AVITA Medical Inc

OVERVIEW

AVITA Medical is a leading therapeutic acute wound care company delivering transformative solutions. Our technologies are designed to optimize skin restoration procedures, effectively accelerating patient healing and recovery. Our solutions improve the healing outcomes for patients with traumatic injuries and surgical repairs, addressing critical healing needs that arise from unpredictable and life-changing events. Our offerings currently include our core technology platform, RECELL® (“RECELL”), as well as PermeaDerm® and Cohealyx™, each designed to target acute wound care needs.

At the forefront of our portfolio is our patented and proprietary RECELL, approved by the United States Food & Drug Administration (“the “FDA”) for the treatment of thermal burn wounds and full-thickness skin defects, and for repigmentation of stable depigmented vitiligo lesions. In 2024, we expanded our product offerings to address additional acute wound care needs. In January, we signed an exclusive multi-year distribution agreement with Stedical Scientific, Inc. (“Stedical”) to market, sell, and distribute PermeaDerm, a biosynthetic wound matrix in the U.S. In July, we entered into an exclusive multi-year development and distribution agreement with Regenity Biosciences (“Regenity”), granting us exclusive rights to market, sell, and distribute Cohealyx, an AVITA-medical branded collagen-based dermal matrix in the U.S., with potential expansion into the European Union, Australia, and Japan. These agreements strengthen our commitment to offering a comprehensive suite of solutions for acute wounds.

CORPORATE HISTORY

AVITA Australia, the former parent company of AVITA Medical, was founded in December 1992. On October 1, 2019, AVITA Australia began trading its American Depositary Shares on the Nasdaq Capital Market (“Nasdaq”) under the symbol “RCEL”. Today, our common stock continues to trade on Nasdaq under “RCEL” and our CHESS Depositary Interests (“CDIs”) trade on the Australian Securities Exchange (“ASX”) under the symbol “AVH.”

STRATEGY

Prior to 2024, our business was centered around our breakthrough RECELL technology. While RECELL remains the cornerstone of our portfolio, we strategically expanded our product offerings in 2024 by adding products complementary to RECELL. These new products address a wider range of clinical needs in acute wound care, enhancing our ability to reach more patients globally, ultimately improving their healing outcomes.

To further our mission of improving clinical outcomes and establishing new standards of acute wound care, we have outlined the following strategic objectives:

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Increase market penetration in U.S. burn centers, positioning RECELL GO® as the standard of care in burn management

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Expand adoption of RECELL GO for the treatment of full-thickness skin defects throughout the U.S

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Begin a targeted RECELL GO mini rollout to trauma and burn centers treating smaller wounds in the first quarter of 2025

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Commence a post-market study of Cohealyx in early 2025 to develop clinical data for commercialization in the second quarter of 2025

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Seek additional business development opportunities complementary to our core RECELL technology and target markets

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Obtain CE mark approval in the first quarter of 2025, allowing us to market RECELL GO in the European Union and Australia under existing distribution agreements

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Continue developing opportunities and strengthening global partnerships to transform patient outcomes worldwide

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Drive commercial revenue growth, generate positive cash flow, and achieve operating profitability

PRODUCT PORTFOLIO

RECELL Technology Platform

At the forefront of our portfolio is our patented and proprietary RECELL technology. RECELL harnesses the regenerative properties of a patient’s own skin to create an autologous skin cell suspension, Spray-On Skin™ Cells, delivering a transformative solution at the point of care. This breakthrough technology serves as the catalyst for a new treatment paradigm enabling improved clinical outcomes.

How RECELL Works

The core platform technology of RECELL enables clinicians to harvest a thin split-thickness skin sample from the patient and process it into an autologous cellular suspension, Spray-On Skin Cells. This suspension is prepared at the point of care in as little as 30 minutes and includes the patient's own skin cells, keratinocytes, fibroblasts, and melanocytes, all critical to acute wound healing and repigmentation through the wound bed.

The patented and proprietary platform technology underlying the Spray-On Skin Cells originated in Australia, based on the seminal work of Professor Fiona Wood and fellow scientist Marie Stoner.

Device Evolution

Since its initial introduction, we have continued to refine and expand the RECELL technology to meet a range of clinical and workflow needs, culminating in multiple device configurations for different wound sizes. We expect the RECELL GO platform to serve as a growth driver, further advancing our strategy to expand our impact on patient care.

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RECELL Autologous Cell Harvesting Device (“RECELL 1920”): The first RECELL device offered in the U.S. is a single-use, stand-alone, battery operated, autologous cell harvesting device containing enzymatic and buffer solutions, sterile surgical instruments, and actuators. Each RECELL 1920 device can be used to treat areas of up to 1,920 cm 2.

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RECELL Autologous Cell Harvesting Device with Ease-of-Use (“RECELL Ease-of-Use” or “RECELL EOU”): RECELL EOU is an enhanced ease-of-use device aimed at providing clinicians a more efficient user experience and streamlined workflow. Each RECELL EOU can be used to treat areas of up to 1,920 cm².

