AVITA Medical, Inc. — Form 10-K Summary
Reporting period: Fiscal year ended June 30, 2021, with quarterly results including the quarter ended June 30, 2021. The request metadata refers to “2020 Q4,” but this filing covers fiscal 2021; the Q4 figures below are for fiscal 2021 Q4.
Business context
AVITA is a regenerative medicine company commercializing RECELL, a point-of-care system that prepares a suspension of a patient’s own skin cells. Its primary commercial market is U.S. burn treatment. The FDA expanded RECELL’s burn indication in June 2021 to include full-thickness pediatric burns and full-thickness burns exceeding 50% total body surface area. The company is also developing uses in soft tissue reconstruction and vitiligo, and pursuing earlier-stage research in epidermolysis bullosa and skin rejuvenation.
Key financial metrics
| Metric | FY2021 | FY2020 |
|---|---|---|
| Revenue | $29.2 million | $14.3 million |
| Gross profit / margin | $23.3 million / 79.6% | $11.3 million / 79.2% |
| BARDA income | $2.1 million | $3.9 million |
| Operating expenses | $51.9 million | $57.9 million |
| Operating loss | $26.5 million | $42.7 million |
| Net loss | $26.6 million | $42.0 million |
| Net loss per share | $1.17 | $2.07 |
| Net cash used in operations | $25.9 million | $22.7 million |
| Cash and cash equivalents at year-end | $110.7 million | $73.6 million |
| Total assets / total liabilities | $125.5 million / $9.8 million | $82.5 million / $10.1 million |
FY2021 revenue comprised $21.5 million of commercial sales and $7.7 million of BARDA product and emergency-preparedness revenue. BARDA product sales represented approximately 26% of total revenue. The company reported no significant external borrowing at year-end. Current assets were $121.3 million and current liabilities were $7.4 million.
| Fiscal Q4 metric | Quarter ended June 30, 2021 | Quarter ended June 30, 2020 |
|---|---|---|
| Revenue | $10.3 million | $3.9 million |
| Gross profit | $8.3 million | $3.0 million |
| Operating loss | $4.7 million | $13.0 million |
| Net loss | $4.7 million | $12.9 million |
| Net loss per share | $0.19 | $0.60 |
Material changes versus the prior comparable period
- FY2021 revenue rose 105% year over year. Commercial RECELL revenue increased 50%, or $7.2 million; the additional increase included BARDA’s purchase of units for emergency preparedness.
- Gross margin increased to 79.6% from 79.2%, which management attributed mainly to lower shipping costs, increased production, and extended product shelf life.
- Operating expenses declined 10%. Lower general and administrative expenses reflected higher prior-year share-based compensation and redomiciliation costs; sales and marketing costs also fell with reduced travel and conferences.
- Research and development expense increased 62% to $14.8 million, primarily due to increased vitiligo clinical activity and other pipeline investment.
- Net loss narrowed by 37%, although operating cash use increased to $25.9 million, partly reflecting higher BARDA receivables.
- Cash increased following a March 2021 equity offering of 3.2 million shares, generating approximately $64.0 million net proceeds. The company said it had not used the net proceeds by June 30, 2021.
Outlook, risks, contingencies, and unusual items
- Management stated that available working capital was sufficient for committed programs and other activities for the next 12 months. The company nevertheless expects losses to continue until sales can support its cost structure and says further capital may be needed; future financing could dilute shareholders or impose restrictions.
- COVID-19 reduced travel, accidents, burn incidence, and burn admissions, and restricted commercial-team access to hospitals. Management expected burn-related accidents to return toward pre-pandemic levels as restrictions eased, but noted continuing uncertainty and possible supply-chain, operating, and clinical-enrollment effects.
- The $53.4 million BARDA contract runs through December 31, 2023 unless terminated earlier. Cumulative payments were $30.9 million at June 30, 2021. BARDA’s 5,614-unit vendor-managed inventory procurement was delivered and accepted; RECELL units carry a replacement obligation due to limited shelf life.
- CMS’s proposed 2022 outpatient payment rule reviewed AVITA’s Transitional Pass-through Payment application. The company expected a decision toward the end of December 2021, with a code potentially effective in early 2022; approval and broader commercial coverage were not assured.
- At fiscal year-end, the soft tissue reconstruction pivotal study had enrolled 32 of 65 patients, with completion expected during calendar 2022. The vitiligo feasibility study had treated 5 of 10 patients and the pivotal study 16 patients; a possible revised pivotal-study design was under discussion with the FDA.
- Management anticipated Japanese regulatory approval by the end of 2021 and a partner-led commercial launch in 2022, subject to approval and permitted labeling. The next RECELL iteration was under FDA review and expected to launch in the first half of calendar 2022, subject to regulatory progress.
- Other significant risks include regulatory approval and trial delays, reimbursement and pricing uncertainty, manufacturing and single-source supplier risks, competition, intellectual-property protection, and dependence on BARDA and continued financing. A key RECELL patent extension was pending; without extension, the filing says the patent could expire in 2022.
- The company reported no significant legal proceedings, no material off-balance-sheet arrangements, and no material contingencies at year-end. Management concluded disclosure controls and internal control over financial reporting were effective; the auditor did not provide an internal-control attestation.
Important facts for investors to verify
- How much of future revenue growth is recurring commercial demand versus BARDA procurement, and how commercial adoption is progressing across burn centers.
- Cash runway under the operating cash-burn rate, including the timing of collections on BARDA receivables and remaining equity-offering proceeds.
- CMS’s final pass-through payment decision, resulting reimbursement, and coverage from commercial insurers.
- Enrollment, outcomes, and FDA timelines for the soft tissue reconstruction and vitiligo programs, along with the next-generation RECELL review.
- Japanese approval timing and labeling, and the cost and operational implications of BARDA product replacement obligations.
- Status of the patent-term-extension application and the company’s broader intellectual-property coverage.