AVITA Medical, Inc. Price & Performance (RCEL)

Any forward looking statements provided during this call are based on management's expectations as of today. I will now turn the call over to Jim for his comments. Thank you, Jessica.

Good afternoon to those in The U. S. And good morning to our Australia investors. Thank you for joining us today as we review a year of remarkable progress and complete For the past year, we evolved from a single product company into a multi product leader in therapeutic Acute Wound Care. This initiative began in 2023. As we launch our strategic growth plan. Expanded our core business, treat trauma and surgical wounds under the full thickness skin defects indication, support these efforts, we began building a scalable infrastructure setting the stage for our first portfolio expansion, In January 2024, announced Permianer, the first addition to our multiproduct portfolio. By April 2024, we had launched it marking it a pivotal milestone in our transformation aligning our portfolio with our mission.

This mission shown on Slide three, it's a cornerstone of who we are and where we are headed. Let me explain its significance and how it is shaping our future success. Our mission is to position Aveda Medical as a leading therapeutic acute wound care company. Delivering transformative solutions our technologies are designed to optimize wound healing, effectively accelerate the time to patient recovery. The words in this statement are meaningful. Let's break down what this means. Therapeutic. Means that our solutions are designed to actively heal and cure patients. Not just be palliative forms of care. Acute defines the nature of our focus We treat patients with event driven injuries burns, traumatic or surgical wounds not chronic wounds such as diabetic foot ulcers venous leg ulcers or pressure source Simply put, our patients are victims of severe unexpected accidents or events car crashes, industrial fires, or traumatic burns. The common denominator is not their age, it's not their gender, nor is it their ethnicity. Or rather the shared nature of their injuries. These injuries could be the result of a solo road incident burns sustained from an industrial fire, [indiscernible] multiple injuries from a tragic event like the recent terror attack in New Orleans Despite their diverse scenarios, these patients all have injuries due to traumatic events.

Our mission to help patients heal faster not only reduces overall healthcare costs [indiscernible] more importantly, helps patients return home to their loved ones more quickly. This underscores the power of our technologies and a driving force behind our expanded product portfolio. Please turn to Slide four, to see the related markets that we serve as I explain how our product portfolio aligns with our mission. Let's start with our core product resell. And review how it optimizes patient healing and accelerates patient recovery. First and foremost, what makes Resell special is that it is skins bearing. Allowing physicians to achieve closure using significantly less healthy donor skin. Also known as autologous skin, Compared to traditional grafting techniques, resell expands autologous sample 80 to one. Additionally, substantial clinical evidence demonstrates that patients treated with resell [indiscernible] experience less scarring, and leave the hospital sooner. We sell Go, our next generation system. Combines the proven outcomes of Resell with enhanced features that simplify and streamline its use in both burn and trauma centers. The conversion to Resat Go is going very well. We've converted nearly all of our burn accounts and over 70% of our trauma center accounts were approximately 83% of our total unit volume.

As a reminder, each of our standard resale go processing kits agreed up to nineteen twenty square centimeters. Which is roughly 10% of total body service area. However, most traumatic wounds are under four eighty square centimeters or about 2.5% total body surface area. This size difference created somewhat of a cognitive dissonance for the clinicians using a standard resale kit to treat a small wound. Like using a sledgehammer drive in a small nail. To address this, we designed [indiscernible] for wounds under four eighty square centimeters. Filling a critical gap in our trauma care offering As anticipated, we received approval for Resell Go Mini on December 23. We are rolling out Wixel Go Mini to burn in trauma centers that currently treat a significant volume of smaller wounds during Q1. Incidentally, Resocco Mini uses the same ResellGo processing device as a standard Resell Go processing This innovation is the foundation of our portfolio. And lacking possibilities in therapeutic acute wound care with complementary solutions like CoHelix Permianne, Permida Derm a temporary biosynthetic dressing, further strengthens our portfolio by supporting wound healing before and after grafting. It plays a role in helping clinicians heal patients faster get patients home sooner and reduce hospital stays.

