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

Good day, and thank you for standing by. Welcome to the PermeaDerm KOL webinar. [Operator Instructions] I would now like to hand the conference over to your speaker today, Ben Atkins, Vice President of Investor Relations at AVITA.

Thank you, and welcome to the AVITA Medical PermeaDerm Key Opinion Leader webinar. Today, we will be reviewing data and cases from our PermeaDerm-I study, which evaluated PermeaDerm as a wound temporizer compared with cadaveric allograft. 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. I should also like to add that this presentation will include images of burns and wounds. It's now my pleasure to hand over to Katie Bush, AVITA Medical Senior Vice President of Scientific and Medical Affairs.

Thank you, Ben. Today's discussion will focus on our PermeaDerm-I clinical study readout and 2 surgeons clinical experience with the product as part of our broader AVITA portfolio. Joining us today are Dr. Anju Saraswat, Assistant Professor of Surgery at Wake Forest University School of Medicine; and Assistant Medical Director of the Atrium Health Wake Forest Baptist Burn Center. Also, Dr. Christina Sharon, a Burn and Acute Care Surgeon and the Burn Director at Baton Rouge General in Louisiana. In a moment, Dr. Saraswat will provide an overview of our clinical trial results, then Dr. Sharon will provide her experience using PermeaDerm as part of the AVITA portfolio. We will then open the line for questions. Before I hand over the presentation to Dr. Saraswat, let me provide some background information on how PermeaDerm fits in the AVITA portfolio. At AVITA Medical, our purpose is healing at the speed of life, helping patients heal sooner and return to their lives faster. To achieve that, we have built a portfolio of 3 complementary technologies that support clinicians across the continuum of acute wound care, from preparing and stabilizing the wound with PermeaDerm, rebuilding the wound with Cohealyx to ultimately restoring the patient's skin with RECELL. Individually, each product addresses a critical stage of treatment. Together, they provide a more comprehensive approach, proven to improve clinical outcomes while reducing the burden of care to the patient and hospital. Across the portfolio, more than 225 publications, together with a growing number of company-sponsored and investigator-initiated studies continue to strengthen the evidence base supporting our technologies. Today's data builds on that body of evidence, complementing the recent interim results from our multicenter Cohealyx-I study, the webinar for which is available on our website. Today's focus is PermeaDerm. We will review its role as a temporizer, a concept central to the PermeaDerm-I trial and discuss how it can help surgeons stabilize and protect the wound before final reconstruction. When we have discussed PermeaDerm previously, we've described it as protecting and stabilizing the wound. Let me explain why that's important. Definitive wound closure is always the goal, but in many cases, it is not possible immediately. A patient may require further stabilization, the wound bed may just not be ready yet or donor skin may be limited, that is where temporization fits. PermeaDerm provides temporary wound coverage that helps bridge the period between excision and definitive closure, maintaining a protective environment until reconstruction can proceed. This clinical role is central to the PermeaDerm-I study we'll discuss today and reflects how the product is increasingly being positioned in practice as an alternative to allo during this critical stage of care. Cadaveric allografts have been used for temporization for more than a century and remain a familiar option in burn care when definitive closure is not yet possible. They are one of the oldest approaches in burn care. While widely used, allografts require frozen storage, tissue tracking and thawing before application, which adds time and complexity in the operating room. Tissue characteristics could also vary from donor to donor including thickness and consistency, and they are available only in certain sizes based on donor harvesting capabilities. In addition, because they are human derived, allografts carry a risk of disease transmission and immunogenic response. PermeaDerm is a modern approach to temporization a biosynthetic wound matrix designed to provide temporary coverage similar to allograft yet reducing the logistic burden of human donor tissue. PermeaDerm mimics key features of native skin through a bilayer structure that protects the wound, allows oxygen exchange and supports healing. It is fully removed prior to definitive closure, making it a temporary bridge rather than a permanent implant. PermeaDerm is also transparent. This allows at a glance wound assessment with a clear view to the wound healing process, minimizing disruption to the patient, the wound or the product itself. I will now turn the presentation over to Dr. Saraswat to review the PermeaDerm-I clinical trial results.

