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

Good morning, and thank you for joining this AVITA Medical quarterly Australian webinar. I'm Rudi Michelson of Monsoon Communications. Joining us today are AVITA's CEO, Jim Corbett; and CFO, David O'Toole. Jim is in Australia for a Sydney-Melbourne road show this week. This webinar has been arranged so Australian investors have the chance to be brief, direct and ask questions. [Operator Instructions] I'll now hand over to Jim to begin the presentation.

Thank you, Rudi. It's really great to be back in Australia again. As many of you know, after the last few years, we make a point to have this from Australia because, in fact, our Australian shareholders make up about 50% of our registry as the U.S. make up the other half. So it's really important to us to stay in touch with you, share with you what the latest goings on are with the company. And I'm fortunate today because it's beautiful in Melbourne, a little bit chilly but beautiful. So let me begin by just emphasizing a few things. During the last couple of quarters, we've taken great care to redefine our company and focus it on our core abilities and capabilities and our future R&D intent. Very simply said, AVITA is a leading therapeutic acute wound care company. Our mission is to transform acute wound care. Let me just take a minute to talk about that for a minute. When we say therapeutic, what we mean is that we're going to heal that wound, close that wound and send that patient home. That is the objective. That contrasts with other types of wound care, which are necessary but not our mission or focus, and that is chronic wound care. For example, diabetic foot ulcers and venous leg ulcers comprise greater than 90% of chronic wound care and unfortunately, are not really intended to get treated in a way that is going to heal them permanently, unless the underlying cause of the venous -- of the chronic venous insufficiency or diabetes is solved. And so those are not where we are. We're principally in the acute care setting and are treating those patients. So as such, when we think about what AVITA is, that defines us. And correspondingly, it means we're not a dermatology company. Vitiligo, which we have done research on and actually received approval for, is a market that will require tremendous investment. And we think our investment dollars will be better returned to shareholders and to the benefit of patients by focusing on therapeutic acute wound care. So with that, let me just kind of -- let me talk about our portfolio. What you're seeing here is the portfolio as it presents to the doctor and the patient. Let me take a moment and describe what happens when a patient with an acute wound presents. One of the things that happens immediately is the physician will need to temporize the wound. And what they're doing is they're putting a dressing on the wound to assess the strategic way they're going to treat and close that wound. When they temporize they can use our new PermeaDerm biosynthetic dressing. Now let me describe it. It's translucent, so you can see through it. It's microporous so it breathes and the exudate or the wound weep can come out, and it can stay in place for a multiple number of days. So it gives the doctor and his or her team time to assess the patient. Then you move into what is typically stage 1 of a 2-stage procedure to perform a skin graft and close the wound. In that stage 1 treatment, the wound gets debrided. You cut away the damaged tissue. If it's a burn, it will be the tissue damaged by the burn. If it is some other form of trauma, there will be dead tissue that needs to be cut away. It could be a necrotizing fasciitis patient where you cut away the bacterial infection. In all of those cases, what needs to happen in stage 1 is the revascularization of that wound such that it is ready to receive a skin graft. Now when we do that, we use the dermal matrix we have just introduced during Q2 called Cohealyx, which is a collagen structure. It has some really unique qualities, and I'll share those with you in a few slides to come. But I want you to see it in a big strategic picture of treating the patient. About 7 days later, after applying Cohealyx, the patient is ready for skin graft. Now the patient can receive RECELL or RECELL combined with split-thickness skin graft or -- and there's multiple versions of RECELL, RECELL, the original standard manual, the automated version of RECELL GO and depending on the size of the wound, RECELL GO mini, which treats a 2.5% total body surface area versus the 10% for standard RECELL. So that is stage 2, and it occurs, again, about 7 days after the Cohealyx is applied to the wound. When you complete that graft, whether it's a combo of split-thickness skin graft and RECELL or RECELL on its own, you need to put a dressing on, and that dressing is and can be PermeaDerm for all the same reasons. You can look through it without having to disturb the wound. It allows the wound to breathe and heal optimally and allows the exudate or the wound weep to exit the wound without a lot of disturbance. Now there is one more stage about 10 days later when you may, during aftercare, need to apply one more dressing. And PermeaDerm would be very suitable for that