Thereby lowering overall cost of care. I want to take a moment to remind you about the unique qualities of First, it is porous. Facilitating airflow to the wound to promote healing while enabling exudate drainage. Next is porosity is flexible. Which lets the clinicians adjust to moisture levels ensuring optimal healing conditions for each patient's unique wound needs. Finally, it's transparent cover allows clinicians to monitor the skin monitor the skin graft healing progress without disturbing it. Rather than lifting or removing the dressing Partitioners have a clear view of the progress making it uniquely effective. Taking our wound healing approach a step further, our newly FDA cleared dermal matrix SCO Helix represents a breakthrough in addressing the critical need for accelerated graft readiness. Cohelix is a collagen derived dermal matrix that we co developed with Regenerity Biosciences. Our goal was clear, create a material integrates into the wound bed and absorbs histologically eliminating the need for removal before skin graft application. And reducing the number of days to draft readiness. In a validated porcine model, our preclinical work demonstrated that when Cohelix is used as a dermal matrix, on a large wound, it is ready for grafting in just seven days.

Compared to twelve to twenty one days for alternative dermal matrices in the studies. This faster readiness translates directly to shorter hospital stays reduced cost and better patient outcomes. In full thickness wounds, CoHelix provides a three d structure that supports tissue regrowth and the formation of new blood vessels is eventually absorbed into the wound. To illustrate the significant benefits of faster healing, important to understand the complexities and challenges associated with treating pulp thickness wounds. By definition, a full thickness skin injury penetrates all layers of the skin. Causing significant soft tissue loss damage to the connective tissue structural integrity. Unlike a superficial knee abrasion, where your own cells repopulate quickly, often heal overnight, Full fitness wounds lack the necessary healthy cells to rebuild the missing connective tissue. This leaves the wound open and at risk of severe infection and scarring. [indiscernible] [indiscernible] For example, the standard of care is a two stage procedure. Let me describe it for you. If you were to clean the wound bed and immediately perform a split thickness skin graft, to close the wound. The graft may not take due to insufficient connective tissue. While first preparing the wound bed using a derma matrix, there could be a loss of functionality, or additionally an unsightly outcome resulting from the deep tissue loss and likely heavy scarring.

This is why full thickness injuries require a structured two stage surgical approach to reconstruct the lost or damaged tissue. Cases of severe tissue loss such as a sharp bite, or necrotizing bacterial infection, treatment may also involve Cision of damaged tissue.

Then the use of Cohelix to build a dermal base followed by split fitness skin graft closure and possibly an application of Permidderm to protect healing environment. It is important for us to develop human clinical data to support the launch of [indiscernible] To accomplish this, we have initiated a post market clinical study known as Cohelix which is currently pending IRB approval at multiple sites across The U. S. This study uses an objective study design known as OPC. To benchmark Cohelix performance against published data from alternative dermal matrices. We are measuring key outcomes over a twenty six week period including days to graft readiness, days to closure and days to go home. We anticipate that this study will demonstrate accelerated seven day graft readiness and shorter overall time to wound closure.

Compared to alternative derma matrices further reinforcing the value [indiscernible] Early patients have already been completed ahead of the formal enrollment of CoHelix1. In fact, our first case has already shown promising results consistent with our preclinical findings. Let's turn to Slide number five look at the highlights of this case. In mid January, a 67 year old woman sustained a third degree burn While cooking over her stove, as shown in Image A. She was treated at the Ohio State Wexner Medical Center where she received an application of Cohelix as seen in Image B. By Day seven, as shown in Image C, her wound was ready for grafting. Consistent with our preclinical findings. Within a week and a half, she was discharged from the hospital. According to one of her clinicians, had she been treated with an alternative dermometrix, hospital stay would likely have extended this case highlights why as you can see on Slide six, the medical community has already started to recognize CoHelix as a game changer in the treatment of acute wounds. According to our treating physician, not only does CoHelix reduce the amount of time a patient spends in the hospital, but he believes that it will allow physicians to treat more patients because of how easy it was to use in the Operating Room.

