A US$20m procurement might be aiming a bit high. Perhaps a look at Avita’s dealings with BARDA can provide some insight into potential order sizes and pricing.
Avita originally entered into a contract with BARDA in September 2015 which continued until December 2023. The extent of BARDA’s assistance to Avita under the contract is detailed in the Avita 2023 Annual Report
BARDA funded the completion of two randomized, controlled pivotal clinical trials, as well as Compassionate Use and Continued Access programs, and development of the health economic model demonstrating the cost savings associated with the RECELL System. BARDA exercised a contract option to fund a randomized, controlled clinical trial for a pediatric early intervention study which commenced enrollment in March 2020, and closed to enrollment in June 2021, subsequent to FDA-approval of an expanded RECELL indication for use that includes treatment of pediatric patients. The BARDA contract also supported the Company’s clinical trial in soft-tissue reconstruction, which led to the full-thickness skin defect indication. Also included in the BARDA contract was a provision for procurement of the RECELL System under a vendor-managed inventory system to bolster emergency preparedness in the amount of $7.6 million and an additional $1.6 million to support the logistics of emergency deployment of RECELL Systems for use in mass casualty or other emergency situations. We were contracted to manage this inventory of product until the earlier of the federal government requesting shipment or at contract termination on December 31, 2023. As of December 31, 2023, we had received cumulative payments of $40.3 million under the original BARDA contract.
The original RECELL kit system received PMA approval in 2018. Avita reported that the US government procured an initial 5,000 RECELL devices in FY21. It appears that Avita was paid US$7.7m for this order. Under the contract, an additional 20,000 RECELL devices may be procured for surge capacity.
A contract modification was then executed in February this year, which extends to September 2025. The following provides some insight into pricing arrangements
From the Avita 2023 Annual Report
Under the modified contract, BARDA shall have access to AVITA Medical’s RECELL inventory in the event of a national emergency. No additional inventory build will be required. In the case of a national emergency, BARDA shall pay for RECELL devices at a reduced price for the first 1,000 units and retail price for any units over 1,000 requested. BARDA will pay AVITA Medical approximately $333,000 in maintenance fee over the term of the contract to ensure first right of access.
Other than procurement details, I note the following from Avita's dealings with BARDA
BARDA funded “development of the health economic model demonstrating the cost savings associated with the RECELL system”. BARDA is doing the same for Novosorb BTM, with the first of a three part report to be released next month. I believe that having health economic data to support the cost effectiveness of BTM will be of great benefit for PolyNovo.
After initial PMA approval of RECELL in burns, BARDA opted to fund a paediatric trial. I would very much like to see any Novosorb BTM approval to be expanded for use in the paediatric population.
In addition, BARDA supported a clinical trial of RECELL in soft tissue reconstruction. Again, I would like to see a supplementary PMA approval for Novosorb BTM in soft tissue reconstruction.
And because I’m a tad ambitious, I would also love to see BARDA fund development of a Novosorb synthetic allograft product to assess whether it could be an alternative to the cryopreserved human cadaver skin allograft currently stockpiled by BARDA, especially given the following observation
Due to the expense and complication involved in stockpiling an MCM (Medical Counter Measure), long shelf-lives are preferred, as is room-temperature storage. Although refrigerator, freezer and liquid nitrogen storage may be possible, these are not desirable, given the potential for limited access to electricity and the challenges associated with stockpiling. *
(20min delay)