as well. So when you think about what's going on here, I want to contrast it to our prior commercial model. What I just described requires a selling-competent AVITA sales executive who is clinically trained to support every stage of that procedure. In our prior model, we would only attend as a company the stage where RECELL was used. And we would often do that with a clinical specialist. And in the early days of RECELL, this was really the only way to go, right? You needed to have really great, so to speak, white-glove care for that training that need to be used -- implemented when there was new users. We now have many experienced users. And we want to sell in every phase of that multistage procedure I just described. So we're going to talk today about the transformation of our commercial model and how basically we have a selling person present throughout the multiple procedures that involve RECELL and the products we sell that really are designed to support the needs of that same wound on that same patient by that same doctor in the same hospital. That is our vision. This is an interesting slide. One of our really creative marketing team created this, and it really helps you see the cross section of the wound, the dermis and epidermis, and you can see those blood vessels revascularizing. But if you just move -- the purpose of this slide left to right is to show the potential of this concept of a portfolio that's applicable to the same wound, the same patient, the same doctor and the same hospital. And you can see across the bottom the revenue opportunity in a partial thickness wound with PermeaDerm, $8,000; deep partial thickness wound with PermeaDerm, that means more than 1 RECELL device, means more than 10% total body surface area; and then all the way to the right, where you need to put PermeaDerm into the patient's wound after it's been debrided and it takes 7 days to get ready for skin grafting, and you get as much as almost $57,000 of revenue potential in that same wound. So our TAM, particularly in burns, has tripled in the last 12 months. And it's transforming the company, both in our breadth of product opportunity, our ability to add value to the treatment of these patients who've suffered terrible injuries and to be able to add value to the physicians' workload. To that end, the clinical trials keep on rolling at AVITA. We recently were looking at our portfolio clinical research. It's not well known, perhaps by some, we have over 250 publications, abstracts, podium presentations that have been put on at various medical conferences, some of them by AVITA executives who are well regarded in the field. Now this really defines the core and heart of how AVITA sees our role in wound care. We think that bringing forth clinical research with our products is absolutely essential to helping the physician make the right choices. Now we've got Cohealyx I, and we're using the Roman numeral I because we expect more. And at the same time, this is a post-market study. Its primary endpoint is time to skin grafting. It's up to 20 centers, 40 patients. And I'm asked always right away, wow, 40 patients. Seems like just a few. Well, here's why it's 40 patients. We have used an objective performance criteria methodology in our clinical design. Objective performance criteria means we took the competitive products, we used their published clinical research and their time to graft as the foundational benchmark against Cohealyx I. So Cohealyx I, we don't have a need to randomize and compare. They've already done the work for their products. We're just going to do the same work for ours and compare to theirs. Well, in the case of all of our competitors, the best-in-class is 14 days time to graft and the predominant is 21 days. So we're trying to prove an extremely powerful statistical signal that we will be 7 days or more better than everybody else. Now the benefit of that is, of course, 7 days time to graft, 7 to 14 days better than someone else, any other company, that is time off of the treatment regimen for the patient. That shortens length of stay. That is valuable. Later on, we'll talk about that, but let's just park in our mind the minimum improvement that we expect from Cohealyx I is 7 days versus any other dermal matrix. Now let's talk about PermeaDerm-I for a moment. PermeaDerm-I is a biosynthetic that's translucent, that has adjustable microporosity, and you can leave it in place a long period of time, just like cadaver skin or allograft. And what we're doing is we're comparing it to allograft. Now the unfortunate and fortunate thing for us, allograft is very much in broad use -- used as a dressing on this type of wound. Let's just compare what we're going to be looking at. First of all, can you -- handling is an important part of the study. It turns out allograft has to be kept frozen, has to be thawed out and you have to deal with that. So that's kind of a pragmatic logistical issue, but one that costs time and money and effort on the part of staff. PermeaDerm does not require that. The second is that when you apply it, you get to apply it. And does allograft work? Sure, it does. Can you see through it and affirm that it's working? Well, no. You have to lift it up and look. And when you do that, you have the risk