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

Thank you for standing by, and welcome to the AVITA Medical Cohealyx KOL Investor Webinar. [Operator Instructions] As a reminder, today's program is being recorded. And now I'd like to introduce your host for today's program, Ben Atkins. Please go ahead, sir.

Thank you, and welcome to the AVITA Medical Cohealyx Key Opinion Leader webinar. Today, we will be reviewing an interim analysis from our Cohealyx I study, which evaluated time to autografting against a literature-derived performance benchmark. Before we begin, I'd like to remind you that today's call will include forward-looking statements regarding AVITA's current expectations about future events. Please refer to Slide 3 for additional details. It's now my pleasure to introduce our speakers. Joining us today are Dr. Derek Bell, Professor of Plastic Surgery and Kessler Burn Center Director at the University of Rochester Medical Center; Dr. Lourdes Castañon, Clinical Associate Professor of Surgery and Director of the Burn Program at Banner University Medical Center, Tucson, affiliated with the University of Arizona College of Medicine; Cary Vance, Interim CEO of AVITA Medical; and Katie Bush, Senior Vice President of Scientific and Medical Affairs. We'll begin today's discussion with opening remarks from Cary Vance. Cary, over to you.

Thank you, Ben. Acute wound care today is complex and resource-intensive. Patients often require multiple procedures over extended periods and variability in the path to closure can drive longer hospital stays, higher complication risk and increased cost. At AVITA, we are a hospital-based acute wound care company. We are focused on a concentrated set of burn and trauma centers where we have deep relationships and a consistent clinical presence. Growth in this business is driven less by adding new accounts and more by increasing utilization within the accounts we already serve, the same clinicians using our products across multiple patients over time. That's the foundation of our strategy. Built on that is our portfolio of 3 complementary technologies: RECELL, our spray-on skin technology, which enables skin regeneration at the point of care; Cohealyx, a dermal matrix that prepares the wound bed and PermeaDerm, which protects and stabilizes the wound. Individually, each of these products has clinical value. But the real strength is how they are used together on the same patient by the same clinician, optimizing the full healing pathway from wound bed preparation to dermal repair to skin coverage. And the goal is straightforward: accelerate progression to closure and healing, what we call it AVITA healing at the speed of life. That matters clinically, but it also matters economically, improving hospital workflow, reducing length of stay and lowering cost of care. As we look at that pathway, one of the key bottlenecks remains wound bed preparation. Delays at that stage extend care and increase risk. That's where Cohealyx is designed to play a role, enabling faster, more reliable progression to grafting. Where we continue to see a bottleneck today is in preparing the wound bed for closure. Delays at that stage drive prolonged care, higher risk and increased resource utilization. That's exactly where Cohealyx is designed to play a role, enabling faster, more reliable progression to grafting. Today, we'll share early data from our Cohealyx I multicenter study, including an interim look at time to grafting. And as we improve that step, we also expand the opportunity to utilize our broader portfolio, increasing value per patient and strengthening our leadership in acute wound care. With that, I'll turn it over to Katie.

