Good morning. My name is David O'Toole. I'm the Chief Financial Officer for AVITA Medical. Thank you for joining me this morning to hear about our exciting company. I will be making forward-looking statements. This is our legal disclaimer. So our company, we are a commercial stage regenerative tissue company, with the goal to become a global-based wound care company. We were founded in the early 1990s, 1992, around the Bali bombings in Australia. We went public in Australia in 2017, and we had our product, RECELL, approved by the FDA in 2018 here in the United States, re-domiciled to the U.S. in 2019, and started trading on NASDAQ in 2019.
We are now a dual-listed company, both in Australia on the ASX and on NASDAQ. Our company's going through a strategic transformation. It's an exciting time for us. We are in the process of converting all of our clients to our automated system, RECELL GO, and we also are doing significant portfolio expansion, adding additional products to our mix in order to become this broad-based wound care company. We are primarily a U.S.-based company, but we are looking to expand globally on a selective basis, and I will speak about that later. Our leadership team, we're led by Jim Corbett, who's the CEO. He's been with the company for two years as CEO. He was with the board for about a year and a half prior to that.
And we've also. He has significant commercial experience and had stepped in after Q1 of this year to take over the commercial team, when we did management change for the commercial team. He led the commercial team through a very good quarter, Q2, and then we hired Robin Vandenburgh , who had a distinguished quick career at Smith & Nephew and has joined us over the last month. She has significant experience leading large commercial organizations, and she's doing a great job right now. So what is RECELL?
Prior to June of this year, the RECELL System was a manual system, where the surgeon actually had to take the graft, disaggregate the cells manually, and then put them into a buffer and the enzymes, wait a period of time, come back, and then put it into a spray applicator and spray it on the wound. Our RECELL GO system, which is the automated system here, it looks like a small blender, was approved by the FDA in June, late May, June of this year. Now, the surgeon doesn't do the disaggregation manually. He takes still the graft, but puts it into a cartridge with the buffer and enzymes, and then that is put into this blender, comes back in 30 minutes.
Blender, it's a durable and comes back in 30 minutes, and the product is ready to be used and put into a spray applicator and sprayed onto the burn or wound. It's an exciting time for us. We now have RECELL GO, which is our automated AC-powered system made up of two devices. One is the durable, which we call the RPD, and then the disposable cartridge, which is the RPK. The RPD is our device. We place it at the hospital. We don't sell that. We loan it to the hospitals and trauma centers, and that device is able to be used for 200 times. Then, after 200 uses, we will provide another device.
The RPD functions to basically consistently disaggregate the cells through consistent pressure, and then regulates the soak times and optimizes both the cell yield and the consistency of those cells. We expect to convert all of our accounts by Q3 of 2024 . That's, you know, in the next couple of weeks. I think we'll be significantly there. I think we'll be at least 90%-95% converted by the end of this quarter. So RECELL GO is, and our system is used for, one cartridge is good for a 10% total body surface, a wound or a burn. And that's about 1,920 sq cm .
Many of the wounds that we are treating now are smaller than that, and so we have also developed and validated, and submitted for FDA approval, a product called what we call RECELL GO Mini, which will be used for wounds in the range of 2.5%-5% TBSA. We've already submitted that, as I indicated. It does get Breakthrough Device designation, and so within 180 days, we should have approval from the FDA, which would be December of this year, and we would launch that in January of 2025. How is it going as far as RECELL? These pictures, there's one, this one and the next one. These are just pictures of actual procedures in an OR that we took.
The first one, there were two of them running simultaneously. The next one, there's three of them, and you can see, and the next one is four. And then the coup de grâce is this, procedure that was actually six of them running at the same time. And why is that important? It's important because they're running at the same time. They don't have to do them consecutively, like they would have had to have done with the manual device, and so that cuts down on the OR time, cuts down on training. These devices are very simple to use. It cuts down on staff time, it cuts down on the patient being under anesthesia.