of disturbing the wound, which we all know is not good. The third part about it is, can you adjust the microporosity so that the cadaver skin breathes? Well, we all know cadaver skin doesn't breathe, but PermeaDerm does. So pretty great. It's got a nice feature. And the exudate, that wound weep that naturally happens as a very severe wound heals, it cannot come out through the allograft, but it can come out through the PermeaDerm. And then finally, there's the cost factor. PermeaDerm, unfortunately, costs half as much as allograft. So when you add all these benefits and then you pay half as much for it, we think we're going to really demonstrate superiority over allograft in this study. So these are really important because all of our clinicians are treating really severely injured patients. And being able to rely on the clinical data, the products that they use to treat them is really our mission. Now what does this do for our company economically? Well, 2.5 years ago, we were in the burn market only. And we had about a $450 million TAM. If every patient in the burn world was treated with RECELL, we could sell $0.5 billion. Now it's not been nearly that penetrated yet, but you're going to find out in a minute why it should be. When you look here, you can see with the portfolio of our products, short and long term and built it around -- and now we have trauma and surgical wounds where we have approval for RECELL. With RECELL as the castle in a moat, right -- from a regulatory point of view, you can't copy it. You can't reproduce it in under 5 years. And now with the automation of RECELL GO, we have RECELL at the center of our strategy for many, many years to come, in excess of a decade. So building the product portfolio, our sales rep and RECELL are center to the case. We now have same patient, same wound, same surgeon, same hospital, a $3.5 billion TAM in the U.S. only. So really a great opportunity for this company. Let's talk about, I think, the most consequential data of all time for RECELL, and perhaps among all the devices I've ever known, probably the most transformative data that has ever been presented. Let me set the stage. This data is mined from the U.S. burn registry and it's 6,300 patients, and it was presented at the British Burn Association Annual Meeting. And this data compared split-thickness skin graft to RECELL. And the results were dramatic in over 6,300 patients over a 5-year period with patients suffering burns covering 30% or less total body surface area. And this is the graft stage. So this is after the dermal matrix stage. The split-thickness skin graft took 15.6 days to close. RECELL, 10. 5.6 days equals 36%. I was sharing with the team of AVITA, hey, the most important number in our lives has become 36. Everybody in the world should ask us, why is 36 important? Well, 36% is the amount of the length of stay a patient treated with RECELL should expect versus a split-thickness skin graft. So of the nearly 70% to 75% of burns that are not treated today with RECELL, I'd like to hear the argument that, I want my patient to stay in the hospital longer. I want them to not go home to their families sooner, and I want to spend more money doing it. That is the comparison that has been created by this data. This is the inflection point for AVITA. Let me share with you a very similar part of our strategy with the same conclusion. Cohealyx -- when we developed Cohealyx, we did so, and we have a great capability in Boston at a university there where our Senior VP of Medical Affairs, Katie Bush, is able to do the preclinical tissue research on herself. And what we are able to do there is take a pig model, which is validated for this purpose, and look and compare how a dermal matrix would perform versus 2 other competitors in this case. There was 3 other competitors. One did not perform well enough to really spend much time on. And look at -- and if you look at this graph, it's arranged vertically. So Cohealyx going down, competitor A going down, competitor B going down. And what we're looking for is graft-ready at 7% -- 7 days rather, not -- which is better relatively speaking, period, because these others get graft-ready sooner or later. It's just Cohealyx gets better much faster. And in fact, that translation -- looks like 87 to -- 97 to 85 actually is 7 days, and 7 days is a lot of days. And you add that to the 36% improvement for RECELL versus split-thickness skin graft, and you're talking about patients treated with AVITA products getting out of the hospital as much as 13 days faster. 