Thanks, Cary. Before we get into the data, I do want to take a moment to ground everyone in a key concept that underpins the Cohealyx I trial. In the treatment of deep injuries, a skin graft is used on the injury site, which originates from a donor site on the patient. This skin graft has limited vascular supply. And in order for it to successfully take, the wound bed has to be properly prepared. It needs to be vascularized, it needs to be stable and ready to support that graft. If that doesn't happen, the graft will not take and the wound will not heal. And in practice, the preparation of the recipient site or optimization of that site is often what drives a delay in treatment. So while skin grafting is a standard and effective approach for wound healing, the rate-limiting step is getting the wound bed to a point where grafting is actually possible. What we've seen consistently across our RECELL clinical trials, published data and real-world use is that clinicians are trying to solve the problem of wound bed optimization with dermal matrices. In fact, more than 1/3 of patients in our RECELL trials and over 40% in published data sets receive a dermal matrix as part of their treatment. So the need is clear, but limitation of current solutions is time. In a meta-analysis review of literature, time to grafting with dermal matrices averaged approximately 33 days. And that delay has real consequences, including increased risk of complications, longer hospital stays and overall higher cost of care. That's the problem Cohealyx was designed to address by enabling faster progression to grafting. Our approach with Cohealyx has been to build evidence in a stepwise data-driven way. We started with preclinical work followed by clinical case series and real-world experience. And now with the Cohealyx I multicenter clinical trial, we are generating higher quality clinical evidence. Across each of these stages, we've seen a consistent signal, a meaningful reduction in time to grafting. And in the interim analysis of Cohealyx I, we are seeing a significant decrease in time to grafting compared to the objective performance goal based on currently used dermal matrices. At this point, I think it's most valuable to hear directly from the surgeons who are using Cohealyx in practice and who participated in the trial. Dr. Derek Bell, a Burn and Plastic in Reconstructive surgeon from the University of Rochester Medical Center in Rochester, New York; and Dr. Lourdes Castañon, a burn and trauma surgeon from the University of Arizona Department of Surgery and College of Medicine. They'll walk through their clinical study experience and how this translates at the bedside. So with that, I'll turn it over to Dr. Bell and Dr. Castañon.

