AVITA 3Q SALES
With the 3Q results due out next week I thought I would share with you what might be expected. In particular sharing my reasons along with my assumptions in arriving at a figure in excess of $3.5m. Of course I am speculating and have no knowledge on what the sales figures might be.
1. US sales in 2Q were $1.102m = 147 kits. I assume that most of these kits were initial stocking orders and that 12 burn centres (BCs) had ordered by end of Dec. (we know it was 12 as at 7th Jan). An initial stocking rate of 12 per BC seems reasonable to me.
2. AVITA reported that 24 BCs had experience with RECELL through participation in trials and compassionate use programs. these represented approximately 30% of patients attending the 134 Burn Centres (Cohen presentation Mar13). It is reasonable to assume that these 24 BCs would be amongst the first to complete their internal reviews and be first adopters of the RECELL technology. They would be the first to order the RECELL kits.
3. AVITA has also reported that 14146 target candidates with >10% TBSA burns are treated in the BCs but of that number approx 30% are juveniles. This reduces potential immediate patients to 0.7 X 14146 = 9902.
4. Thus the 24 BCs would treat approx 0.3 X 9902 = 2970 burns patients annually. The 12 BCs would thus treat 1485 patients annually or 371 over 3 months. the 12 BCs that had already ordered by end of Dec would have had the opportunity to use RECELL for the 3 full months.
5. AVITA has reported that the average patient would require 3 to 3.5 kits, so let us assume 3 kits.
6. Now we understand the burns surgeons are very conservative and as a result the RECELL take up rate (RTUR) may take some time to ramp up. In addition not all patients will be suitable for RECELL due to contraindications. For the purpose of this exercise let us assume a RTUR of 25% which some will say is very conservative while others will criticise as being ambitious.
7. Thus for the 12 BCs that had ordered by end of Dec we can calculate that the number of kits used was 371 x 0.25 x3 = 278 kits = $2.085m.
8. In addition we have new BCs coming on board and commencing ordering during 3Q. AVITA reported that there were 19 BCs by end of Feb. For simplicity, let us assume that there were 24 on board by end of March. The additional 12 BCs could be expected to contribute the $1.102 m through initial stocking orders and some usage (as per the 12 that were on board in 2Q).
9. In addition, let us assume RoW sales has increased from $0.343m to $0.400m on the back of momentum from FDA approval in the US. Not a big stretch.
10. Thus total sales for 3Q could be calculated as $2.085 +$1.102+$0.400 = $3.587.
As stated, this is very speculative and depends on stocking sales v usage sales as well as RTUR. IF the technology is shit hot as most people on this board believe and IF the business case for the use of the technology is as strong as AVITA purports then a RTUR of much greater than 25% would be more appropriate leading to sales calculations in excess of $5m.
All will be revealed by AVITA next week.
Enjoy your weekend
RTUR is a term I have made up for this post.
(20min delay)