Quite honestly, this outcome is a turning point for AVITA Medical and a breakthrough in acute wound care. Setting a new standard for treating and healing severe injuries while lowering the cost of care and shortening the time for patients to return home. Permida Derm and Cohelix fit strategically within our portfolio as illustrated on Slide seven. [indiscernible] playing an integral roles, the two stage standard of care for full thickness by playing integral roles in the two stage standard of care full thickness wounds. Consider a patient with a burn covering ten percent of their total body surface area.

First, the procedure begins with a surgical excision of a burn. Next, Permiferm could be applied to temporize the wound bed allowing the wound to improve for a short period of time. After clinicians have determined the wound bed is free from an acrotic tissue and infection Cohelix is applied to prepare the wound bed Approximately seven days later, which is four to fourteen days faster alternative dermal matrices the wound graft is ready meaning there is sufficient tissue regrowth proceed to the second stage. The second stage begins with a split thickness meshed autograph combined with resell spray on skin cells placed over the newly generated tissue. As a reminder, resale supports definitive closure used significantly less hopefully skin compared to traditional autografting procedures. Remember that ReCell expands the autologous sample 80 to one. A layer of Permian derm is then applied over both the graft and the newly applied Brion skin cells and separately to the resell donor site. To aid in the healing process of both wounds. This wound is continuously assessed to determine when the patient is ready to leave the hospital. This integrated approach improves clinical outcomes while expanding Avita Medical's market opportunity. Let's look at the total available market potential per patient.

For a 10% to 20% total body surface area wound, The average selling price per resell is $6,500 to $13,000 PermidaM adds $2,000 to $4,000 as addressing. When Cohelix is applied to the same wound, it increases the potential average selling price between $20,000 to $40,000 In the aggregate, when all three products are used together, the potential average selling price ranges between $28,500 and $57,000 all the while providing substantial clinical and economic benefits by accelerating the time for the patient to return home. One last point, CoHelix can also be used independently of resell as demonstrated in the Wexter Medical Center case discussed earlier, resulting in an additional increase of the total addressable market [indiscernible] On April 1, we will initiate the full commercial launch of Co Helix for large wounds. Using a consignment model with RFID tracking to simplify hospital adoption and inventory management. Our sales reps will use the RFID reader track inventory for the hospital, our internal accounting and the FDA. Plan to price Cohelix below current market leaders. Further positioning it as a value driven solution. Competitive pricing coupled with a consignment model, and a reduced time to graft, are key benefits that we believe will help us progress through the value analysis committee process faster.

With Cohelix, we add nearly $1,000,000,000 to our total addressable market or TAM Just within the 120 plus burn centers, on top of the approximate $500,000,000 TAM for resale and the $100,000,000 TAM for Permilderne in these same [indiscernible] In trauma centers, targeting full thickness wounds, CoHelix adds $1,350,000,000 in TAM, Permian Derm contributes hundred and 35,000,000 in TAM and resale provides a potential of 1.5 in TAM. [indiscernible] Aveda Medical now has a combined $3,500,000,000 TAM opportunity in The U. S. Alone. Let's take a moment and look backwards.