Thank you, Katie. As surgeons, we need temporary wound coverage that bridges excision and definitive skin grafting. Traditionally, that role has been filled by allograft. But allograft has limitations, including cost, availability and workflow. The question we wanted to answer was straightforward, can PermeaDerm provide a clinically comparable alternative while reducing the cost of care? That's the rationale behind the PermeaDerm-I study. This is a randomized controlled trial involving 40 patients with wounds covering up to 30% of total body surface area. Following excision, patients received either PermeaDerm or allograft during the temporization period before undergoing split thickness skin grafting. Patients were then followed for 8 weeks. Importantly, we looked at multiple endpoints. We evaluated what matters in clinical practice, graft take, healing, inflammation, adverse events and surgeon experience. We also measure the practical aspects that matter to hospitals, including preparation time, application time and the cost of treating the wound. Taken together, these endpoints were designed to determine whether PermeaDerm could deliver comparable clinical performance while offering meaningful economic advantages over allograft. Collectively, 11 burn centers contributed data to the study and are listed here on this slide. The participation in multiple investigators across diverse institutions and patient populations help demonstrate that these findings are representative of real-world burn and wound care rather than the experience of a single center. Now turning to the results. The primary endpoint of the study was met. PermeaDerm reduced treatment cost by 70% compared with allograft, and that difference was statistically significant. If you look at the chart on the left, the difference is immediately apparent. On a cost per percent TBSA treated basis, the mean cost was $148.70 for PermeaDerm versus $497.10 for allograft. For clinicians and hospitals, that's a meaningful result. It demonstrates that PermeaDerm can deliver the temporary wound coverage we need while substantially reducing the cost of care. Put another way, PermeaDerm reduced costs by approximately $348 for every 1% of TBSA treated, highlighting the potential economic impact in routine clinical practice. The workflow benefits were just as compelling as the cost findings. PermeaDerm reduced preparation time by nearly 96% compared with allograft. The reason is straightforward. Unlike allograft, PermeaDerm does not require tissue tracking, thawing or meshing, so it's ready for use immediately. Once in the hands of the surgeons application time was comparable between the 2 groups. The key question, of course, is whether those economic and workflow advantages came at the expense of healing? Based on these results, the answer is no. Clinical outcomes were highly comparable between the 2 groups. At 1 week following grafting, approximately 94% of PermeaDerm patients achieved at least 95% graft take, essentially the same with allograft. By 8 weeks, all patients in both groups have achieved wound healing, demonstrating comparable progression to definitive closure. Taken together, these findings show that PermeaDerm delivered meaningful cost and workflow advantages while maintaining the outcomes surgeons expect when using temporary wound coverage. As these products are used in medically complex burn patients, safety is in an extremely important part of the study. Reassuringly, there were no PermeaDerm related adverse events. And overall, adverse events were numerically lower with PermeaDerm than allograft, including fewer study area events. Wound bed biopsies also showed no meaningful differences in inflammation between groups. Overall, these findings support the safety of PermeaDerm as a temporary wound coverage option. Investigators and patients both reported high satisfaction with PermeaDerm with 100% in each group rating it satisfied or very satisfied. This is an important practical signal, suggesting the product is well tolerated by patients and easy to incorporate into a surgeon's operative workflow. The aggregate data we've reviewed is supported by what we observed in individual patients. This slide shows a comparative case example, illustrating how PermeaDerm performed relative to allograft. These 2 patients were similar in age and had wounds with similar size, mechanism of injury as well as wound location. Following excision of these full thickness burns down to fat, both wounds require temporary coverage before allograft placement. As you can see, both products provided effective wound protection throughout the first several days. An important difference, however, is that PermeaDerm is transparent, allowing the surgeon to directly visualize the wound bed without removing the dressing. That visibility can make ongoing assessment easier while maintaining wound coverage something that isn't readily available with allograft on the wound bed. At 1 week, the PermeaDerm and allograft were removed and allograft was applied. The images on the right of the screen are 8 weeks follow-up and demonstrate comparable healing outcomes. This representative case illustrates that PermeaDerm provided effective interim coverage in a manner that was clinically comparable to allograft with the added practical advantage of visualization of the wound bed without removal of the product. Taken together, the data from the trial suggests that PermeaDerm delivered comparable clinical results with less workflow burden and lower cost. We saw comparable graft take in healing, no difference in safety or inflammatory profile and high satisfaction from both surgeons and patients. From a practical standpoint, PermeaDerm also simplified workflow by eliminating thawing, meshing and tissue bank logistics, while remaining easy to integrate into clinical protocols. PermeaDerm is also predictable as it comes in standardized configurations unlike allograft, which can vary in size and thickness depending on donor and vendor. Also, PermeaDerm is a synthetic product that is not subject to the supply constraints or donor availability limitations that can possibly be associated with Cadaver skin. And economically, the product demonstrated a 70% reduction in product cost. Together, these findings support PermeaDerm as a temporizing option with meaningful operational and economic advantages. I will now pass over the presentation to Dr. Sharon who will be talking about her clinical experience with the product.