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RECELL GO®Autologous Cell Harvesting Device (“RECELL GO”): RECELL GO is our next-generation device featuring enhanced features that streamline the preparation of Spray-On Skin Cells. RECELL GO significantly reduces the training burden on medical staff, improves workflow efficiency in the operating room, and precisely regulates the incubation times of the RECELL Enzyme™to optimize cell yield and promote cell viability. It consists of two components:

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A multi-use, AC-powered RECELL GO Processing Device (the “RPD”), which controls and manages the pressure applied to disaggregate the donor skin cells and precisely controls the incubation time of the RECELL Enzyme™ to optimize cell yield and promote cell viability.

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A RECELL GO Preparation Kit (the “RPK”), which contains a single-use RECELL GO Cartridge, disaggregation head, RECELL Enzyme, and other components. A single RPK can treat areas up to 1,920 cm 2.

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RECELL GO mini Autologous Cell Harvesting Device (“RECELL GO mini”): RECELL GO mini is a line extension of the RECELL GO system, designed specifically to treat smaller wounds up to 480 cm 2. It utilizes the same RECELL GO Processing Device (RPD) but features a RECELL GO mini Preparation Kit (the “mini RPK”), which includes a single-use RECELL GO mini Cartridge optimized for smaller skin samples. These modifications reduce resource use and minimize waste, making RECELL GO mini an accessible option for clinicians treating smaller wounds. This design aims to broaden adoption of the RECELL GO platform in trauma and burn centers. Rollout to trauma and burn centers that currently treat smaller wounds will begin during the first quarter of 2025.

Key U.S. FDA Regulatory Approvals

Market Opportunity

Burn Injuries

In the U.S., approximately 40,000 people have burn injuries severe enough to require hospital admission annually, with an inpatient mortality rate of 2.7%. Severe burns (typically defined as second- and third-degree) often require autologous split-thickness skin grafts (“STSGs”) to achieve definitive closure of the burn wound. However, donor-site creation in a STSG, or autograft, procedure is associated with significant pain, risk of infection, scarring, delayed healing, and increased healthcare costs.

The clinical benefits of closing wounds quickly are well recognized and include increased survival, shorter hospital stays, decreased pain duration, and reduced infection-related complications. However, for large burn injuries, the patient may not have enough healthy donor skin available right away to complete treatment of the entire burn injury area when using traditional grafting techniques. In extensively burned patients, donor sites must heal so they can re-harvest from the same sites, resulting in delays in treatment and closure, multiple procedures, and lengthened hospital stays. While waiting for donor skin, these burn wounds may be temporarily covered with allograft (cadaver skin) or xenograft (typically pig skin). As such, treatment with STSGs is expensive, costing around $579,000 and 59.4 days in hospital for a patient with a 40% TBSA burn injury to recover and return to normal day to day activities.

RECELL has demonstrated the ability to reduce donor-site harvesting requirements while maintaining or improving clinical outcomes. Pivotal clinical studies indicated that using RECELL significantly reduced donor-skin requirements by up to 97.5% for second-degree burns and 32% for third-degree burns when used with autografts, compared to standard of care autografting, without comprising healing. Additionally, the clinical trial for second-degree burns revealed a statistically significant reduction in patient-reported pain, increased patient satisfaction, and improved scar outcomes.

Retrospective studies demonstrated that fewer autografting procedures are required for definitive closure of full-thickness burns when using the RECELL versus conventional autografts alone. In pediatric cases (N = 284), treatment with RECELL resulted in a 56% reduction in the mean number of autograft procedures required compared to National Burn Repository (“NBR”) data. Additionally, in adult patients with greater than 50% TBSA (N=318), RECELL resulted in a 60% reduction in the mean number of autograft procedures versus NBR data.

In addition to these clinical benefits, RECELL has proven health economic benefits and a compelling cost-effectiveness model. For deep partial-thickness burns, RECELL reduces total treatment costs by an average of 26%, or approximately $37,000, for patients with 10% TBSA and approximately $150,000, for patients with 40% TBSA. For full-thickness burns, RECELL reduces total treatment cost by 3%, or approximately $6,000 for patients with 10% TBSA and by 42% or approximately $243,000, for patients with 40% TBSA. These savings are achieved through shorter hospital stays, fewer procedures, and minimized donor site sizes. All of these cost savings estimates are net of the cost of the RECELL device.

We developed a budget impact model showing that, in a burn center with 200 patients, treatment using RECELL reduces annual total treatment costs from approximately $39.4 million to $32.6 million, saving 17% or approximately $6.8 million per year compared to conventional autografting alone. Additionally, real world evidence published by IQVIA and funded by our company and the Biomedical Advanced Research and Development Authority (“BARDA”) demonstrates that these economic savings apply to a wide range of burn sizes.

