AVITA Medical, Inc. (NASDAQ:RCEL) Q2 2023 Earnings Call Transcript

Ryan Zimmerman: Okay. Fair enough. Now, it’s very exciting. I mean, those are fantastic margins. Looking forward to it. Jim, turning to the early launch in full-thickness skin defects, can you just share anecdotally, given that you have been able to see early case adoption. What specific cases are doctors most comfortable with, kind of if there’s a trend in terms of utilization of this new indication where you’re seeing success? And then, conversely, where you may need to educate physicians about the potential and the latitude with which the label gives you for the new indication?

James Corbett: Ryan, that’s a big question. But let me give it a shot. First, let me try and get specific. We are having a multiplying week-over-week effect of both new accounts being added and new VAC applications underway. So, every week, the numbers move meaningfully in this short time we’ve had. So, that’s a tangible way for me to speak about it. The cases are still pretty broad, because there is a lot of differentiation among them. The ones the physicians, so to speak, capture most easily are cases like degloving, like necrotizing fasciitis. Those types of cases are very obvious resale cases, and they quickly gravitate to them. So, I don’t have macro trends or numbers yet on those because as you know, it’s been just several weeks.

But we see that they aren’t – what’s the right word? They’re quite aware of RECELL. We’ve done some market prep during the time, because we had — that Salesforce was principally in place and going through training and not promoting for in excess of four weeks on average before the launch. So, they had time to condition the market, identify the high grafting physicians because you can do that through CPT analysis. So, I think the bullishness that we feel is reflected and A, we did finish the high end of our guidance, as you know. I shoot for the middle, so high end is a – it means it went a little bit better than I planned for. And in the raising of guidance for the year, I think reflect that as well.

Ryan Zimmerman: Okay. Good stuff. Looking forward to seeing this play out. Appreciate it.

James Corbett: Thank you.

David O’Toole: Thank you.

Operator: Our next question comes from the line of Ross Osborne with Cantor Fitzgerald.

Ross Osborne: Hi, guys. Congrats on the quarter and thanks for taking my questions. So, maybe just circling back to sales rep productivity, just want to make sure I’m on the same page. So, in a prior question, you replied there’s not really a ramp for new sales reps to cover their cost. But in terms of hitting your 1Q average productivity of about 20 kits per month, how long do you think it would take for these new reps to hit that more efficient level?

James Corbett: It’s a good question. I have a different way to characterize that metric for you. So, the first element is not time-based, it’s just cost-based. So, it takes five resale kits per month to cover the cost of the sales rep. So, we look at that as an investment. So, when we hire a sales rep, we know getting to five, everything after that becomes contribution margin to the rest of the business. We do have a range of when that occurs. It ranges from as quickly as three or four months. It takes on some — in some cases in a very brand new territory with no prior resale might take six months. That’s a range of when they get from cost break-even to contribution margin positive. As far as the 20 reference, to put it in context, we have — when we went to this expansion, our average rep exceeded 20 per month.