AVITA Medical, Inc. (RCEL) Earnings Call Transcript & Summary

Rudi Michelson of Monsoon Communications. Today, joining us are AVITA's CEO, Jim Corbett; and CFO, David O'Toole. Jim Corbett is in Australia for AVITA's quarterly Sydney, Melbourne roadshow this week. And following last week's results, David O'Toole joins us from AVITA's Valencia, California office. The roadshow and the webinar provide Australian investors with a chance to be briefed direct and ask questions on AVITA's progress. [Operator Instructions] I'll now hand over to Jim Corbett to begin the presentation.

Thank you, Rudi, and good morning, Australia. I'm excited as always to be here and to share with you our progress. And in fact, I think this quarter, we have some really interesting matters to discuss as to the strategy and the outlook of the company. I do encourage you, and one of the reasons we do this in this manner is to submit some questions if you have any. During the quarterly earnings call, it's not exactly conducive for a good interactive exchange, but this one is. So please feel free. Most important is we've taken great care to define the AVITA Medical vision. And so let me take a moment with you to really focus on that. Our mission is to be a therapeutic acute wound care company, delivering transformative solutions for acute wound care. What we are -- all of our technologies are focused on the fundamental of -- let's break the words out a little bit, therapeutic means we want to cure the wound. We want the patient to go home. We want to go back -- them to go back to living their life and not a palliative treatment. So a lot of wounds are treated in a manner where they never -- because they're from another reason than an acute cause, they're treated in a manner where they go on forever. And that is also characterized by -- so they're not palliative. -- they're palliative, not therapeutic, okay? Now go to the acute word. The acute word means it's an injury. It's a car accident, it's a fire, it's a road rage -- road rash. It's a necrotizing bacteria that has to be excised during surgery. It's from surgery where they have to excise excess tissue. That's an acute wound, to be differentiated from a chronic wound. A chronic wound, the vast majority of them in wound care centers in the United States are either diabetic foot ulcers or venous leg ulcers. That's over 90% of them. The problem with those markets is that they are -- first of all, they're out of our acute care call point. They're actually not responsive to being cured. The reason is we're not going to cure their diabetes by treating their diabetic foot ulcer. We're not going to cure their chronic venous insufficiency by treating their venous leg ulcer. It will just come back. So this is a very important point about how AVITA is transforming itself, and we have completed the initial phase of the transformation. And what you'll see today and hear today are all the different ways we think we are able to provide multiple streams of value to the physicians who are treating acutely injured people. So take a moment and think about this. Our patients are not defined by age or gender. They're not defined by having some prior disease. They're not defined by having any ethnicity. They're absolutely defined by the injuries that they receive. So a very event-driven occurrence on an epidemiology basis, you can see it happening in society on a [Audio Gap] which wounds, where, when and how, that's the hard part. So our goal is to be prepared for that. Let me share with you what it looks like to treat a full thickness trauma wound or a full-thickness burn wound. There are a range of technologies and treatments necessary. The three largest are all built around the proprietary nature of RECELL. RECELL is a once-a-category product. Now with RECELL GO, we can deliver it to more places easier. In particular, when you use more than one 10% TBSA product on a patient. The benefits to the patient, the doctor and the hospital and the economics just absolutely multiply. On the other hand, next to RECELL, the two biggest markets are dermal replacements and dressings, and we'll get into those in detail. What are we doing in our pipeline? Wound bed hemostasis. When you excise the necrotic tissue, at times, stopping the patient bleeding is a problem. There are technologies to help with that. Sometimes in the base of the wound, there's difficulty or concern that completely having the wound clean of bacterial infection is difficult. So having a base wound care, base of the wound, antimicrobial care treatment would have some benefit. At the same time, sometimes you want that antimicrobial on the top of the wound to protect it. So there's two different scenarios there. Wound depth assessment matters because it helps guide the physician in terms of the depth of removing dead and necrotic tissue. And then finally, when it's all said and done, reducing wound scar is an absolute goal for -- once we save their lives, we want them to be able to live it. So today -- we're going to focus on our portfolio today, and it's -- we've got some really interesting products. They're all approved, by the way, and we're in launch in January here 2025. So let me describe it a little bit from a big picture point of view and when our products might be used. First and foremost, the standard of care for a deep full-thickness wound is a 2-stage procedure. Now in the first stage is when you get the wound ready to ultimately