The U.S. burn treatment market is highly concentrated, with around 140 burn centers and 300 burn surgeons treating approximately 75% of severe burn patients. Historically, our target market was burn centers, which represented about 25,000 RECELL-eligible burn injuries. However, with FDA approval for full-thickness skin defects, we are now expanding into trauma centers to address the additional 10,000 RECELL-eligible burn injuries treated outside dedicated burn centers.

As we continue to innovate and expand the capabilities of RECELL, our commitment to redefining the standard of burn care remains unwavering. RECELL is an invaluable asset for treating burn injuries that require grafting by reducing the need for autografting procedures, shortening hospital stays, and providing significant cost savings. Our vision is clear: to redefine healing, improve outcomes, and transform lives for patients worldwide.

AVITA Medical has a policy of providing the RECELL System to a provider only after they have been certified, which includes extensive training in the use of the product and in the aftercare of the patient. In general, we have found that most U.S. burn centers follow the industry-standard process of evaluating RECELL and then it is reviewed by their hospital’s Value Analysis Committee (“VAC”) prior to purchasing. In general, most surgeons follow a typical adoption curve, starting from where they see the greatest economic and clinical value, which is the use of RECELL for treatment of larger burns. With time and continued use, surgeons typically progress to adoption of RECELL for smaller, less severe burns and facial burns.

In the U.S., the RECELL System is reimbursed through established mechanisms for both inpatient and outpatient care. For inpatient treatments, hospitals receive payments based on the Medicare Severity Diagnosis-Related Group (“MS-DRG”) system, which classifies hospital stays by diagnosis and procedures performed. For physicians, as well as in outpatient and ambulatory surgical center (“ASC”) settings, new Category I Current Procedural Terminology (“CPT”) codes (15011–15018), effective January 1, 2025, have been introduced to describe Skin Cell Suspension Autograft (“SCSA”) procedures performed with the RECELL System. These codes replace previously utilized codes and facilitate standardized billing for healthcare providers. The Company continues to collaborate with both Medicare and commercial payers to expand coverage and ensure appropriate reimbursement for the RECELL System and its associated procedures, aiming to enhance patient access and support broader adoption in clinical practice.

Full-Thickness Skin Defects

A wound is a breach in the integrity of the skin, with full-thickness wounds extending through the dermal layer into deeper tissues. These acute wounds can arise from traumatic avulsions, surgical excisions, or resections. The cause or origin of the wound directly impacts healing potential, response to treatment options, and likely complications. In the U.S., we estimate that roughly 272,000 procedures annually could be eligible for RECELL Treatment.

Traumatic Wounds. Traumatic wounds are subdivided by the mechanism of injury into lacerations, abrasions, avulsions, degloving, crush, penetrating, or bites. Traumatic wounds often arise in high-energy circumstances and result in extensive zones of injury with damage to multiple tissue types. Missing cutaneous tissue, macerated edges, and contamination are common and can complicate wound healing. In the U.S., we estimate there are approximately 122,000 annual procedures that are eligible for treatment with RECELL.

Surgical Wounds. Surgical wounds are precise incisions intentionally created to access underlying organs, relieve compartmental pressure, excise diseased cutaneous tissue (infected or severely inflamed or necrotic), or to harvest tissue for autografting (flaps and grafts). In the U.S., we estimate there are approximately 12,500 annual procedures that are eligible for treatment with RECELL.

Surgical Resections and Excisions for Cancer. Surgical resections and excisions for cancer are procedures used to remove and treat various skin cancers. In the U.S., we estimate there are approximately 136,000 annual procedures that are eligible for treatment with RECELL.

Similar to burns, full-thickness skin defects are associated with large areas of skin loss and as such, some of the top unmet needs identified by surgeons are closely aligned:

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Reduced donor skin harvesting

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Reduced scarring

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Reduced pain

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Uniform pigmentation with surrounding skin

Given the benefits of reducing donor skin harvesting, just as with the burns indication, we designed a clinical trial to demonstrate the use of less donor skin without compromising healing outcomes relative to conventional autografting. The trial was essentially a repeat of the successful previous trial in full-thickness burns, but with a population of patients with full-thickness, non-burn injuries. The study design included two co-primary endpoints based on pairwise comparisons where each subject received both RECELL treatment and standard of care treatment: one endpoint had a hypothesis of superiority for donor skin-sparing and the other co-primary endpoint had a hypothesis of non-inferiority for healing. Both co-primary endpoints were met, demonstrating statistically significant donor-sparing and non-inferior healing outcomes with RECELL versus standard of care, meaning less skin from the patient is required to repair and close the wound without compromising the healing outcomes relative to convention autografting. In addition to these results, RECELL has been successfully used to treat full-thickness skin injuries outside the U.S. for many years and there exist several case reports on the treatment of traumatic injuries that have been the subject of peer-reviewed scientific publications and presentations at medical conferences.

The approval for the treatment of full-thickness skin defects represents a significant opportunity. Given approximately 50% of the U.S. burn centers are classified as trauma centers, this indication opens doors in trauma centers already using RECELL for burn care. Further, we are expanding our burn market opportunity by virtue of our approval for full-thickness skin defects as we are extending our reach to include trauma centers. This market expansion allows us to reach more trauma centers, leveraging our existing resources and creating synergies with the burns market.