13 days in someone's life who's recovering from a severe injury is so valuable to their life. And the doctor can treat more patients, and the hospital can use that bed to treat more patients, and they make more money doing it, which sounds a little capitalistic, but it's practical. Let's take a minute and look at a good example. This was a patient treated with Cohealyx. Now this patient did not get RECELL. It wasn't as big a wound. However, it was a type of wound that typically takes 30 days to recover. This patient was graft-ready inside 5 days, received their graft and exited the hospital at 14. Now this was -- this particular patient was treated by Ohio State University. And this was their press release. They stated this would have been a 30-day treatment. And here's a patient that gets out in 14. I suppose maybe they're looking for a vacation, but they're not looking forward to be in the bed of a hospital in Ohio State while their wound heels when they can be out living life. So this is real-world experience with Cohealyx. We think Cohealyx I, the study, is going to further validate this. And we have conversions already of hospitals who are using Cohealyx and finding this days to graft is real. It's happening, and they're so enthusiastic about it. Let's just talk about the value of reduced length of stay. And you can look at it right here on this graph. Total estimated cost per inpatient day is $11,000. There's direct costs and related costs, but you can just see how much it is worth. And it occurred to us that we are not selling RECELL the product. We're selling RECELL the protocol. The protocol to treat with autologous cell suspension, known as RECELL, is going to result in faster healing, less scarring and go home soon to your family sooner. And there's nothing that really beats that combination. Now we're going to take a minute and look what this means for the company because our future is bright, and it's important to understand some of the challenges we've recently had. This last 6 to 9 months have been a little bit challenging for the company financially. And I'd like to take a minute and describe why and why it's on its way to complete resolution. Now a new procedure like RECELL has been in place 5 years, and it was time for its own independent Category I code, which went through the AMA adjudication process and the AMA -- what's called the RUC committee, which is relative unit comparison to create the points by which reimbursement is created for a new code. When it arrived in time for release November 1, CMS looked at it and said, oh, my goodness, you, AMA, have made this way too complicated. So we're going to propose a dual-path resolution. Path A, you go back and fix the code, and we gave -- and they gave AMA a several-page guidance document that they wrote specific to the code, said, here's how you fix it. Please go fix it. And by the way, I'm happy to report that's well on its way. The societies have gotten together. They've got a submission underway, and it will all get resolved by January '27, kind of right on schedule with the normal AMA process and twice per year meetings and the RUC process. At the same time, we have a code, and they said, we're going to give it to the contractor pricing. What does that mean? CMS is the central organization, and they contract with subsidiaries of commercial insurance companies to administer Medicare claims and Medicaid claims. In this case, there are 7 of those geographically in the United States, but they are not related to each other. They are all contractors with the U.S. government. And so getting them to cooperate is 7 different companies interacting. So when we spring out of the box in January, unbeknownst to everybody, doctors, hospitals and ourselves, the doctors themselves got paid, but the providers -- or excuse me, the hospitals themselves get paid. The providers, the doctors basically got all kinds of things because contractor pricing is uncommon, not as far as never happens, but it is uncommon. Medicare contractors are inexperienced at it and uncoordinated. They do have a joint goal to unify and do things similarly so that Medicare policy is implemented across the U.S. in a common manner. It wasn't until the May time frame that all 7 of them met together, which they did. And during that time, they talked in a very -- with the societies and with AMA. And they came to a good understanding of how to reimburse for RECELL. What we see in June and July is the breakthrough of that solution. So what's being solved is retrospective to January 1, claims that have not been actioned upon are going to get acted upon. Claims that were underpaid will get adjudicated and paid correctly. And all of this will come to some resolution, we believe, during Q3, and we see good signs of it. So a real hiccup, it affected us very materially in the first half, and it will cause us to have a recovery in the second half. Let me describe that. We think it affected us up to the tune of $10 million in revenue in first half. And in fact, when we compare our top 10 hospitals and we look second half '24, first half '25, our top 10 hospitals not only stopped growing, they retracted $5 million. So we think this is all going to now turn around. But it caused us to say, all right, let's ground our guidance into the reality of what we just experienced and know that during the second half, the 7 MACs have to recover, re-adjudicate a large number of claims from January, get a system in place that's reliable, well communicated to the market and take away this chaos. So the good news is before January 1, we had never had a claim turn down. So to run into this problem was -- sometimes I refer to it as concrete learning when I run into a concrete wall. That's what this felt like. So it did happen. We've worked our way through it. We've got updated guidance of $76 million to $81 million for the year, which is growth of 19% to 27%. If you hit the midpoint of that, it's about 25% growth over prior