get a skin graft. That said, one thing is you may temporize the wound and you basically put a breathable, transparent biosynthetic dressing on it, which, of course, is PermeaDerm. And you might do that for a couple of days while you're waiting for the wound to stabilize. Then, next phase, which is still within the first phase of treatment of the 2-stage, is the physician may determine the wound is so deep that a dermal matrix is needed to promote revascularization and provide cellular structure in the wound. This is necessary to get a graft to succeed. And the term that is used is when the dermal matrix is ready, graft take is the goal you're trying to achieve, and we'll get into some clinical work we've done on that. You then will replace it with -- then you will do the split-thickness skin graft with RECELL. Now, that is the healing portion of closing the wound. You would then close it and wait for it to heal with a dressing that is transparent, biosynthetic, adjustable porosity, so air could come in and exudate can come out, which would be PermeaDerm. So those are possible uses of our products. Take note that there's a RECELL GO mini on the screen. More to come on that, but RECELL GO Mini treats 2.5% total body surface area or 480 square centimeters. So we have RECELL GO and RECELL GO Mini and more to come on that, and we'll do that now. So it is RECELL GO time. The maturing of RECELL as a procedure, combined with being able to standardize and remove the work from the doctor and staff to have RECELL GO prepare the RECELL spray on skin is a big time saver and improves the quality of the Spray on skin. So we've launched -- since midyear last year, we're about 83% of our total unit volume are converted. We expect all of that to convert by the year-end. We also introduced and got approval, particularly targeted at the trauma market, RECELL GO Mini. Now, RECELL GO mini treats 2.5% total body surface area. And so you'll note that's 20% of RECELL. And why is that? Well, very straightforward, the vast majority of the trauma cases, which is upwards of 270,000 procedures, compared with burns at 35,000 procedures annually, that they are under 2.5% total body surface area. And psychologically, one of the things we ran into is an interesting -- I know, we worry about health care waste and such in all our societies. Treating a 2.5% problem with a 10% solution is a bit like using a sledgehammer and a nail. So the doctors really desired something that more appropriately fit the size of the wound. So we developed RECELL GO Mini. It is used in the same RECELL processing device that RECELL GO is. And it is available, and we are promoting it as we speak. Let's take a minute and talk about what's going on with PermeaDerm. We acquired PermeaDerm for sale effectively around April 1st last year. We announced it earlier, but we went to market April 1st. One of the challenges is it was a very new product, and we had to -- but it's a second-generation product from a product formerly known as Biobrain from the same inventor that was very effective. This is the next generation. It has some features and benefits that are really valuable. It's transparent, as I mentioned earlier. It provides a bacterial barrier. It maintains wound moisture through the microporous openings in the dressing, which you can make larger or smaller by the way you stretch the dressing as it's applied. It has a bioactive coating that helps the wound bed in supporting -- and supports healing and it keeps the bacteria away. So air moves both ways, exudate moves out, air moves in. It comes in many sizes and has many applications. We have built up our clinical evidence substantially in the last 6 months. We have many case studies, many case series, and we are currently conducting a post-market study, randomized, comparing it to its most common competitor, which is allograft. For those of you who don't know, allograft is cadaver skin. It has some benefits in that it doesn't get rejected by the body, for example, but you cannot see through it as another example. And it costs twice as much as PermeaDerm. So this study, we're going to expect to establish minimum equivalency, if not superiority, in terms of clinical support -- superiority. And of course, we will cost half as much. So this is an exciting product that we're bringing to market now. We have nearly 100 hospitals evaluating it at this moment. Now let's talk about Cohealyx. Cohealyx is a collagen-based dermal matrix that's been denatured, redesigned from a cellular level into a helical structure to create a cellular structure that promotes vascular ingrowth and cellular ingrowth. How it was developed and how it was sterilized have a lot to do with how long this structure exists in the wound and how effectively it is absorbed in the wound. So what you want is the optimal curve where the structure of Helix(sic) [ Cohealyx ] stays there long enough to promote tissue regeneration and at the same time, fully absorbed histologically into the wound, so you don't have to remove it. Now we looked for a couple of years for the right material, and we found the right partner who does nothing but the development and manufacture of biologic technologies like this and works with probably 20 other commercial companies like ourselves, most -- many of which you know. So we tested all of these in a preclinical validated porcine model. And our objective was to understand the time to be graft-ready, because when you're