From a reimbursement perspective, the same DRG code that is currently being used to treat inpatient burns is now being applied for the treatment of full-thickness skin defects. Additionally, the outpatient TPT “C” code we have been granted for RECELL can also be utilized for the treatment of full-thickness skin defects in the outpatient setting.

Vitiligo

Vitiligo is a disease that causes the loss of skin pigmentation, or color, in patches. The extent of color loss from vitiligo is unpredictable, can affect the skin on any part of the body, and may also affect hair and the inside of the mouth. Vitiligo occurs when melanocytes, the pigment-producing skin cells, die or stop producing melanin, the pigment that gives skin, hair, and eyes color. Vitiligo is believed to be an autoimmune disorder in which a patient’s immune system attacks and destroys the melanocytes in the skin. It may also be caused by heredity factors or a triggering event, such as sunburn, stress, or exposure to industrial chemicals. Vitiligo affects people of all skin types, but it may be more noticeable in people with darker skin. It is estimated that worldwide vitiligo prevalence is between 0.5 to 2% of the population.

Following FDA approval, we conducted a post-market study and initiated a health economics study to capture the longitudinal healthcare costs for a vitiligo patient. Both studies were submitted for publication in 2024. In early 2025, we expect these studies to be published, which will support the possible reimbursement necessary for the commercialization of the vitiligo indication.

PermeaDerm

We hold an exclusive multi-year distribution agreement with Stedical to market, sell, and distribute PermeaDerm, a biosynthetic wound matrix. PermeaDerm is FDA-cleared for the treatment of a variety of wound types and sizes until healing is achieved. Its transparent structure helps clinicians monitor the wound without frequent dressing changes. Additionally, PermeaDerm's flexibility and ease of use make it an ideal choice for a wide range of clinical settings, from acute care hospitals to burn centers, which complements RECELL by providing a versatile solution for wound care management.

Cohealyx

Through our multi-year exclusive development and distribution agreement with Regenity, we hold the rights to market, sell, and distribute Cohealyx, an AVITA-Medical branded collagen-based dermal matrix in the U.S., with the potential to commercialize the product in the European Union, Japan, and Australia. Cohealyx features an advanced bovine collagen-based design engineered to facilitate tissue integration and revascularization resulting in reduced treatment timelines and improved patient outcomes in full-thickness wounds.

Preclinical studies in porcine models demonstrated that Cohealyx generated robust tissue capable of consistently supporting a split-thickness skin graft in a two-stage procedure earlier than leading dermal matrices in the study. While animal model results do not necessarily translate to clinical results, this expedited timeline is anticipated to lead to quicker wound closure and streamlined clinician workflows, resulting in shorter hospital stays, reduced treatment costs, and better patient outcomes.

The FDA granted 510(k) clearance for Cohealyx on December 19, 2024. Early evaluations to provide comprehensive feedback are underway, with the first three patients being treated in January 2025. To build on preclinical success and develop clinical data in support of the commercial launch, we plan to conduct a post-market clinical study in early 2025 to demonstrate Cohealyx’s performance in real-world settings, focusing on clinical efficacy, time-to-graft reduction, and the associated cost savings in the treatment of full-thickness wounds and burns. The full commercialization launch is expected to begin in the second quarter of 2025.

INTERNATIONAL STRATEGY

In international markets, the RECELL System has received various approvals and registrations to promote skin healing in a wide range of applications including burns and full-thickness skin defects. These endorsements include Therapeutic Goods Administration (”TGA”) registration in Australia, Conformité Européene (“CE”) mark approval in Europe, and Pharmaceuticals and Medical Devices Act (“PMDA”) approval in Japan under the Pharmaceuticals and Medical Devices Act for burns. Our global commercialization strategy is focused on Australia, the European Union (“European Union or “EU”), Japan, and the United Kingdom (“United Kingdom” or “UK”).

In alignment with our strategic growth objectives, we initiated a global commercialization strategy in 2023. This initiative targets key markets including Australia, the European Union, Japan, and the United Kingdom. Leveraging the exclusive use of third-party distributors, we have successfully secured distribution agreements in 16 countries, including, Australia, Austria, Belgium, Denmark, Finland, Germany, Ireland, Japan, the Netherlands, Norway, Portugal, Spain, Sweden, Switzerland, and the UK. Our efforts remain robust as we continuously seek and establish new distribution partnerships within these primary markets.

RESEARCH & DEVELOPMENT

Our research and development activities are focused on advancing our innovative products and building a comprehensive portfolio of solutions, as well as developing clinical applications to advance the management of wound care. Additionally, we continue to conduct clinical studies to provide further efficacy and health economic evidence.