Thank you, Katie. As Katie mentioned, there is a clear need in clinical practice for better solutions to prepare the wound bed and get patients to closure more efficiently. That's what led to this multicenter study evaluating Cohealyx with full thickness wounds. I've previously worked with AVITA on prior RECELL studies, and I was particularly interested in utilizing this Cohealyx study because this is a real barrier in getting our patients to closure in a timely manner. The goal of this study was to evaluate the ability of Cohealyx to advance wounds to the preparation and readiness stage for closure. The study enrolled patients across 20 centers, including many high-volume verified burn centers, which gives us a data set that reflects our real practices within our country. The Cohealyx I trial evaluates Cohealyx with a standard 2-stage treatment approach consistent with how we manage many of our full thickness burns. I often utilize a 2-stage approach with my patients with a variety of different acellular dermal matrices in doing so. In this study, the primary endpoint was the time to skin grafting, essentially how quickly can we get this patient from its initial treatment stage to the time of closure. Cohealyx is first applied to the wound bed. And once the wound is ready, then the patients proceed to definitive closure with split thickness skin grafting often in combination with RECELL. This is a critical milestone. The faster we can get the closure, the better this is for the patient. We evaluated this against literature reported mean of 33 days with 28 days being the lower bound of the confidence interval, representing the objective performance goals. This benchmark was established based on published data currently utilized with different dermal matrices, including but not limited to PolyNovo BTM, Integra and MatriDerm. These are many of the products that we use in our practices. These studies were selected because they have sufficient published data to establish a reliable evidence-based benchmark, which serves as a meaningful reference point for how patients are typically managed. This study includes a broad patient population without restrictions to patient condition or wound size, which makes the findings highly predictable to our everyday practices. In addition to time to grafting, the study also evaluated time to healing, scar outcomes and, of course, the safety profile, which is important in any studies. So again, our target patient population was acute full-thickness wounds that required stage procedures without limitation to size with endpoints being wound healing, scar assessment and safety. This slide summarizes the primary endpoint, which is the time to skin grafting. We see from this that there's a clear reduction compared with the meta analytic control. The mean time, decreases from 33 days with controlled matrices to 13.6 days with Cohealyx . So this difference is almost 20 days, 3 weeks essentially. This magnitude is significantly meaningful. The reduction in time by nearly 3 weeks significantly changes the course of patient care, including the risk of complications and overall utilization of our resources. So the faster we can get our patients healed, the better it is for the patients because it mitigates risk of infection, mitigates utilization of resources within our community with prolonged wound healing, nursing, time in the hospital, et cetera. Looking beyond the mean, the median time was 11 days, which reflects where most patients are falling. This suggests that there's an effect that's not driven by a small number of early cases, but it's pretty consistent across our cohort. The early sign of grafting that we saw was 5 days. The p-value was less than 0.001, which indicates that this is clinically significant, statistically significant data. This is a great slide. Building on our earlier time to grafting results, it shows how this translates across our entire cohort. Most of the patients were grafted within a relatively tight window, about 72% or 3/4 were grafted within 14 days, 25% of those patients were grafted within the first week. This isn't just an average effect. It reflects how the majority of patients are progressing throughout the study. There's a clear clustering in the 7- to 14-day range, which aligns with the median of 11 days. This consistency is important as it suggests a predictable pathway rather than just a few early responders within the study. There are some outliers, which is expected and this reflects what we see in our clinical practices. This may be reflective of some patient-specific factors, patients that may be more sick or have more complex wounds. So this is not surprising. But overall, this reinforces that there's a consistent and accelerated time line to grafting for this subset of patients. Beyond just the clinical outcomes, this reflects that the investigator experience is pretty good across the cohort. The satisfaction of the investigators was 90%, either being satisfied or very satisfied. None of the responders were very dissatisfied and only 10% were either dissatisfied or neutral. This suggests that the experience with the product is reproducible across the patients, and it isn't just limited to a subset. Satisfaction is not just subjective, it reflects how the technology performs in routine practice, how this integrates with our workflow and whether this is consistent in its results. When investigators are consistently satisfied, they're more likely to continue to use this product and incorporate this into our practices. This is something you need to think about when utilization across many centers throughout this country. This is my first patient I utilized in this trial. It's a 62-year-old gentleman who had flame burns to his trunk. The total service area was almost 500 square centimeters. He also had a history of COPD. So here is at presentation upon entrance into the operating room. He had 30 degree burns throughout the majority of this area. The area that you're looking at is his right torso with his head and shoulder being to the right and his hip being -- or his head and shoulder to the right and hip being to the left. Here is after excision, you can see that there's a healthy appearing wound bed that's going to be accepting of the graft. There's the application of the Cohealyx. I fixed along the perimeter sparingly using skin staples and then moisten the product with saline, so it conforms to the wound bed uniformly. You see a small red dot in the middle, it's a biopsy site for the study. Here's this patient 11 days, and he's determined to be appropriate of autologous grafting. You can see that there's nice granulation tissue throughout the majority of the wound bed. So I know that this is going to be ideal for accepting a graft. So I put split-thickness sheet grafts on him. The reason why I roll up is because the resins tend to put the grafts upside down. These are split-thickness sheet grafts, extremely thin, 0.004 inch. There they are applied to the wound bed. I fix them further with a wound VAC. So here's a patient 7 days postop. After the VAC takedown, you can see excellent adherence to the grafts throughout. Here is a 14 days postop and you can barely discern that this patient was even grafted. And 8 weeks postop, you can see the majority of this is the same color and consistency as the own-burn skin. He has some areas that are a little bit hyperpigmented. However, this is smooth, soft and supple. He has a fantastic result. So what are the key takeaways? First Cohealyx serves as a dermal matrix. We're optimizing the wound bed prior to grafting, which is translating to shorter time to definitive coverage compared to our historically published controlled acellular dermal matrices. Secondly, our primary endpoint is designed to capture efficiency and how quickly these patients progress to closure. This is clinically meaningful. In this study, the investigators were satisfied or very satisfied with the quality of the wound and the time to grafting with the Cohealyx. And now I'll be passing this over to my good friend and colleague, Dr. Castañon, who will discuss her experiences with Cohealyx. I thank you for this opportunity.