graft-ready, you graft, and the time to graft-ready affects the time to close when the graft is itself closed. So faster integration, revascularization, are all key components to getting it exactly right. We have a trial that is currently being enrolled. It's in institution review board. Site selection is in process for other sites. We have nearly 10 that are already considering the approval, and we have a multi-hospital IRB already approved. And the study will assess the performance in a real-world setting of Cohealyx against what's called an objective performance criteria. So what we did is we took all of our possible competitors, and we took their published data, and we measured things like days it takes to get graft ready, so graft take. Days to graft closure and days to go home. And we'll be studying Cohealyx against that data, which is published in the literature. So it's a single-arm study. We think we'll enroll it in the first half. We'll follow the patients up to 26 weeks. And one of the elegant elements of this study is that we get to use the data in a real-time basis. So the -- a physician treats a few patients, they have their experience, he can get up on a podium and show it. So if it was being done under FDA protocol, we couldn't do that, but we can do that in a post-market study. So we have multiple facilities currently evaluating Cohealyx now to provide case studies and some of those will graduate to the clinical study, which, of course, I didn't mention, has 40 subjects. So when you're trying to prove that you are 7 days, against the competition that is 14 to 21 days, that's a really high signal, statistically speaking. And consequently, you don't need a big number to prove it. If we were trying to prove 2% better, we'd need 1,000 patients. But the fact is we're proving that we're 50% better from the best. Now this is going to give you some data, and it's a little gruesome, but this is from the validated pig study. And what you see on the left vertical column are Cohealyx at different stages and then two of the leading competitor products. A day 0 is when -- is the initial application. And what you want to see by day 7 is a beefy red, well-vascularized wound ready for a split thickness skin graft and RECELL. And you can see that at day 7, that is what we have here. Now we also see that 7 days post graft, this patient is closed. If you look to the right, this is measuring in the study the percent of the wound area that is graft-ready at 7 days. In the case of the eight Cohealyx cases, that number is 98%. In competitor A, it's 85% and competitor B, it's about 67%, 65% or 67%. So you can see it is markedly better than the competitors. This shortens hospital stay, gets the patient home, saves money for the hospital and the DRG system. This is from Ohio State. This is an example of a woman who had a small wound. It did not need RECELL, but it's still big enough. It was 200 square centimeters, that they had a wound in A and B, where they applied Cohealyx. And on day 7, you can see that Cohealyx in C is very well integrated into the wound. And you can see at 3 days post-Cohealyx application, the graft is virtually healed and that patient is ready to go home by day 14. The physician who treated it said, any other dermal matrix that he would have used would have had this patient in the hospital for a month. In this case, 14 days. So this kind of outcome is the same outcome we expect from RECELL. In RECELL, we expect the patient with severe wounds to go home 30% sooner than they would otherwise. With Cohealyx, we're offering that same type of benefit earlier in the process. So very consistent in terms thematically of what we're trying to accomplish at AVITA. Now let me describe how this works in a 2-stage procedure in terms of the TAM for the use of these three products. Now -- the TAM for -- and this is just going to be burns. I'm not going to look at trauma for the moment because it's so powerful for burns that the trauma will be easier to understand and less complicated. In burns, you have a 2-stage procedure, and we're going to assume somewhere between a 10% or 20% procedure of a full thickness wound. The PermeaDerm dressing, which can be used to temporize or to cover the wound after RECELL and a split-thickness skin graft have been applied, okay? It produces a possible average selling price of which we get 50% of $2,000 to $4,000. RECELL would use one to two kits, so $6,500 to $13,000. That was our former TAM, and it was about $450 million in the burn hospitals only, just those 120. Now I'm going to use an average selling price that's well below the market. I'm just going to use $10 because it's easier to calculate and very easy to understand of $10 per square centimeter. So $2,000 to $4,000 means $20,000 to $40,000 in terms of economic average selling price for this case. This takes the TAM for this patient category in these hospitals from a base level of $28,500 to $57,000. So this transforms the TAM for AVITA in the 120 burn accounts that we're already in from 6,500 to 13,000 to 28,500 to 57,000 or said in a very macro way from $450 million to around $1.5 billion. So that is just a huge expansion in our opportunity. And we're there every step of the way of this procedure. So we have a lot of opportunities to help the doctor with products that will bring value to the patient. This is a slide I've shown in past meetings, but I've modified a few things. Note on the far right, it is the