year. And if we were able to isolate the disappointment over our prior momentum, we'd have [ 64 ] going to 25% growth, we'd be pretty excited. That said, we have reset our guidance to what we believe we can readily achieve and be in a position. And if things go a little bit better than we expect, great. We'll deal with that. But we feel very confident about this guidance, especially with the new products. Now what did it do with cash flow breakeven in GAAP? It moved it 6 months. It didn't move it 6 years or a year, moved it 6 months. Unfortunate, but reality, and as a consequence, our crossover, Q2 '26 and Q3 '26 for GAAP. So we feel great about that guidance. We have no need to grow our OpEx in the coming year. And the sales organization redesign I discussed earlier did some great things for us because on the one hand, we put all selling assets in front of the customer. That's number one, really good. But when you do that and you remove the service aspect, you need less people. So we did reduce people by a material number, and we took our field organization from 180 -- 108 to 82. Our quarterly expense reduction is $2.5 million associated with that, which is $10 million annually, which lowers our cash needed to break even. So one of the benefits of becoming more focused is this. There's other things we did. Of course, we ceased investment in vitiligo, which saved us marginally some capital. So what do we see right this moment as we're moving in Q3 that is very encouraging? We don't give monthly revenue, but I can give it to you qualitatively. June, which is month 3 of the quarter -- and remember, we're an acute wound care business. Acute wound care has to be ready for mass casualty. So there's always a minimum amount of inventory on the shelf, which typically gets topped off in month 3 of a quarter. So June being month 3 of a quarter fit that definition, and it happens. June was our highest revenue month in company history. Pretty encouraging towards this recovery I've been describing. In July, which is month 1 of the quarter, which would always be our softest month and especially following the highest ever, but in fact, July was the best month 1 we've had in a year. So it was real strong, notably including PermeaDerm and Cohealyx. So we're really feeling great about that. PermeaDerm had its highest quarter of revenue to date in Q2. And Cohealyx, which was launched in April, has started to have accounts trickle out to order. Our first real conversion, they didn't place an order of [ 300,000 ] in July. They actually placed several that added up to [ 300,000 ] in July, reflecting real utilization. So it wasn't just a stocking order. And the -- and as we move into August, they're going to do it again. So we're really bullish on the value of Cohealyx. The reimbursement issues, we think, are getting behind us. There's more work to do, but we feel confident that societies are really engaged. They're doing a terrific job. AMA is responsive to them. The MACs are being increasingly responsive to them. This RECELL demand is increasing, but the length of stay data is going to change the world for us. Let me take a minute. We took this data and we've gone to 2 hospitals, 1 big academic on the East Coast and 1 big IDN out west. And we went to them and both of them had a protocol, don't treat under 20% TBSA. And sure enough, we, as mentioned, entered into an agreement with both of them where we share in that length of stay reduction. So in both cases, it's resulted in what we expect 150 additional cases every month through the remainder of the year. So just that data is going to change the whole world for us. The operating expense reduction I mentioned earlier, we saw in Q2, you can see it on the P&L. And you've got the reason why, of course, change in how we're going to market. And many of you may know we announced the private placement of AUD 23 million, USD 15 million investment in the company by a number of new and existing investors yesterday, so literally hot off the press. So our cash on hand is in a great place. We're closing in on nearly $30 million of cash with that investment. And we have a very strong accounts receivable that's also coming, so in the order of $9 million to $10 million. So we feel we're in good shape financially. We've kind of -- there's been concern that we needed to have the right amount of cash to get profitable. That issue is solved. We were concerned about the reimbursement. That issue is completely solved. We got the biggest gift on the planet by getting this length of stay data from British Burn and figuring out how to maximize that 36%. That 36% is going to change the trajectory of RECELL's feature. So I think with that, I want to close with the thoughts about what we're doing. With the resolution of this claims backlog, we expect RECELL rebounds second half. Our recovery trajectory and stronger balance sheet allows us to go after our growth the way we're intending. And what we do with this length of stay data -- I'm looking forward to reporting to you in coming quarters the amazing impact that this makes on the care of patients, the work of the physician and the performance of AVITA. So I close with questions and answers, please. I hope we have the answers. I know you have the questions.

