AVITA Medical, Inc. — Q2 2022 Form 10-Q
Reporting period: Quarter and six months ended June 30, 2022; comparisons are to the corresponding 2021 periods. Financial statements are unaudited and were reviewed by the independent auditor. AVITA is a commercial-stage regenerative medicine company whose lead product is the RECELL System.
Financial results
Amounts in millions, except per-share data and percentages.
| Metric | Q2 2022 | Q2 2021 | Six months 2022 | Six months 2021 |
|---|---|---|---|---|
| Revenue | $8.34 | $10.30 | $15.87 | $19.07 |
| Gross profit / margin | $6.95 / 83% | $8.25 / 80% | $12.71 / 80% | $14.87 / 78% |
| Operating loss | $(6.36) | $(4.70) | $(15.85) | $(10.70) |
| Net loss | $(6.26) | $(4.72) | $(15.72) | $(10.72) |
| Basic and diluted loss per share | $(0.25) | $(0.19) | $(0.63) | $(0.45) |
- Commercial sales rose 23% to $8.24 million in Q2 and 39% to $15.69 million for the first half, driven by more ordering customers and larger average orders.
- Total revenue declined because 2021 included BARDA product deliveries to managed inventory: $3.5 million in Q2 and $7.6 million in the first half. These deliveries did not recur in 2022.
- Operating expenses increased 3% in Q2 and 12% in the first half. Sales and marketing spending rose 29% and 30%, respectively; first-half general and administrative expense rose 22%. Research and development expense fell 23% in Q2 and 17% in the first half, which management attributed to programs being in lower-cost phases, not an intentional spending reduction.
Cash, liquidity and debt
- At June 30, cash and cash equivalents were $34.7 million and marketable securities were $56.4 million, totaling $91.1 million; restricted cash was a further $0.2 million. Total current assets were $91.8 million and current liabilities $7.9 million.
- Operating cash use was $12.9 million for the six months, versus $12.5 million in 2021. Investing activities used $7.8 million, mainly for marketable securities; financing provided approximately $1,000. Cash, cash equivalents and restricted cash declined $20.8 million from year-end.
- The company reported no significant external borrowing. Management stated that available cash reserves were sufficient to fund operations for the next 12 months; it also said future capital raising may be needed and spending could be curtailed if financing is unavailable.
- Total liabilities were $9.9 million, including operating lease liabilities; the filing reports no material purchase commitments or other long-term contractual obligations beyond leases.
Outlook, developments and risks
- FDA approved an enhanced-ease-of-use RECELL device supplement in February 2022. Japan’s PMDA approved RECELL for burns; commercial launch was pending reimbursement pricing approval. Enrollment in pivotal U.S. trials for soft-tissue reconstruction and vitiligo was complete; topline soft-tissue trial results had been announced, and further FDA approvals remained prospective.
- BARDA income was $0.6 million in Q2 and $1.3 million for the first half, supporting the soft-tissue reconstruction pivotal trial. The BARDA contract runs through December 31, 2023.
- Management cited COVID-19-related hospital staffing constraints and uncertainty, including a July 2022 return to work-from-home arrangements at headquarters amid BA.5 resurgence. Pandemic effects on hospital activity, clinical work and supply availability remain uncertain.
- Other notable exposures include continued operating losses and cash use, possible future financing needs, clinical and regulatory execution, and marketable securities’ unrealized losses of $0.5 million at June 30. No material litigation was reported; the filing stated disclosure controls were effective.
Investor verification priorities
- Track commercial RECELL sales and whether growth offsets the absence of prior-year BARDA inventory deliveries.
- Confirm cash and investment levels against quarterly operating cash use and management’s 12-month liquidity assessment.
- Monitor reimbursement pricing and launch timing in Japan, and regulatory progress for soft-tissue reconstruction and vitiligo.
- Review trends in sales and marketing costs, gross margin, and share-based compensation as the company expands commercialization.