We continue to commit resources to product development to ensure the RECELL platform continues to evolve and that we maintain robust patent protection. On May 29, 2024, the FDA approved our PMA supplement for RECELL GO, our next generation autologous cell harvesting device for the treatment of thermal burn wounds and full-thickness skin defects. RECELL GO maintains the FDA Breakthrough Device designation from predecessor devices. RECELL GO is comprised of a reusable durable base unit and a single-use sterile cartridge. The RECELL GO system aims to control the current manual process of cell disaggregation and filtration, as well as soak time, reducing variability across medical providers compared to the current device. This revolutionary design will also reduce training requirements, allowing us to leverage our sales team more effectively. In turn, we believe the reduction in training medical professionals will lead to increased adoption across our indications and the broader market. RECELL GO offers us an opportunity to expand our intellectual property portfolio. With each iteration of our RECELL device, we anticipate preservation of the therapeutic power of Spray-on Skin Cells, deployed in devices that become appropriate for use in an increasing range of clinical settings.

On June 28, 2024, we submitted a PMA supplement for RECELL GO mini, which is designed to address small wounds up to 480 cm 2. This version retains the same multi-use processing units as RECELL GO but features a modified cartridge designed for the smaller donor skin samples needed for smaller wounds. On December 23, 2024, the FDA approved our PMA supplement for RECELL GO mini.

In 2024, we completed a post-market study to evaluate repigmentation using RECELL and seek to measure the improvement in the quality-of life following treatment of stable vitiligo with RECELL. Additionally, we initiated a healthcare economic study to capture the longitudinal healthcare costs for a vitiligo patient. In early 2025, we expect these studies to be published, which will support the possible reimbursement necessary for the commercialization of the vitiligo indication.

SALES AND MARKETING

Our commercial organization is focused on clinical case support, staff training, and building awareness to further expand interest in the clinical and economic benefits of RECELL. It is not uncommon in the treatment of wounds to have rotating staff and it is our commitment for all those working with RECELL to be comfortable with the technology both during the procedure as well as during aftercare.

Our commercial organization is composed of highly experienced medical sales representatives as well as former burn and trauma nurses. This organization covers both burns and full-thickness skin defects.

HUMAN CAPITAL

AVITA Medical’s investment in the U.S. commercial success of RECELL has led to the development of best-in-class teams supporting sales, clinical education and training, reimbursement, medical affairs, as well as corporate management and infrastructure. As of December 31, 2024, we had 260 full-time and part-time employees. As of December 31, 2024, 99% of our workforce was based in the United States (“United States or “U.S.”), with a significant number of our management and professional employees having prior experience with leading medical device, biotech, or pharmaceutical companies. None of our employees are covered by collective bargaining agreements.

We embrace differences, diversity and varying perspectives amongst our employee base and are proud to be an equal opportunity employer. We do not discriminate based on race, religious creed, color, national origin, ancestry, physical disability, mental disability, medical condition, genetic information, marital status, sex, gender, gender identity, gender expression, age, military or veteran status, sexual orientation or any other protected characteristic established by federal, state, or local laws. A diverse workforce as well as an inclusive culture and work environment are fundamentally important and strategic to us, beginning with our Board of Directors and CEO and extending to all levels of the Company. As of December 31, 2024, the Directors of the Company were 33% female, our senior executive team was 40% female and our total employee base was 52.5% female. In addition to promoting gender diversity, we encourage ethnically diverse talent through our recruiting and retention efforts.

INTELLECTUAL PROPERTY

We protect our intellectual property, core technologies, and other know-how through a combination of patents, trademarks, trade secrets, and IP protection clauses in our agreements. Additionally, we rely on our research and development program, clinical trials, know-how and marketing programs to advance our products and product candidates, and to expand our intellectual property rights. We expect that our research and development pipeline, strategic partnerships, and improvements to RECELL GO have the potential to result in additional patent applications in the next calendar year.

In 2024, AVITA Medical initiated a global patent strategy to cover its flagship RECELL GO product and secured patent protection for RECELL GO in all commercial markets prior to its June 2024 product launch. AVITA Medical added to its RECELL GO patent coverage throughout 2024, ending the year with 18 enforceable patent assets and 13 pending patent applications globally having expiration dates ranging from March 2034 to December 2043. Additionally, AVITA Medical expects (i) an additional three U.S. patent grants that cover RECELL GO to be issued in 2025, and (ii) multiple corresponding patent allowances to be issued at the European Patent Office (“EPO”) in 2025 and 2026. The Company believes that this layered and extensive patent coverage, in conjunction with built-in advantages from global regulatory approval processes and our first-to-market position, give RECELL GO strong protection in the marketplace.

More broadly, as of December 31, 2024, AVITA Medical’s patent portfolio comprised 29 patent grants and 33 pending patent applications worldwide, with patent coverage either secured or in progress in the U.S., China, Japan, Australia, Brazil, Canada, France, Germany, Hong Kong, Italy, Spain, the UK, and at the EPO, the European Union Intellectual Property Office, and the World Intellectual Property Organization. These assets cover the all-in-one RECELL product, RECELL GO, methods of using the RECELL System, methods of evaluating the therapeutic potential of Regenerative Epidermal Suspension (“RES”), a cell-free and allogeneic RES supernate, and methods of preparing a cell suspension with exogenous agents to promote wound healing.