Thank you, Jim. [Operator Instructions] I'll now hand over to Ben Atkins to run the Q&A.

Thank you, Rudi. Jim, we've had a few questions come in, and I'm going to read those out either to you or to David. Jim, starting with you. How is RECELL performing across your target segments, burns, trauma centers and outpatient facilities? And what's your plan to reignite growth where revenues have been flat or impacted by this reimbursement headwind?

Well, first of all, the great news is the product is performing terrifically well, whether it be -- there's those who really are accustomed to using RECELL GO, the manual device, and they want to keep using it. That's great. There are those who see that RECELL GO, particularly in multi-kit procedures, has some real benefits to their workflow. It doesn't change the work, but it changes the workflow and allows them to simultaneously process biopsies. Our experience on the clinical side with PermeaDerm and Cohealyx is just overwhelmingly positive. So the big issue here is making sure this resolution of historical claims gets adjudicated and that we drive this message of the compelling reduction in length of stay, the 36% reduction. This is the name of the game. It's not about the product. It's about the protocol. Treat the patients with RECELL. It's not an expense. It is an enabler of better healing and faster time to home.

Jim, a follow-up question just on RECELL. Can you just comment on the recent -- in the earnings, the announcement about NTAP, specifically for wound care for RECELL.

Yes. That's a very good -- so we recently -- this is one of those things you should look at with a little bit of humor, bureaucratic humor. There's a program in Medicare called new technology add-on payment. And you can apply for it for a new technology. And we broadened our indication from burns to what essentially is trauma and surgical, which essentially is also known as nonthermal graft applications. And if they're nonthermal, you can apply the NTAP. And NTAP provides an additional payment to the hospital for the use of RECELL. Now that was applied -- that was awarded and will go into effect October 1. And the humor I was connecting here is here you have CMS awarding us NTAP. Previously, they had awarded us Breakthrough Device designation on our first PMA 5 PMAs ago. That Breakthrough Device designation is designed to facilitate reimbursement and regulatory approval. And so here we go through 5 PMAs, we get an NTAP and we run into this funky contractor pricing problem, which is kind of very indicative of left versus right and not really staying coordinated. But the NTAP is exciting for us. It's going to help us grow the trauma and surgical wound market. But again, it's for nonthermals in those markets.

David, we'll come to you in just a minute with a question. But Jim, just sticking with you for one more moment. We've had a couple of questions related to the international market. Can you perhaps just give the latest on the CE mark approval for RECELL GO? And when do we anticipate meaningful sales traction internationally, especially given some of the data that you've referred to today?

Yes. Well, there's some questions behind the questions there, Ben. So let me say it this way. We are working with our notified body to get the CE mark, which will cover where we intend to go internationally, which is most of Western Europe and Australia. We have approval in Japan already. Now we expected that a year ago October. And we may get it before October, we may not. The problem with the MDR is that any small company, it's -- let me step back. The MDR basically requires every product from every company to requalify. So imagine if we had to do that with the FDA. We would just destroy the FDA for 10 years, right? The work would be just amazing. And that -- but that is what the European parliament did. So we've been implementing the MDR. We are on the third extension. In our particular case with RECELL GO, we went with a notified body who asked that we pay a premium, and they would have approval by last October. Now we paid the premium, but we don't have approval. Now we do expect it in the near term. We're through most elements of the review. Can they bureaucratically get it done before September is over or not? We don't know. Almost assuredly, we'll be launching in Q4. Now I want to temper our international view because on the one hand, all of -- we're starting from 0 virtually. And we're going to be giving our distributors training, and they're going to develop a market. But it is going to be a slow and steady pace, not an investment that is going to delay our profitability. So we're going to temper our investment even though we're so excited about it, but we know that we need to get profitable in the U.S. to fund our business. And we can see that in the horizon, and we will be tempering our international investment as a consequence.