Thank you, Dr. Saraswat. I have been familiar with AVITA through RECELL and over time, I have come to appreciate the value of having options that support patients across the full wound healing pathway. In my practice, I start with the end in mind. Building a plan around how I will prepare the wound bed, rebuild the tissue and ultimately get skin on these patients and back to their lives. What intrigued me about PermeaDerm was its potential role as an alternative to allograft for temporary wound coverage. It gives me a practical way to assess whether the wound is ready for grafting or whether additional excision is needed. And from an operative standpoint, reducing logistics in the OR and saving money for the hospital is always welcome. I will be sharing 2 cases from my practice with you today, in which I use PermeaDerm, Cohealyx and RECELL. I will focus primarily on the PermeaDerm component, but also discuss the final outcomes for these patients. This illustrates how the AVITA portfolio can be used across the continuum of care in a patient with an extensive 45% TBSA area burn. Given the severity of the injury, it is clear from admission that definitive closure would need to occur in stages. That made temporary wound coverage, an important part of the treatment strategy while we stabilize the patient and prepare the wound bed for reconstruction. These images are post excision of the wound and PermeaDerm was applied as a temporary wound covering. Clinical assessment of this wound indicates a clean wound bed, and there were no signs of active infection. But unfortunately, with this patient due to other injuries, there was a delayed time to first excision debridement and the patient was at risk for infection and wound conversion. One of the advantages I value most about PermeaDerm is its transparency. It allows me to directly visualize the wound bed without removing the product, making it easier to assess tissue viability and determine whether additional excision is needed. In this patient, that visibility proved valuable. It confirmed that portions of the wound converted and required further excision while other areas have developed a healthy, well vascularized wound bed. You can see on the arm how well vascularized the wound bed is, but that an area on the back needed additional excision. We then reapply PermeaDerm following the re-excision of the back and left the PermeaDerm on the arm in place. Once the wound bed was optimized, we transitioned to definitive reconstruction, Cohealyx was used to further support the wound bed, followed by a 6:1 wide mesh, split thickness skin graft and RECELL together with cultured epithelial allografts to achieve definitive closure. The patient was discharged on day 48 with 98% wound closure, and these photographs at 71 days demonstrate an excellent overall outcome. For me, this case highlights how the AVITA portfolio can work together. PermeaDerm to protect and assess the wound during temporization; Cohealyx to optimize the wound bed and RECELL to help achieve definitive closure. This is another example in which the full portfolio was used. The patient presented with 22% TBSA burns, involving both lower extremities and the hand. After excision PermeaDerm was used to provide temporary wound coverage while allowing us to determine whether any additional excision will be necessary before definitive closure. One feature I'd like to highlight is the PermeaDerm glove shown on the right. Hands can be particularly challenging to address because of their complex anatomy. The glove conforms well to the hand, provides uniform coverage and is much more efficient than individually wrapping each finger. After 8 days of temporization, the wound bed was ready for definitive reconstruction. At that point, we proceeded with skin grafting and RECELL with Cohealyx to support the healing environment. Again, this illustrates how the products are used sequentially with each serving a distinct purpose as the patient progresses through treatment. By 30 days, the vast majority of the wounds had healed with only a few areas still open, which can happen following wide mesh allografting, especially over subcutaneous fat. Rather than leaving those areas to heal on their own, I applied small strips of Cohealyx to support continued closure and to fill defects. This is an example of how I use Cohealyx beyond the initial procedure to help manage the final stages of healing when needed. At the 45-day follow-up visit, the patient was healed. There was some hyperemia, which is expected in the lower extremities, and this gradually dissipates over time. In my experience, PermeaDerm is a useful tool that allows me to temporize patients with confidence. In my experience, it is clinically predictable, easy to use in the OR and straightforward for my staff to manage afterwards. It helps me assess the wound bed in real time and give me a clear path to proceed to grafting with confidence. I will now turn it over to Katie for final remarks.

Thank you, Dr. Saraswat and Dr. Sharon for sharing your experience and walking us through the data. Taken together, the clinical study in these real-world cases reinforce 3 key themes: strong clinical performance, a simpler workflow and a meaningful economic advantage. We believe those attributes position PermeaDerm as a compelling alternative to allograft and an important part of AVITA's acute wound care portfolio. We'll now open the call for questions. I'll be moderating today's discussion, and we encourage you to direct your questions to our surgeons on the study results, the clinical data or their practice experience using PermeaDerm and burn care. Operator, please open the line for questions.

[Operator Instructions] And our first question comes from Ryan Zimmerman with U.S. Bancorp BTIG.

This is Izzy on for Ryan. I just wanted to start to post the question to either of you actually. But the study was -- the study started with patients that have 30% TBSA. I was curious if you think the results that you've seen from the data would be able to generalize into larger burns?

Dr. Saraswat, do you want to go ahead and field that question?

Sure. I'd be happy to. So -- just to clarify the question, you're asking, can the product be used for burns larger than 30% TBSA?

Yes. Do you think that the results are generalizable into burns above that 30% TBSA and potentially, is there plans to study in that population?

The short answer is yes. I mean this was the first study demonstrating the usefulness as an alternative to allograft. And this is something that for a patient with a larger TBSA, we would absolutely use allograft to temporize the wound bed. So I think it would be something that we could easily interchange with PermeaDerm. We highlighted has benefits compared to allograft and it's easy to use.

I was just going to ask if Dr. Sharon had any other comments to make.

I agree with Dr. Saraswat. I have actually used it personally on 45%, 50%, 70% TBSAs and have had really good outcomes. So I think it does translate.

And just as a follow-up, are there any wound characteristics or potentially like patient profiles where you would still prefer to use allograft over PermeaDerm or any limitations to PermeaDerm in your experience so far?

Dr. Saraswat, do you want to go ahead and answer first and then Dr. Sharon, if you have any additional comments.

Sure. Yes. I was kind of running through my head all the reasons I would use allograft. And really, I can't think of a situation where I would not use PermeaDerm instead, especially because, as Dr. Sharon highlighted, you can see right through it and evaluate the wound bed. And so you can oftentimes make decisions with a shorter timeline with the ultimate goal of getting these patients grafted and out of the hospital and healed faster. So I obviously can't think of a limitation to this.