Additionally, AVITA Medical owns and defends a global trademark portfolio comprising 148 registered trademarks, common or state law trademarks, and pending trademark applications, including “AVITA Medical,” the AVITA Medical logo, “RECELL,” “RECELL GO”, the RECELL GO logo, “Spray-On Skin,” the RECELL System logo, “Cohealyx,” the Cohealyx logo, and others in the U.S. and international markets.

FACILITIES

AVITA Medical leases approximately 17,500 square feet of administrative and office space in Valencia, California that is currently leased through October 31, 2026. The Company operates an FDA-registered production plant in Ventura, California, in a 27,480 square foot facility that is currently leased through September 30, 2027. The Ventura facility has one 3-year option to extend the lease, at our sole option, which allows for a total lease extension period through September 30, 2030. The Company also has an administrative office lease in Irvine, California of approximately 10,700 square feet that is currently leased through the end of July 2028. We also lease a limited amount of incubator space in Irvine, California for scientific research and product development activities.

MANUFACTURING, SUPPLY AND PRODUCTION

We produce the RECELL System in the Ventura facility under current Good Manufacturing Practices (“cGMP”) and per ISO 13485, which also meets the regulatory requirements of other jurisdictions in which we sell the RECELL System. We maintain a state of regulatory compliance and inspection readiness at all times, and any future material changes to our production processes for the RECELL System will be submitted for approval to the FDA and regulatory authorities in other jurisdictions as required.

Within the Ventura facility we perform the final manufacturing, assembly, packaging, and warehousing of the RECELL System.

AVITA Medical sources multiple components, sub-assemblies, and materials from third-party suppliers, who are required to meet our cGMP quality specifications and associated regulatory requirements. To ensure continuity of supply, we maintain multiple sources of supply for key components, subassemblies and materials, and the majority of critical raw materials and services have multiple qualified suppliers. While a small number of materials remain single sourced, we are actively working to qualify and validate additional suppliers for these materials as we continue to evaluate methods of removing risk from the supply chain for the RECELL System. We believe that our current manufacturing capacity at the Ventura facility is sufficient to meet the expected commercial demand for the RECELL System for burns, full-thickness skin injuries, and other indications under development, for the foreseeable future. Additionally, in the second half of 2024, we implemented lean manufacturing methods to increase efficiencies in the production of the RECELL System.

AVITA Medical serves the U.S. burn market by shipping the RECELL System directly from our Ventura facility to customers. From time-to-time we may also store small quantities of the RECELL System at satellite distribution sites within the U.S. to better support access of the RECELL System to our U.S. customers.

BARDA CONTRACT

BARDA, under the Assistant Secretary for Preparedness and Response, within the U.S. Department of Health and Human Services (“HHS”) has supported our company since 2015. A contract with BARDA provided funding for the development of the RECELL System. The BARDA contract also supported the Company’s clinical trial in soft-tissue reconstruction, which led to the full-thickness skin defect indication. In addition to the clinical support provided by BARDA, we managed an inventory system of RECELL Devices for BARDA to bolster emergency preparedness and support the logistics of emergency deployment of RECELL Systems for use in mass casualty or other emergency situations. Between 2015 and December 31, 2024, we have received an aggregate total of $40.5 million in payments under the contract with BARDA.

As of December 31, 2023, we no longer have a contractual obligation to manage an inventory system for BARDA. However, from that date through September 28, 2025, we will provide access to RECELL inventory in the event of a national emergency. BARDA will pay for any devices requisitioned from this inventory along with a nominal annual maintenance fee to ensure first right of access.

COMPETITION

We currently believe that there is no direct competition for RECELL. Additionally, our innovative technology is supported by robust intellectual property rights and we believe that regulatory approval processes around the world will continue to provide additional and significant barriers to entry against meaningful competition. Despite these meaningful competitive advantages, the medical device, biotechnology, and pharmaceutical industries are highly competitive and subject to rapid advancements in technology, as well as changes in practice. In the future, we may face competition from various sources, including medical device, pharmaceutical, and wound care companies, academic and medical institutions, governmental agencies, medical practitioners, and public and private research institutions, among others. Consequently, any product that we successfully develop and/or commercialize will compete with both existing therapies and any new therapies that may emerge in the future.

In the burns and non-burn wound markets, our indirect competitor is primarily split-thickness autografts. While RECELL complements autografts for the treatment of various wound injuries, split-thickness autografts represent the traditional surgical procedure and the current standard of care. However, based on our clinical trials, we believe that RECELL offers sustainable competitive, clinical, and economic advantages over the traditional surgical procedure. We also believe that our current portfolio products (PermeaDerm and Cohealyx), as well as future portfolio products, will enhance these advantages.