chronic wounds. And we are separating the chronic wounds out of our indication because we don't have an intent to go where they are. We don't have a belief that this is the best therapy because we have not studied it to demonstrate the value of it. And on the other hand, we're left with 270,000 traumatic and surgical wounds that -- and for example, a cancer excision is a surgical wound. It's an acute wound, and we can close it with combination of Cohealyx, RECELL and PermeaDerm. So you can see that this market is huge. It's in about 350 to 400 hospitals principally, and it's $2 billion more of TAM. So if you add these two together, it's $3.5 billion of TAM. 9 months ago, we had $500 million of TAM available to us in the burn market. Today, we have trauma, surgery and burns and a broader product line of RECELL GO, RECELL GO Mini, Cohealyx and PermeaDerm around which to build our business. Let me take a kind of moment to look outward. In terms of our global strategy, we're a little bit frustrated, candidly, with the notified bodies, which are the parties that implement the medical device directive for Europe, which happens to cover Australia as well. Our application has been in. In fact, we expected them in October and had paid a premium to do that. They, in fact, don't have any, what I would call, statutory requirements in terms of time to review like the FDA does. And so we are through all the substantive review elements. And now we're subject to a pure administrative process, which we think solves end of Q1 -- between the end of Q1 and end of Q2. It will allow us to launch RECELL GO in 16 countries by the midyear. So we're looking forward to that. I know that we thought it was going to come because that was our agreement, both of the last 2 quarters. And at least in this point, we're already through the substantive review and a little bit just in a wait game. If we look at where the company is to achieve its goals, that's the key. We've made some substantial changes in the last year. Midyear last year, Robin Vandenberg joined us to lead the commercial sales organization in the U.S. She's a very experienced executive, formerly of Smith & Nephew. She is developing our sales management leadership team this moment, and they are working on how we're going to sell differently because we now have much more to offer the customer. That said, what we are offering the customer is on the same wound, same patient, same doctor, same hospital when it comes to burn wounds. So it's an opportunity where we, as the AVITA makers and promoters and supporters of RECELL have a unique, so to speak, seat at the table, where they have us there all the time, and our competitors would love to have that selling advantage. Our product portfolio expansion is in full blast. RECELL GO Mini is in inventory and rolling out to principally burn and trauma centers, but principally trauma centers because that's where the small wounds are. Cohealyx, we're doing early cases, because it's approved, that are designed to capture data for promotion for an April 1st launch. We expect a full launch in Q2 2025. We expect the enrollment of the study, you will come to be known as Cohealyx-1 to be well underway, if not complete by midyear. And then we'll publish it. So we will have material that demonstrates this 7-day to close. We have several cases already where that has occurred in our early limited market reality. So Cohealyx is being marketed in a limited form. The study is underway and full launch is April 1st. And incidentally, full launch corresponds with the really large sheets we need to go into the burn market, because if you recall, the standard RECELL covers 2,000 square centimeters and the large sheet of Cohealyx is 700 square centimeters. And right now, we're using the 200 version, 200 square centimeters. So we're a little confined on really big wounds in the moment. International expansion. By mid-'25, we expect this will be ready. We are ready. We have RECELL GO processing devices already in inventory with the proper electronics. We have inventory ready to go to these 16 countries. So we'll see more of that in the second half. What's really exciting is a couple of things. First and foremost, our year ahead of us, we are giving a guidance range for the year of $100 million to $106 million, reflecting a growth rate of 55% to 65%. Now we're introducing, on top of our underlying growth rate, and you could take the last 2 quarters and we'd be in the $80 million revenue place. We're launching Cohealyx, full launch of PermeaDerm, full launch of RECELL GO Mini, and we're in the second 6 months of RECELL GO. So we have the wind at our back, and we expect to generate free cash flow in the second half of '25 and reach both GAAP profitability and cash flow positive during Q4 2025. We're really looking for -- our goal is to establish our brand, AVITA RECELL as a standard of care in acute wound management and strengthening our global reach. If you look back, we -- this acute treatment is one of the things that always gives us some -- we've had some bumps, and we had a bump in Q4. That said, if you look at us on an annual basis, we have a strong record of growth. And with all the products we're adding not during '25, but at the commencement of '25, you take our core growth and you add those to it. So we're expecting a really terrific year, a transformative year where AVITA becomes a therapeutic acute wound company. With that, I will take questions.