Two years ago, our total TAM for resale was $500,000,000 solely in burn centers. Just eighteen months ago, we received FDA approval for the full thickness indication dramatically expanded our TAM by allowing us to enter the trauma center market. In that time, we've gone from a $500,000,000 TAM and Burns Burns and Trauma Centers. Looking ahead, our strategy is clear. Number one, expand Reselco adoption. Number two, rollout resale Go Minning during the first quarter. Focused on 270,000 full thickness acute wounds annually To be clear, we will not be targeting chronic wounds or chronic wound centers. Number three, launch Cohelix commercially. Number four, continue to roll out perimeter And finally, number five, we expect to notify body in the European Union [indiscernible] the CE Mark for Rissoco by the middle of the year opening up markets in Europe and Australia. We remain committed to generating free cash flow in the second half of the year and achieving GAAP profitability during Q4 of twenty twenty five. In summary, 2024 was a transformational year Our expanded product portfolio which now includes resell, ReCell Go, ReCell Go Mini, [indiscernible] [indiscernible] has taken us from a $500,000,000 TAM with a single product focused solely on burn centers with $3,500,000,000 TAM Therapeutic acute wound care across both burns and trauma centers.

I want to thank our team customers and shareholders their unwavering support as we continue to revolutionize the standard of [indiscernible] Therapeutic acute wound treatment. With that, I will turn the call over to Dave for a closer look at our financial results and guidance. David?

Thank you, Jim.

For the three months ended 12/31/2024, our commercial revenue was $18,400,000 representing a 30% increase compared to the same period in 2023. This growth was driven primarily by the continued deployment [indiscernible] in our existing burn centers as well as new accounts in trauma centers. As we look forward to 2025, we expect Resell Go Mini, and Co Helix to contribute substantially to our revenue growth following their launches in February, and April respectively. With Permia Derm's revenue also gaining momentum throughout the year. As expected, our gross profit margin for the fourth quarter improved to 87.6% recovering from the temporary decline last quarter and slightly increasing from 87.3% in the same period of 2023. As I indicated during our third quarter conference call, Q3 operating expenses were elevated in that quarter due to one time non recurring expenses. In line with this previous statement, our Q4 operating expenses totaled 26,100,000.0 a $4,100,000 decrease from the Q3 total of $30,200,000 We have no plans to increase our headcount. Or other operating expenses in 2025. As such, Q4 total operating expenses should be a consistent baseline for each quarter in 2025. Also note that the total operating expenses of 26,100,000.0 in the fourth quarter, include non cash expenses of approximately $2,800,000 of stock based compensation expense and approximately $400,000 of depreciation and amortization.

Q4 twenty twenty four operating expenses increased by $1,400,000 compared to the same period in 2023. This increase was primarily due to $3,900,000 rise in sales and marketing expenses stemming from employee related costs within the expanded commercial sales G and A expenses decreased by 600,000.0 due to lower salaries and benefits, as well as reduced professional fees. Similarly, R and D expenses reflecting lower outside professional fees due to the completion [indiscernible] Other income expense shifted from $6,300,000 in income in the same period in the prior year to an expense of $300,000 in the current quarter.

The $6,600,000 decrease primarily resulted from a one time non cash gain of 9,400,000.0 from the wind down of our foreign subsidiaries offset by the change in fair value of the warrant liability. For the fourth quarter, other income expense consisted of a non cash charge of $700,000 related to the change in fair value of the warrant liability offset by $400,000 in investment income. Briefly, I'd like to address the guidance announcement made on January 7. We have gained a better understanding of the year end purchasing pattern among our key customers. At the end of Q4, several top accounts strategically chose not to finalize pending purchase orders due to year end cash preservation strategies leading to an approximately $3,000,000 to 4,000,000 revenue shortfall. Importantly, these deferred purchases were due to timing decision. Not a lack of demand for commercial operational issues on our part. During January, we experienced normal purchase activities which should result in renewed strong first quarter revenue growth. Moving on to the full year results, For the full year ended 12/31/2024, our commercial revenue increased 29% to 64,000,000 compared to 49,800,000.0 in 2023. It was disappointing to have the revenue miss in the fourth quarter.

But as you can see from [indiscernible] We do not want to lose sight of the fact that we have had significant year over year revenue growth for the last five years. The 29% growth in 2024 was driven by the resell go transition deeper penetration within existing accounts and new account growth targeting trauma centers. The gross margin for the full year was 85.8% meeting the higher end of our previously given guidance of 85% to 86%. And up 130 basis points from 84.5% in 2023.