GOVERNMENT REGULATIONS

The production and marketing of the RECELL System and any additional product candidates developed in future ongoing research and development activities are subject to regulation by numerous governmental authorities including the FDA in the U.S. and similar agencies in other countries throughout the world. Pursuant to its authority under the Federal Food, Drug, and Cosmetic Act (the “FD&C Act”), the FDA has jurisdiction over medical devices in the U.S. The FDA regulates the design, development, manufacturing, and distribution of medical devices to ensure that medical products distributed domestically are safe and effective for their intended uses. The FD&C Act classifies medical devices into one of three categories based on the risks associated with the device and the level of control necessary to provide reasonable assurance of safety and effectiveness. Devices deemed by the FDA to pose the greatest risk, such as life-sustaining, life-supporting or implantable devices, or devices deemed not substantially equivalent to a previously 510(k) cleared device are categorized as Class III. These devices typically require submission and approval of a PMA. The RECELL System is categorized as a Class III medical device, and in September 2018 the FDA granted our PMA for use in the treatment of acute thermal burns in patients 18 years and older. In June 2021, the FDA approved a supplement to our PMA to expand the use of RECELL in pediatric patients with full-thickness burns. In June 2023, the FDA approved a supplement to our PMA to expand the use of RECELL for full-thickness skin defects and an original PMA to expand the use of RECELL for the repigmentation of stable depigmented vitiligo lesions. On May 29, 2024, the FDA approved our PMA supplement for RECELL GO, our next generation autologous cell harvesting device, to treat thermal burn wounds and full-thickness skin defects. On December 23, 2024, the FDA approved RECELL GO mini.

To support additional PMAs or PMA supplements in the U.S. or applications for approval in other regions, the completion of additional clinical and non-clinical studies and supporting development activities will likely be required. Clinical trials can take many years to complete and require the expenditure of substantial resources. The length of time varies substantially according to the type, complexity, novelty, and intended use of the product candidate. We cannot make any assurances that once clinical trials are completed by us or a collaborative partner, we will be able to submit as scheduled a marketing approval request to the applicable governmental regulatory authority, or that such request and application will be reviewed and cleared by such governmental authority in a timely manner, or at all. Although we intend to make use of fast-track and abbreviated regulatory approval programs when possible and commercially appropriate, we cannot be certain that we will be able to obtain the clearances and approvals necessary for clinical testing or for manufacturing and marketing our product candidates. Delays in obtaining regulatory approvals could adversely affect the development and commercialization of our product candidates and could adversely impact our business, financial condition, and results of operations. During the course of clinical trials and non-clinical studies, product candidates may exhibit unforeseen and unacceptable safety considerations. If any unacceptable side effects were to occur, we may, or regulatory authorities may require us to, interrupt, limit, delay or abort the development of our potential products.

Any products manufactured or distributed by us pursuant to regulatory approvals are subject to continuing regulation by the FDA and similar agencies in other countries, including maintaining records supporting manufacturing and distribution under cGMP, periodic reporting, advertising, promotion, compliance with any post-approval requirements imposed as a conditional of approval, recordkeeping and reporting requirements, including adverse events experiences. After approval, material changes to the approved product, such as adding new indications or other labeling claims, or changes to the manufacturing process, are subject to prior approval by the FDA and other regulatory agencies. Medical device manufacturers and their subcontractors are required to register their establishments with the FDA, certain state agencies and international agencies. Subcontractors are subject to periodic announced and unannounced inspections by the FDA and other agencies for compliance with cGMP. We have established processes in place for categorization of vendor criticality and the associated activities for qualification and monitoring of vendors. These activities include, but are not limited to, requiring certification of supplier in conformance to relevant cGMP requirements and other FDA and international agency regulatory requirements, approved supplier lists, and regularly Company-conducted audits. In addition, all goods and services purchased from suppliers by us must be purchased from only those suppliers on the approved supplier list. Furthermore, the Company itself will continue to comply with all relevant FDA requirements and regulations and any applicable international agency regulatory requirements in its continued manufacturing and promotion of its FDA approved commercial products.

In addition to FDA approval in the U.S., the RECELL System has received various approvals and registrations in international markets. The RECELL System is TGA-registered in Australia, received CE-mark approval in Europe, and received Japan’s PMDA approval for burns in Japan.

HEALTHCARE LAWS AND REGULATIONS

AVITA Medical is a manufacturer of medical devices, and therefore we are subject to regulations by the FDA and various federal and state healthcare laws and regulations. These regulations govern our advertising and promotional practices, our interactions with healthcare providers (“HCPs”), and our reporting of any payments made to HCPs. AVITA Medical is committed to the highest standards of business conduct in accordance with the AdvaMed Code of Ethics.