Thank you, Jim. We'll now move on to the Q&A. [Operator Instructions] If you can function I'll now hand over to Jessica Eckeberg to run the Q&A.

Thank you, Rudi. This first question is for Jim. "Of the 120-plus burn centers in the U.S., how many are using RECELL? And what percentage of the burn market do you believe you have captured to date?"

Great question. In various sense, we are selling to virtually all of the 120 centers to some degree or another. In terms of share, it's very difficult to estimate it because there's no competitor other than the standard of care of an autologous skin graft. So in fact, we estimate that our share is somewhere in the order of 20% to 25%. So a lot of upside ahead for us as we have RECELL GO, RECELL GO mini and these other opportunities to bring value.

And then also in regards to accounts "for the new trauma account, what -- where are you at in terms of quantity for RECELL?"

Yes. So we don't carve that out as a specific disclosure. That said, I can tell you that -- two things. We're in close to 200 new trauma accounts since the launch of the full-thickness indication. Those accounts aren't equal. Some are really big and some are relatively small. depending on where they are, the type of population that lives around them, type of wounds that show up at those hospitals. Where we will be going from a go-forward point of view, we'll continue. There's another couple of hundred hospitals to go in terms of trauma centers. Our big emphasis, however, is to sell our portfolio. And so what you'll see is us focusing on product mix and becoming a deeper contributor to healing these acutely injured patients and helping them get home.

Thank you. This question is for David. "Please comment on the new debt covenants negotiated with OrbiMed. Do you have any plans to raise additional cash through an equity raise?"

