Medical Announces Financial Results For First Half Fiscal 2016
NORTHRIDGE, CA and CAMBRIDGE, UNITED KINGDOM--(Marketwired - February 26, 2016) -
Avita Medical Announces Financial Results for First Half Fiscal 2016
Adam Kelliher, CEO of Avita, commented, "The momentum generated by Avita over the period has been tremendous in further positioning the Company as a growing leader in the regenerative medicine space. Our ReCell® technology continues to be evaluated and validated, emphasized by the contract with BARDA, approval from the FDA to increase patient access through our Compassionate Use Program, CE Mark expansion for ReGenerCell® and ReNovaCell®, FDA approval for an Expedited Access Pathway designation for ReCell® in burns, and proven access to capital. In addition, there has been strong recognition by a number of publications demonstrating the effectiveness and safety of the device. Furthermore, in the second half of the fiscal year, we have made significant strides by completing enrollment of our U.S. pivotal trial of ReCell® in burns and we look forward to sharing additional clinical and operational updates over the coming months."
Half Year Corporate Highlights
- Focused the Company with the sale of its Respiratory Business for $2.47m, which streamlines operations and provides additional capital for execution of the commercial strategy
- Strengthened balance sheet with a US Government BARDA contract valued at up to USD$53.9 million dollars and the completion of an AUD$10 million equity financing
- Made significant progress in the US with the grant of an FDA Expedited Access Pathway designation and the two-fold increase in patient numbers permitted for Compassionate Use
- Enhanced opportunities for global penetration to progress our commercial strategy by gaining CE Mark for ReGenerCell® and ReNovaCell®, and receiving patent protection in Australia, as well as patent validation in eleven European countries
- Advanced ReCell® commercial strategy through newly-established agreements with specialist wound-care distributors in France and UK
Half Year Financial Highlights
- ReCell® global sales YTD up 17% compared to last year
- ReCell® Asia Pacific sales YTD up 43% compared to last year
Expected Milestones for Second-Half FY 2016
- Primary effectiveness readout of ReCell® U.S. Pivotal Burns Trial
- Effectiveness readout of ReGenerCell® Venous Leg Ulcer (VLU) Pilot Study
- EU Launch of three brands: ReCell®, ReGenerCell®, ReNovaCell®
- U.S. Launch of Diabetic Foot Ulcer (DFU) feasibility study of ReCell®/ ReGenerCell®
We made significant progress in executing our growth strategy, which we believe will position Avita to create long-term value for our shareholders. We have focused our attention on our ReCell® technology, which has demonstrated its ability to enhance wound care and the treatment of burns and skin defects. We did this by streamlining our business and expanding our ability to penetrate global markets. In addition, we strengthened our balance sheet by generating capital through non-dilutive sources as well as gaining support from investors that understand Avita's potential. The regenerative medicine space has continued to grow and our technology has demonstrated its ability to impact the space. Our goal is to continue these endeavors and we are well on our way.
Significant Headway with the US FDA
We have continued to gain support from the United States Food and Drug Administration and are very pleased with their reception to ReCell® and the objectives Avita is working to accomplish. The Expedited Access Pathway (EAP) designation we received at the end of 2015 was certainly a vote of confidence from the agency as this is a new designation for life-saving devices from the FDA, and we are one of the first companies to have been granted this type of approval. We are engaging with the agency to better understand how the expedited program will impact our previously indicated estimate of a third quarter 2017 FDA approval date.
The FDA's appreciation of our ReCell® technology's ability to potentially save lives was also demonstrated with the two-fold increase in patients that are able to receive ReCell® under our Compassionate Use IDE program. Compassionate Use refers to the expanded use outside of a clinical trial of an investigational (not yet approved) medical product for a serious disease or condition for which a physician determines that there is no comparable or satisfactory alternative therapy available. To date, we have treated 23 of the 24 patients that our increased quota will allow for. We are currently in discussions with the FDA to increase the number of patients allotted under this program, based on the demonstrated need for our technology.
Finally, we completed enrollment of the U.S. Pivotal trial of ReCell® in burns required by the FDA for the use of ReCell® in combination with meshed autografting for the treatment of partial-thickness and full-thickness acute burns. We cannot understate the importance of enrollment completion. Identifying and selecting patients for this trial has been extremely thorough as we want to ensure that we can secure data that is sound and as complete as possible by the end of the trial.
Further Validation from the U.S. Market
As we have mentioned on previous occasions, Avita was awarded a contract with the Biomedical Advanced Research and Development Authority (BARDA) worth up to USD$53.9 million for late-stage clinical development and procurement of ReCell® under a U.S. mass casualty preparedness program. This is of significant value for two reasons.