Interactions with Healthcare Providers

Providing any benefits or advantages to HCPs in order to induce or encourage the use or referral of AVITA products is strictly prohibited by both U.S. and international laws and regulations. Restrictions under applicable federal and state healthcare laws and regulations include but are not limited to the following:

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The federal healthcare Anti-Kickback Statute (“AKS”). AKS prohibits any person from soliciting, offering, receiving, or providing any remuneration in cash or in kind, whether directly or indirectly, to induce or reward the referral, purchase, lease, order, or recommendation of any item or service for which payment may be made in whole or in part under a federal healthcare program such as Medicare and Medicaid.

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The federal False Claims Act (“FCA”). FCA may be enforced by either the U.S. Department of Justice or private whistleblowers should they choose to bring civil (qui tam) actions on behalf of the federal government. The FCA imposes civil penalties, as well as liability for treble damages and for attorneys’ fees and costs, on individuals or entities who knowingly present, or cause to be presented, claims for payment that are false or fraudulent to the federal government. FCA also imposes similar penalties on those who make a false statement material to a fraudulent claim, or who improperly avoid, decrease, or conceal an obligation to pay money to the federal government.

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State and foreign laws and regulations may apply to sales or marketing arrangements and claims involving healthcare devices or services reimbursed by non-governmental third-party payors.

Additionally, certain state laws require medical device companies to comply with voluntary guidelines in our interactions with healthcare providers promulgated by global trade associations and relevant compliance guidance issued by the HHS, Office of Inspector General. Such guidelines prohibit medical device manufacturers from offering or providing certain types of payments or gifts to health care providers; and/or require the disclosure of gifts or payments to healthcare providers.

Interactions with Foreign Officials and Entities

The U.S. Foreign Corrupt Practices Act (“FCPA”) prohibits any U.S. individual or business from paying, offering, or authorizing payment or offering of anything of value, directly or indirectly, to any foreign official, political party, or candidate for the purpose of influencing any act or decision of the foreign entity in order to assist the individual or business in obtaining or retaining business. The FCPA also obligates companies whose securities are listed in the U.S. to comply with accounting provisions requiring companies to maintain books and records that accurately and fairly reflect all transactions of companies, including international subsidiaries, and to devise and maintain an adequate system of internal accounting controls for international operations. We are also subject to similar regulations under the Australian bribery laws and other anti-corruption laws that apply in countries where we do business.

Federal and State Reporting

Pursuant to the federal National Physician Payment Transparence Program (Open Payments) Act, AVITA Medical is required to report any payments or transfers of value to HCPs annually to the Centers for Medicare and Medicaid Services within the HHS. In addition to adhering to these federal reporting requirements, we are required to make similar annual reports to relevant state agencies.

Privacy

Various federal, state, and foreign laws govern the privacy and security of consumer and patient information. We comply with all such applicable laws.

ENVIRONMENTAL, HEALTH AND SAFETY MATTERS

We are subject to extensive environmental, health and safety laws and regulations in a number of jurisdictions, primarily in California and the U.S., governing, among other things: the use, storage, registration, handling, emission and disposal of chemicals, waste materials and sewage; chemicals, air, water and ground contamination; and air emissions and the cleanup of contaminated sites, including any contamination that could result from spills due to our failure to properly dispose of production waste materials. Our operations at our Ventura manufacturing facility produce a small amount of waste materials that are considered minimally hazardous, and we use a third-party waste disposal company to remove any waste generated during operations from the facility. Our activities require permits from various governmental authorities including local municipal authorities. Local and state authorities may conduct periodic inspections in order to review and ensure our compliance with the various regulations. We are not presently aware of any material violations or deficiencies. These laws, regulations and permits could potentially impose additional costs related to compliance or remediation.

AVAILABLE INFORMATION

The Company files annual, quarterly and current reports, proxy statements and other documents with the Securities and Exchange Commission (“SEC”) under the Exchange Act. The SEC maintains a website that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC. The public can obtain any documents that we file with the SEC at www.sec.gov. In addition, copies of announcements made by the Company to ASX are available on the ASX website (www.asx.com.au) and also, under the heading “Investors: Press Releases” at the following link on our website https://ir.avitamedical.com/press-releases/news-releases. Our filings with the SEC, including without limitation, our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act, are available free of charge on our website under the heading “Investors: Financials _SEC Filings” at the following link on our website (https://ir.avitamedical.com/financials/sec-filings), as soon as reasonably practicable after we file or furnish them electronically with the SEC. We maintain a website at www.avitamedical.com. Information contained on our website is not part of or incorporated into this Annual Report.

ORGANIZATIONAL STRUCTURE

As of December 31, 2023, the business activities of AVITA Medical Pty Limited, AVITA Medical Europe Limited, Visiomed Group Pty Ltd, C3 Operations Pty Ltd and Infamed Pty Ltd were liquidated. AVITA Medical Americas LLC was transferred from C3 Operations Pty Ltd to be directly held by the Company. As of January 28, 2025, AVITA Medical Pty Limited, AVITA Medical Europe Limited, Visiomed Group Pty Ltd, C3 Operations Pty Ltd and Infamed Pty Ltd were deregistered, leaving AVITA Medical Americas, LLC as the sole subsidiary of the Company.