Thank you, Dr. Bell. At our center in Arizona, we treated 4 patients, and I will be presenting on our initial experience. This was a 55-year-old male with an upper leg wound with a necrotizing soft tissue infection or NSTI. The patient underwent surgical excision to healthy margins followed by Cohealyx placement. It is important to note that this patient was critically ill. Their comorbidities included heart failure, cirrhosis, obesity, all which are known factors to delay wound healing. Clinical progress was monitored, and you can see the incorporation of Cohealyx 6 days following application in the leftmost image. On postoperative day 13, the wound that appear red vascularized and suitable for skin grafting. In addition to the clinical observations, we conducted histological analysis to better understand what's happening in the wound bed prior to grafting. At day 13, a small sample was biopsied from the center of the wound bed. What we see is the formation of dermal-like tissue layer, consistent with the proposed mechanism of action of Cohealyx supportive of effective graft preparation. Importantly, these findings align with the preclinical data, giving confidence that the product is translating as expected into the clinical setting. Here, we can see the outcomes for this patient on the left at 12 weeks post skin grafting, having favorable skin graft take, cosmetic outcome and durability. Overall, my takeaways from my experience with Cohealyx to date include: one, it supports progression to skin grafting within clinically meaningful time frames; and two, across both the trial and my clinical practice, I am seeing consistent performance in a range of complex patients with time to grafting beginning to trend below the median observed in the study as I am getting more comfortable with what this product can do.

Thank you to Dr. Bell and Dr. Castañon for sharing both the interim data and their clinical experience with Cohealyx. This slide outlines how we're building and communicating the data set over time. We began with early readouts in 2026, sharing single center results and histology to establish initial clinical signal. With the interim analysis, we're now incorporating these data in the abstracts for upcoming conferences throughout the year. In October of this year, the full data set will become available. And from there, we will expand to multicenter presentation at major conferences in 2027, covering safety, efficacy and broader scientific validation. In parallel, we're targeting publication providing peer-reviewed validation of the data. Overall, this strategy allows us to communicate the data from initial readouts through full validation. With that, I'll hand it back to Cary to provide some closing remarks.

Thanks, Katie, and thank you to Dr. Bell and Dr. Castañon for your insights and for sharing your clinical experience. Let me close with a few key takeaways. First, Cohealyx is addressing a critical step in the pathway. We are redefining wound bed preparation with faster, more predictable progression to grafting. Second, the interim data support both the clinical performance and the commercial potential of Cohealyx. This is not just about outcomes, it's about how those outcomes translate into real-world use. Third, we're seeing strong surgeon satisfaction. And that matters because adoption in this market is driven by clinical confidence and repeat use within existing accounts. And finally, this drives greater value per patient. It reinforces our procedure-based platform with clear milestones ahead as we continue to build the data set and expand visibility. Stepping back, what this reflects is progress. Progress in how we support clinicians, progress in how we improve patient care and progress in how we build a more valuable, more integrated acute wound care platform. With that, let's open the line for questions.

And our first question for today comes from the line of Ryan Zimmerman from BTIG.

For the physicians on the call, I appreciate you guys sharing your experience with us. Maybe the first question, I'll ask both upfront. But the first question is just why have traditional dermal matrices taken longer in your view? And what is it -- what's unique in your view about Cohealyx that enhances that time to skin graft? And then the second question, I'll ask upfront is, historically, AVITA has been a one-product company, right, with the RECELL device, which has been very effective in burn care. Now with Cohealyx and PermeaDerm, there is more potential to use those in conjunction with the RECELL device. But I'm just curious if you foresee using Cohealyx for all the cases where you would use the RECELL device and just how to think about the utilization of these additional products in conjunction with the RECELL device.

This is Derek Bell from Rochester. I think to answer your first question, I think that in my hands, the reason other products have taken longer to integrate is in part their composition. A lot of these products, in my hands is consistent with the 33 days. And I think that the time to vascularization just takes a long period of time. With other products, I have tried to push the envelope and graft them sooner than 3 weeks and the grafts fail. I don't think that they incorporate imbibe and establish angiogenesis and vascular ingrowth as readily as Cohealyx does.

So I have changed my practice. I've had experience with a couple of different ones. And what has changed for me is the early incorporation onto the tissue. And I've been using it in combination with RECELL and 4:1 grafting. I will say with the combination of both products, I no longer do a 2:1, 3:1 graft. I've been, for the most part, doing a 4:1 with RECELL on top of the product, and we've had really great results. For us, length of stay is a big issue. We are 1 of 2 centers in Arizona, and we have high volume. So for us, we want to get them out of the hospital as soon as possible. So this combination goes along with our practice, getting them out of the hospital as soon as we can.