David, a question for you, I think. Can you walk us through your cash burn expectations for the rest of the fiscal year and how you'll meet cash flow needs over the coming 6 to 12 months?

Ben, thanks for the question. So we don't provide guidance for cash burn or cash balances. But I do want to walk through a couple of things that will give you some idea of how we get to cash flow breakeven. I mean the first and most important that Jim mentioned is we raised AUD 23 million yesterday, USD 15 million. And so with the $16 million that we had on the balance sheet at 6/30, we believe that cash is sufficient to get us to start generating cash flow in the first half of 2026. Jim mentioned that we've taken out some expenses out of our OpEx. And we think we are not going to be increasing our OpEx total for at least the next year. We are right around $25 million to $26 million of operating expense per quarter. Of that, about $3.5 million to $4 million is noncash. So our cash expense with very little capital expenditures is around $21 million per quarter. We have gross margins of around 80% to 85%. And so we need to achieve somewhere in the range of USD 25 million to USD 26 million in revenue to cross over to cash flow breakeven. We had $18.5 million last quarter. Sequential growth, not very significant, will get us to that number of $25 million to $26 million. So we have sufficient cash. We have taken out expenses out of the OpEx line. And we -- achieving the revenue that we believe we're going to achieve over the next 2 or 3 quarters will get us to that breakeven point.

David, a follow-up question for you, I think. Could the conversation around U.S. pharma tariffs have any effect on AVITA and its sales?

No. Very little effect at all.

Jim, I'm going to bring a question back to you, and this might make a good, as we get towards the top of the hour, sort of end of the call question. As you look ahead to 2026 and beyond, you've spoken about a few initiatives, the NTAP in place, the MAC reimbursement, new products gaining traction. What is the important milestone or catalyst in your opinion you'd want investors to watch for that you believe will define AVITA's next stage of growth?

That's a great question. There's kind of 3 big levers. #1 lever is 36%. And how that length of stay becomes well communicated in the market and redefines the protocol for treating patients with 10%, 20%, 30% TBSA wounds will absolutely redefine the company and its potential because the adoption of that protocol that was presented will make AVITA a bigger and more -- a stronger company, and that will open up all kinds of opportunities. The second, and it's the biggest single product market we have, which is Cohealyx. And I will be measuring that principally not on an overall basis, but rather as a percentage into our power alley, which will be burns. We can succeed with Cohealyx in burns only, notwithstanding its application throughout surgical and trauma wounds. So I think number 2 will be the maturity of the Cohealyx business, and that could happen really quickly. We figured it out the other day. If 10% of our RECELL patients in burns receive Cohealyx, it would add nearly $40 million to our revenue in the first year at 10% of what we sell associated with that. And certainly, way more than 10% get a dermal matrix. So that's kind of second. The third is the takeoff of the trauma and surgical indications for RECELL. They're in the still early phase where we're introducing Spray-On Skin to doctors who have never heard of it before and helping them learn about how to integrate it into their practice and help the patients they treat. That is a -- from a patient numbers point of view, it's triple, quadruple burns in centimeters squared treatment. So it's a huge market, but tapping into it and getting it adopted is a market development strategy where in burns, we're in market penetration. Those are 2 strategies that are a little bit difficult to execute simultaneously. And -- but we'll find a way, and we'll be sharing that with everyone along the way.

Thank you. Rudi, back to you.

That concludes the webinar, and we thank you for your participation.