Total operating expenses were 111,800,000.0 compared to $86,400,000 in 2023. [indiscernible] increase is primarily attributable to 20,900,000.0 in higher sales and marketing expenses reflecting employee related costs from our commercial teams expansion. G and A expenses rose by $4,900,000 due to increased headcount along with higher salaries and benefits, and stock based compensation. R and D costs declined by $500,000 primarily due to reduced professional partially offset by higher employee related compensation costs within our medical science liaison team. Other income expense for the year decreased by 8,300,000.0 moving from $8,500,000 in income in the prior year to income of 200,000.0 in 2024, This change primarily resulted from a one time non cash gain of $9,400,000 in 2023 from the wind down of certain of our foreign subsidiaries offset by a change in the fair value of the warrant liability. Interest expense increased by $4,200,000 year over year attributable to the long term debt of $40,000,000 under the ORIMID credit agreement.

Net loss for the fourth quarter was $11,600,000 or a loss of $0.44 per basic and diluted share compared to a net loss of $7,100,000 or a loss of $0.28 per basic and diluted share in the same period in 2023. Net loss for the full year 2024 was 61,800,000.0 or a loss of $2.39 per share compared to a net loss of $35,400,000 or a loss of $1.4 per share in the prior year. As of December 31, we had 35,900,000.0 cash and marketable securities.

As reported last quarter, we utilized $9,700,000 in cash during Q3, We continued this downward trend further reducing our use of cash to $8,500,000 in the fourth quarter This reduction was achieved despite an increase accounts receivable which rose by $4,100,000 to a total of 11,800,000.0 as of 12/31/2024, compared to 7,700,000.0 as of 12/31/2023. Note that our days sales outstanding or DSO did not increase. As we move towards generating free cash flow, the second half of twenty twenty five, we anticipate that our use of cash will continue to decline over the next three quarters. In connection with our debt facility with OrbiMed, we executed an amendment today to lower the trailing twelve month revenue covenant for quarters ending 03/31/2025, through 03/31/2026. The twelve month trailing covenant of $115,000,000 for quarters ending after March 31, 2026, remains unchanged. Looking ahead, for the full year 2025, we expect commercial revenue to be in the range of $100,000,000 to $106,000,000 representing growth of $55,000,000 to 65% compared to 2024. Additionally, we expect to generate free cash flow in the second half of this year and achieve GAAP profitability during Q4 of twenty twenty five. As previously stated, we do not foresee any further expansion of our commercial organization over the next eighteen to twenty four months.

As revenue guidance and financial projections are consistent, with our announcement made on January 7. We remain confident in the success of Resale Go. The April 1 full commercial launch of Cohelix and the rollout of Resell Go Mini. Combined with the growing adoption of Perimeter. These strategic efforts position us to deliver strong results this year and drive significant shareholder value. With that, I will turn the call back to the operator for your questions. And our first question comes from Matthew O'Brien with Piper Sandler. Your line is open.

Hey, this is Phil on for Matt. Thanks for taking our questions.

For starters, I guess just on the cadence of the guidance No, would you expect similar sequential growth each quarter or might it be a little bit more back half weighted given the contributions from Cohelix and maybe some timing of VAX?

Yes. Well, now we have a little bit more complex of multiproduct rollouts will create some some complexity in answering your question. So let me try and it simply.

Consecutively from Q4, you should expect we'll be up [indiscernible] In Q1, By that time, we'll be in full launch with Resale Go Mini and Permida Derm is now additionally gaining a lot of momentum So Q2 should then also be up sequentially And yes, you're right that Cohelix has such big revenue impact In the back half, it could have a very significant effect But I see us having consecutive quarter cadence increasing over prior quarter with so to speak, we have plenty of gunpowder here. And a lot to execute, but plenty keep our revenue line driving. So I would expect that cadence to be rather strong during the year.