Thanks, Jessica. First thing I want to say is OrbiMed has been a fabulous partner with us. They are in it for the long term, and they see our business growing and are a complete supporter of us. And we really appreciate what they've done for us over the last couple of years since we entered into the debt covenant -- or the debt agreement with them. When we established the revenue covenants a couple of years ago, the company was different. And we did have some things that didn't necessarily go our way. We had a delay in the launch of RECELL GO and -- but that was a 6-month delay. And so the revenue covenants that we set back in 2023 were established with a different company. And so when we set our revenue guidance for this year of $100 million to $106 million, we set it at a place where we thought we could -- not easily, but we could achieve that, those -- that revenue guidance. In doing so, we realized that we had set the revenue guidance below the revenue covenant for the full year, trailing 12 months ending 12/31/2025 of $115 million. And so when we realized that, we opened a discussion with our partner, OrbiMed. And we mutually agreed that we should amend those revenue covenants so that they aren't a hindrance to our business any longer. And so when the new ones were set, which -- with the first one being this March 31st revenue covenant is now $73 million for the trailing 12 months, ending 3/31, and then it goes to $78 million for the trailing 12 months ending 6/30, and then $84 million for September, and then $92 million for the 12 months ending 12/31/2025. The 12-month trailing for 3/31/26 is $103 million, and then it goes to the $150 million. So you can see that we have a lot of room in those numbers now. For example, if you just took the trailing 12 months for the March 31st period, which is $73 million, and you added up the last 3 quarters, we would only have to have revenue in the -- in this quarter of $20 million to reach the $73 million revenue covenant. So we see no reason to be concerned any longer with busting those revenue covenants and having to start repaying the debt back. And since we are -- we don't see us having to repay the debt, leads to the answer to the second question, which is we see no reason to have to raise additional capital and dilute our shareholders. We -- as Jim indicated, we plan to cross over to generating cash in the second half of the year. And once we become self-funding, we don't see any immediate need to raise another additional equity. at this time. So that's it. Thanks.

Thanks, David. Since I have you, "can you explain the reasons for the high sales and marketing costs this last quarter?"

Yes. So that's an interesting question. The sales and marketing expenses for the fourth quarter were $14 million, and they haven't been increasing since we expanded our commercial team. We had revenue of $18.4 million for the quarter, and we have no plans to expand our commercial team for the next 18 to 24 months. So the total sales and marketing as a percentage of revenue will continue to decrease each quarter as our revenue increases. I think the important thing to point out here is the total operating expenses for the quarter were $26.1 million. And of that, there was about $3.2 million of noncash items, primarily stock-based compensation, depreciation and amortization. And so we see no expansion of that operating expense in 2025. And so the $26.1 million or less will be our baseline for the rest of this year. And that's important, because it gets us to where we want to be as far as GAAP profitability and cash flow breakeven. Our expenses are not increasing and our revenue is.

Thank you, David. Let's go to Jim when speaking about the portfolio. "Does combining PermeaDerm, Cohealyx and RECELL achieve complete full-thickness wound repair? If not, are additional non-AVITA medical products required?"

That is a great question. It's variable on the wound, first of all. So in terms of primary products needed to close the wound, those three will do it. Now if there is an infection, antimicrobial products might be needed. If there is a difficulty stopping bleeding, hemostasis products might be needed. If, for whatever reason, the wound is of excessive death or it's jagged, let's say, it's a shark bite, that might require some form of scar treatment. That said, the base question, are these the three primary technologies needed to close the wound, with RECELL GO Mini, depending on the size of the wound? Yes. But you can see the additive benefits for certain patients, which we're working on.

In regard to Cohealyx, "in order to gain market share, is the primary endpoint faster time to wound closure?" I believe you had mentioned this, but "and when do you anticipate establishing this?"

Okay. There's actually two -- there's two metrics. It is time to graft and then time to closure, then time to go home. So Three. Time to graft is the critical one. So we believe we're going to prove 7 days against competitors that are between 14 and 21. Those are ICU days saved. Implicitly, we will -- it's logical that if you can put the graft on 7 days sooner, it will close some number of days sooner. And if you can close sooner, then you go home sooner. So we're going to prove all that, and we'll be able to prove it in real time on a small number of cases. The total number of cases in the statistical plan for Cohealyx-1 will prove it on a so to speak, pure science basis versus just seeing case studies. Hopefully, that answers. If not, please ask a follow-up.