First, there is a large financial upside for the company based on the terms of the agreement. It has the potential to provide significant capital for our ongoing trial and ongoing initiatives. We have the ability to earn up to US $53.9m from this contract and have already been billing the government and recognizing revenue from this agreement. In addition, it will pay for the costs of a program to help educate US surgeons on the use of ReCell®. The US government understands the need for providing training if this is put into use. This is important because it is not only necessary in order for ReCell® to be effective in the case of an emergency, but will also provide exposure to the market for future use should ReCell® be approved in the US.
Second, we feel this is further validation of ReCell® and the need for this technology, not only in emergency situation on a massive scale, but also in day-to-day patient treatment in which we can provide a much improved treatment for patients in need. With the endorsement of BARDA, we believe that our FDA trial is substantially de-risked as we work toward approval.
Growing the Global Opportunity
While the US market is an attractive opportunity for Avita, our intent is to have an impact on the regenerative medicine market and provide patients with much needed wound care on a global scale. To that end, we achieved several goals over the first half of the year that provide near-term potential to increase sales with long-term protection to cover our IP.
The European Union is one area in which we have gained a strong distribution presence. Following agreements with distributors in the UK and France, we now have agreements in place with partners in Germany, Switzerland and Austria. This is exciting for the Company as in just the past few months, we have dramatically increased our EU presence in markets which there is the potential for demand for our devices.
The EU expansion, coupled with our recent entry into South Korea and Japan through key distribution partnerships, provides us with a large global footprint in markets in which patients can benefit from our technology.
Focusing on the Future
Our goal is to be a leader in the regenerative medicine space with a focus on wound care, burns and skin defects, for which there is a considerable treatment need and our technology has the potential to change lives. With that in mind, we put into place a strategy to streamline our business and recently divested our respiratory products: Breath-A-Tech® and Funhaler®. Although these were legacy products that provided consistent income, we felt that it was a distraction to our core focus and where the future of Avita resides. Also of importance, the sale provided us with $2.47m of additional non-dilutive capital to support our commercial efforts and bring in top talent to help us achieve our future goals.
Our ongoing focus on providing patients on a global scale with access to our potentially life saving technology as well as our goal of creating long-term value for our shareholders requires that right framework. This includes our operational set up which will now be centralized in California which is key to gaining a foothold in the US market and is known for its innovation in the med-tech space. Additionally, we have added talent in key positions with team members that we believe have the experience and knowledge necessary to lead the company into its next stage.
Total ReCell® sales YTD are up 17% compared to last year's first half result with EMEA ReCell® sales up 1% and Asia Pacific sales up 43% compared to last year. Respiratory sales were 9% below last year. As such, this is reflected in total group sales of $1,345,209 which are up 0.3% versus the same YTD period last year.
Other Revenue has increased substantially versus the prior first-half from $26,371 to $692,991 due primarily to the cash inflows attributed to the BARDA contract.
When comparing YTD spending, there was an increase of 52% compared to the same YTD period as last year reflecting a cost increase of $2,136,274. The increase spend is due to various costs across the operation including the addition of the new CEO, BARDA initiation costs including new staff to support the contract and on-going clinical trial work in the US & UK. Net loss after tax increased to $4,929,299 (2014: $3,394,123) representing a increase of 45% on the previous corresponding half year.
ABOUT RECELL® AND RES™
ReCell® is Avita Medical's unique proprietary technology that enables a clinician to rapidly create, at point of care in approximately 30 minutes, Regenerative Epithelial Suspension (RES™) using a small sample of the patient's skin. RES™ is an autologous suspension comprising the cells and wound healing factors necessary to regenerate natural, healthy skin. RES™ has a broad range of applications and can be used to restart healing in unresponsive wounds, to repair burns using less donor skin yet with improved functional and aesthetic outcomes, and to restore pigmentation and improve cosmesis of damaged skin.
ABOUT AVITA MEDICAL LIMITED
Avita Medical develops and distributes regenerative products for the treatment of a broad range of wounds, scars and skin defects. Avita's patented and proprietary collection and application technology provides innovative treatment solutions derived from a patient's own skin. The Company's lead product, ReCell®, is used in the treatment of a wide variety of burns, plastic, reconstructive and cosmetic procedures. ReCell® is patented, CE-marked for Europe, TGA-registered in Australia, and CFDA-cleared in China. In the United States, ReCell® is an investigational device limited by federal law to investigational use. A pivotal U.S. trial is underway, with patient enrollment completion anticipated by the end of 2015. To learn more, visit www.avitamedical.com.
FOR FURTHER INFORMATION
Avita Medical Ltd
Chief Executive Officer
Phone: +44 (0) 1763 269 772
Avita Medical Ltd
Chief Financial Officer
Phone: + 1 (818) 356-9400
Avita Medical Ltd
Phone +61(0) 8 9474 7738
Gemma Howe/Sue Charles
Phone +44 (0)20 7866 7860
The Ruth Group
David Burke, Investor Relations
Kirsten Thomas, Public Relations
Phone: +1 (646) 536-7009 / +1 (508) 280-6592
Investor Relations / PR
Phone: +61 3 9620 3333