The AVITA Medical Inc (ASX: AVH) share price is on the move on Friday morning.
At the time of writing, the regenerative medicine company’s shares are up 4% to $5.35.
Why is the AVITA share price charging higher?
Investors have been buying the company’s shares this morning following the release of its third quarter update.
According to the release, demand for the company’s Recell system rebounded strongly during the quarter.
This led to AVITA recording revenue of US$8.8 million for the three months ended 31 March, which was a 126% increase over the prior corresponding period. Positively, this was also a 72.5% increase on its second quarter revenue.
Supporting this growth was an increase in procedural volumes. For the quarter, volumes reached 492. This compares to 408 in the prior corresponding period and 487 in the second quarter.
AVITA also advised that it added 6 new burn centre accounts during the three months, lifting its total to 99. This represents a penetration rate of 73% of the 136 total U.S. burn centres.
Furthermore, of the approximate 300 total U.S. burn surgeons, 244 have now been trained and certified with Recell. And 147 of these surgeons used Recell during the quarter.
AVITA’s gross margin has softened over the last 12 months from 84% to 76%. This reflects a lower Recell price point for units that were purchased under contract with BARDA. The company’s contract with BARDA was negotiated prior to the establishment of a higher price point achieved in the Recell commercialisation in the United States.
Positively, the company offset this with a reduction in its operating expenses. They came in at US$13.2 million for the third quarter, which is down from US$19.7 million a year earlier. Management advised that this was primarily attributable to lower stock-based compensation along with lower sales and marketing expenses.
Nevertheless, this wasn’t enough to stop AVITA from recording a quarterly net loss of US$6 million. Though, this is a big improvement on last year’s third quarter loss of US$15 million.
This left the company with cash of US$114.9 million at the end of the period.
Management advised that total revenue is expected to be in the range of US$8.2 million to US$8.6 million in the fourth quarter.
This comprises US$5 million to US$5.3 million of commercial Recell revenue and US$3.2 million to US$3.3 million of Recell revenue associated with BARDA.
AVITA’s Chief Executive Officer, Dr. Mike Perry, said: “We made steady progress over the last quarter as we continued to drive RECELL usage in our established hospital burn center base with an increasing focus on smaller burns, and we continued to expand our physician training and outreach programs. As pandemic headwinds abate, we plan to leverage our highly experienced burns sales force and strong relationships built to date with the burn practitioner community to increase hospital access and to penetrate deeper into our existing accounts, resulting in additional procedures and engaging more burn practitioners.”
“Our three pivotal clinical trials in vitiligo, trauma, and pediatric burns are continuing on schedule and we expect to see expanded indications for RECELL coming online, allowing us to serve an ever-growing population of patients,” he added.