And then "in terms of PermeaDerm and Cohealyx, who are your major competitors?"

Well, there's many. On the dressings side, there's just a whole range of dressings. The very few that have the features and benefits and advantages that we do. That said, there's enough of them that being price competitive matters. So we are happy to gain share because our arrangement is that we get 50% revenue share, which translates into 50% gross profit on any price. So therefore, we can always win the price game and give them a chance to appreciate the clinical benefits of it. So getting a price advantage isn't our goal adoption is. So that's -- the competitors are so numerous to imagine. Now in Cohealyx, we have a similar arrangement at the start, 50/50 ASP, average selling price share, which gives us a 50% margin, which allows us the same pricing flexibility as PermeaDerm, but with a few twists, okay? So we should never lose because of price because we always can make the same gross profit. At the same time, the agreement is a 5-year exclusive agreement that we co-developed with Regenity Biosciences. But upon completion of Cohealyx-1, presuming success, we get plus-5 years and our 50% share goes to 60%. So the competitive environment has many, many dermal matrixes. There's easily 20. There are some that are more common than others, I'll mention in a moment. That said, we are not incentivized to try to get the premium price. We're incentivized to get adoption. Our clinical results, our preclinical data says we're superior. So we then said the hospitals put a lot of working capital into dermal matrices. They cost a lot. We are implementing an RFID, which is a radio frequency inventory device. And we can track the inventory. Each sales rep will have an RFID reader, and we'll be marketing Cohealyx in consignment model. So that means we can go prove the clinical benefit in the value analysis committee with the preclinical data and case studies that we are now accumulating. We can win on the price per square centimeter basis. We can win on the working capital management because most companies try to do that manually, and it's pretty messy. We will be doing it automated. We've already implemented it. It's not like a concept, it's a reality. And so we'll move to a 60% margin by first of next year in any event. So from a competitive point of view in Cohealyx, likely suspects are Integra Life Sciences, Kerecis now owned by Coloplast, perhaps PolyNovo in some cases. They have a lot of applications, PolyNovo does, in other cases where we are not in conflict, but we have some where we'll overlap. But those would be three that you would know.

Thanks, Jim. Let's bring it back to David. "Is your 2025 guidance based on your current product lineup, including your non-U.S. product launch of RECELL GO? Or does it include new products in development?"

So the guidance that we've given, again, which is $100 million to $106 million, does include some international revenue, but not significant. Most of the -- all of the rest of the revenue comes from the products that we already have, which is RECELL GO, RECELL GO Mini, PermeaDerm and Cohealyx. It is not dependent on new products in development.

"And have you provided the percentage of total 2025 revenue that you believe will be attributed specifically to Cohealyx?"

We have not. We don't plan to do that until we get more experience with that product. We -- as we -- as Jim indicated, we will be launching it April 1st. We will be gaining a lot of experience over the 9 months after that launch. And we'll more likely than not be able to give more guidance around that revenue mix next year after we close out 2025.

Great. And the final question, Jim alluded to this a little bit, but "how does the profit margin work with Cohealyx?"

Yes. Jim mentioned that. We have an arrangement with our partner, Regenity Bioscience, who -- which right now is 50-50. We purchased the product at 50% of what we believe our average selling price is going to be for that product. And so our gross margin on Cohealyx on every sale will be 50%. And that number after we complete the clinical trial, and also pay another milestone payment in 2026 will go to 60%, where we will be guaranteed a gross margin of 60% on every sale. And it's important to note that, yes, our margin overall percentage is going to go down, but the rest in actual dollars amounts are going to go up significantly. And so the gross profit dollars will go up and all of those dollars will drop to the bottom line because we have no incremental selling -- sales cost associated with selling Cohealyx.

That concludes the webinar. We thank you for your participation.