That's helpful. And I guess just sticking with guidance, and trying to dive down a little deeper as for what's assumed in the growth of the three product categories. Think in your prepared remarks, the guidance assumes somewhat significant contribution from Cohelix. So I was hoping if you could provide a little bit more color on what that might entail as far as market share gains pretty quickly in the second half of of '25, maybe attachment rates to Cohelyx on current resell procedures that sort of thing just to get us a little bit more comfortable with that second half?

Yes. We're not going to break out I think, by product at this point. Today, but I'll give you a way to think about it. That when I debut the breakout of what the TAM is per case, we do if you recall the resell contribution, the Permianderm contribution, the [indiscernible] If you just looked at burns, for example, we treat about one thousand burn cases a month in the last quarter right, at about that rate, it's growing. And those averaged in excess of 10% total body service area. So if you try to figure out how it was kind of an equation we don't know the answer which is how quickly we get through vac But as soon as you do, the revenue upside is considerable. So we'll get some experience about that. We've taken a very careful approach with a limited market release here in Q1 where we're doing cases that where what we're doing is gathering clinical data because it's post approval, then we're in the process of enrolling CoHelix one by virtue of the very significant difference we're proving, right, Seven days to graft versus in some cases twenty You don't need a big number of patients to prove that statistically.

In fact, it's approximately forty patients to achieve full enrollment So that will give us a lot of support in the first by the end of the first half. Thank you. You might think about that.

Thanks so much.

Thank you. Our next question comes from Ross Osborne of Cantor Fitzgerald. Your line is open.

Hey, guys. This is Matthew Park on for Ross today. Thanks for taking the I guess starting with Minnie, Hi, how's it going? As we continue to roll out many are there any trends in adoption or feedback that stand out kind of give you confidence once you go into this full commercial launch?

Well, actually, what's good about MINI is it's used in the same RPD the same processing device It's actually the cassette design is the is exactly the same from a manufacturing point of view The three wells that you put skin and buffer and enzyme in are just smaller. And so it's very easy to use. And this concept where a doctor would feel like wow, I'm using a 10% total body surface area treatment to treat less than 2.5% total body surface area problem that seems wasteful. That's how they felt when we did the market research on it. So actually, the vast majority of those 270,000 surgical and trauma wounds are under that four eighty square centimeters at 2.5%. So we're quite optimistic. It's been just less about just a month. So it's a little bit early for trends. But we of course don't have they've already got the resale processing device. So it's a rather easy additional choice for them. We're quite optimistic about it.

Got it. That makes sense. And then just one more for me. Do you mind reminding us again what drove the high gross margin in the quarter? And I guess how we should think about the general cadence of gross margin in 2025? Yes, this is David. Thanks Thanks for the question. As far as the gross margin for the quarter, over 87%.

Believe that our gross margin for resell products will stay in that range, 85% to 87%. Overall gross margin is going to go down because of the distribution arrangements we have Orco Helix and Perimeter. Gross margin on that basically fifty-fifty. So as those products become more of significant in our portfolio and our revenue mix, our gross margin overall is going to go down But as I've said and as you probably know, that profit margin all drops to the bottom line. Because there's no additional cost to generate that revenue. So our overall gross margin made have a small decrease, but we're still going to be in a better position from an operating [indiscernible] [indiscernible] Got it. That makes sense. Thanks for taking the questions guys.

Thank you. Our next question comes from Ryan Zimmerman of BTIG. Your line is Good afternoon. Can you hear me okay? Hear you well, Ryan.

Are you doing? Good, good. Thanks for taking the question. A couple of questions for me guys. So first, Jim, I appreciate you're not breaking out guidance by product.

How much of international sales is contemplated in the guidance And when do you expect potentially clearance in Europe? Yes, it's a great question. It's modest, Ryan. And the reason it's modest is we just we've been through the substantive review with the notified body. And as a fact, they are let me see exactly, they had committed to us approval in October. So we're now in February. And we don't have it yet.

So we don't have any technical challenges but we have an unpredictable process. So that's representative of our midyear expectation. Yet there's no more submission materials to be reviewed or submitted. At this time.

So it is modest. Okay. And then the inventory that was in the channel in the fourth quarter, Jim, A couple of questions on that. So one, how much of that was resell? How much of that was [indiscernible] [indiscernible] was all of that work down in the fourth quarter because David your comments that you expect the sales to pick up in the first quarter, Is there I guess I'm just wondering why there isn't inventory to be worked [indiscernible] in the first quarter necessarily from what was in the channel kind of late in December.

Yes.

So a couple of comments [indiscernible] part of our inventory. I mean, or excuse me, our sales fundamentally. Have inventory on the balance sheet And what's different in the Permianderm is the really rather large increase in evaluation. So we're we're getting the traction. It took us a little while basically develop the clinical support materials that are necessary because it was not on the market really before even though it had been test launched, I guess, by Milliken before. With respect to your question, keep in mind all of our customers have inventory on the shelf because of the nature of our business, right? We're therapeutic acute wound business, right? So when the So we're not having any signs that would sit revenue successful in Q1. So I don't think that's going to be a big big that's not showing as a challenge to us at the moment.

Okay.

Last one for me, I just want to sneak one in. No, that's helpful, Jim. I mean, the last one for me, David, there's a little lease revenue this quarter.

And so I'm just wondering if you expect that to be a bigger trend in the placement of systems over time as you think about your guidance, the 103? Yes. So lease revenue is just a portion of the overall resell sale of the RP and RPD or RPKs We, as you may remember, provided our hospitals and facilities with the RPD, the processing unit.

At no cost.

And for accounting purposes, and this is only for accounting, we have to allocate a portion of the revenue from the sale of the RPKs, the actual disposable kits. Between revenue and lease revenue.

And that's what that is. It really isn't lease revenue. It's an [indiscernible] [indiscernible] It really it's almost worth thinking about it as the amortization [indiscernible] For the cost of the RPD No, that's what I was trying to understand because I just was wondering if potentially the model is changing in terms of how you're placing systems. Necessary? That's what I was trying to understand. Yes. Yes.

Okay. Yes. We're not Thank you.

Thank you. Our next question comes from Brooks O'Neil of Lake Street Capital Markets. Your line is open.

Thank you. Good evening. So I have not had a chance to read the eight ks related to the Orbimed renegotiated credit agreement, but in the prior ones, there was some question about the quarterly covenant that I considered as a giant deal to have to begin repaying that debt, but can you just give us a sense for how much of a cushion you've gotten in, for example, Q1, Q2 and Q3 As you look toward the end of this year.

Yes, Brooks, thanks for the question. All of the details are in the eight ks, but I'll give you the details for the these first two quarters.

The revenue is on a trailing twelve month And for the first quarter, it is now $73,000,000 down from 75,000,000 for the last twelve months. For Q2, it's now $78,000,000 Right. Down from 90,000,000.

There was a significant decrease doesn't give any indication that that's what we think our revenue is going to be. It just gives, as you said, a little bit of cushion so that we don't have to repay the debt.

Right.

And I'm guessing, but again, I haven't read it, the the terms are substantially the same or has there been a big change in terms of what happens if you happen to break the covenants under the new agreement?

The terms remain the same. [indiscernible] Okay. And then the second thing I was curious about is it's my sense with Cohelix, you got the initial approval based not so much on human clinical evidence Animal work.

And I'm curious, you mentioned Jim mentioned the what sounded like tremendous success at I think, Ohio State. But can you just give us some color on whether you're beginning to amass sufficient clinical evidence with humans to to support the notion that CoHelix can be a material contributor to your revenues In the back part of 2025.

Yes, Brooks, I can. So we got we received approval for that dermal matrix consistent with the market in terms of how you get what the FDA requirements are. They're pretty clear.

Now the work we did in the [indiscernible] that's quite a scientific project and we did it 18 times. So we looked at a lot of different materials and we were looking for very precise qualities of histological absorption yet providing the matrix structure [indiscernible] in growth of blood vessels and and yet have it go away they don't have to remove it. All those kinds of factors. And it has a lot to do with how you sterilize it and how you process denatured collagen. So when we applied our preclinical data, we've probably showed it at least 50 physicians at this point.

We haven't met one yet. We didn't want to try it. Okay? So that's kind of a piece of information. [indiscernible] We've done a number of cases because of course it's approved. That are not in the study. And so far, all of them have remarked how well it handles intra procedure and it is producing the clinical outcome in the short run. We had not all of them have reached the seven days because we only have done this recently. All ready to craft. But none have taken longer. At this point, So we really feel good about and those are on humans. So we plan on having 20 sites to enroll those 40 patients. So we expect that we'll be able to do a couple of things that is that are by design and let me share them with you.

So on one hand, it's a study with an IRB It's under controlled follow-up. On another, it's a post market study. So in the agreement, during the course of the study, let's imagine that A site has five patients enrolled. That physician can share that data with [indiscernible] or on the podium or in an abstract during the period of the study. So we don't have to wait until the study fully enrolls and becomes published in its aggregate sometime late in the year. Rather we will be able to use that data as it's developed. And that was very intentional as part of the study design. [indiscernible] any event, that's I think we're going to have the data by April 1 that supports a strong launch at that time.

Great.

I guess I'll just finish by saying I'm amazed at how much you guys have accomplished Congratulations and keep it up. Thanks, Brooks.

Thank you. Our next question comes from Joshua Jennings of TD Cowen. Your line is open.

Hi, good afternoon. Thanks for taking the questions and Echo Brook's comments on congratulations on the progress. I was hoping to follow-up on Brooks' question as well just on adoption pace of Cohelix And I think in CoHelix, when you're going to be running a cost effectiveness study within, and I think [indiscernible] effectiveness for resale and burns was a big driver of adoption utilization exciting with the first case at Ohio State that that the patient was discharged within ten days when surgeons expectations for her the severity of her wound would have been closer to 30.

I mean how big of a driver do you guys anticipate that length of stay reduction in cost effectiveness to be over time for Cochelix adoption and utilization. Josh, we think it's going to be a very large deal and it very well fits with the resell theme. As you know, there's a lot of data out there that demonstrates that patients treated with resell exit the hospital thirty percent sooner and Cohelix fits that theme. And when we work to get cost justification for a resell, that is a very important matter for hospitals these days and it should be. And so very important matter for the treating physicians and the patients they treat. [indiscernible] this seven days, we think is going to be very determinant and giving us some leverage in terms of adoption. And by the way, the study contemplates inclusion with Helix alone or Cohelix with resell. So it won't be able to have both enroll it's really looking at standard of care.

Great. And then just thinking about the Cole Helix one forty patients enrolled and just the VAC process I mean, is that enough I'm assuming your expectation is that that CLO-six one will be enough for most vaxx do you see that playing out? Thanks for taking the questions.

Josh, I think in the near term, what will be important will be the following. They will want to see the preclinical data in the VAC because it's it's published in published publication now. So want to see the case studies that we have done in real time Third, they will want to have a speed of price point [indiscernible] or they will want to not have to buy the inventory and they will appreciate the consignment RFID system that we're going to market with. I think all of those will contribute to a faster back time. Excellent. Thanks, Jim. [indiscernible] Thank you. That concludes our question and answer session. At this time, I would like to turn it back to Jim Corbett for closing remarks.

Thank you, operator, and thanks to all of you for calling in We are really excited about the transformation of our company Aveda Medical, into a therapeutic acute wound care company. We have a lot of excitement for the year ahead. I'm looking forward to sharing it with you.

Thank you.

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