And so what it does, these OR rooms are in the range of a hundred degrees, and so it cuts down on the amount of time that the patient and the staff have to be in the OR. Getting the patient healed quicker or starting that healing process is very important. And so this actual procedure was for a burn that had 50%-60% TBSA, and so they used all six of these to create six different spray-on applicators with the solution inside of it, and they sprayed it on the wound. And the patient did very well from what I hear, and is doing very well now. So up until last year, we were only approved in burns.
The FDA, we got approval for what we call full-thickness skin defects, which increased our total addressable market considerably. Besides the 35,000 annual burns that we believe are eligible for RECELL, we now have a significant amount of wounds, somewhere in the range of 400,000, that are full-thickness skin defects. Now, some of these wounds on the right are the wounds that are smaller. And many of these wounds will be candidates for RECELL GO Mini once we get that approved in this year and launched in January of next year.
One of the hurdles that we've faced in having all of these additional procedures and also going into a 600-700 trauma centers is that we have to go through the Value Analysis Committee process. And when we started last year, we thought we would be in the range of 15 per month, so 45 per quarter. We've fallen short a little bit on that. Q1, we only had 22 new accounts. We picked that up in Q2 to 37, and we have right now 89 in the pipeline whether that be in the evaluation or the decision stage.
So we believe we'll have more new accounts this quarter, and we'll continue to get better at getting through the Value Analysis Committee for each of these trauma centers, getting to our goal of forty-five per quarter. A few words on our global strategy. We are looking to go to a number of different countries. We do kind of apply a filter to which countries we want to go into. The filter is that they have to have an established healthcare system. They have to have a population big enough to make a market for us, and they have to have the ability to pay. And so that leads us to the European Union, Australia, we're already in Japan, and the U.K.
We do look to expand through third-party distribution partners. We think we wanna do that, because we don't wanna spend money to build out our own, network and our own sales team. We are giving up margin, doing this, but at the same time, we're not spending a significant amount of money to test the waters in those countries. As of July thirty-first, we already have distribution agreements with Germany, Austria, Switzerland, Belgium, Holland, Ireland, Italy, U.K., and some four Nordic countries. And then Spain and Portugal will, very shortly. We are looking to launch RECELL GO in this year in Europe. But before we can do that, we need to get CE mark, which is going to happen here in the next thirty days.
We have the supply in order to do that, and once we get the CE mark, we will launch RECELL GO. As I indicated, we're transforming into a broad-based wound care company with RECELL at the core. And we've already added PermeaDerm. We entered into a distribution agreement with Stedical in January of this year, and PermeaDerm is a dressing, a biosynthetic dressing. It is transparent. It has some porosity so that it can aid in the healing of the wound. It goes on top of the wound. It allows for air to go into the wound to promote healing and allows excess fluids to seep out of the wound, which is also important. So that distribution we're already commercial with that.
We are selling that to our same call points as RECELL, and we just recently added another distribution agreement with Regenity for a dermal matrix that we are going to call Cohelix. And I'm gonna talk about that a little bit more later. We're still looking for a couple of other products. We're exploring wound bed preparation. That would be either an antimicrobial or a hemostatic agent, which would stop the bleeding. And we're still in discussion with a number of companies around that. So this gives kind of a picture of what our products do for a wound. This is a full-thickness skin defect with a concern for infection. The lower layer would be an antimicrobial. We don't have that yet, but that would be the wound bed preparation.
Our product, Cohelix, would then be the dermal matrix, the dermal scaffold that would go into the wound to promote the vascularization of the tissue and granulation of the cells. Then after a period of time, we would put on a split-thickness skin, or the surgeon would put on the split-thickness skin graft with RECELL. Once that is put on, then you would put on a dressing, which would be our PermeaDerm made by Stedical. So the distribution agreement with Regenity, really excited about it. It's a large market. The dermal matrix is a very fragmented market. There are a lot of larger players in it, but we think we have a product that can compete. We have already submitted for 510(k) clearance, and we expect that in the fourth quarter of 2024 .
After we get 510(k) clearance, we would be able to sell, but we wouldn't have necessarily any data that could go up against the market leaders in this field. So we are looking to do some clinical studies after we get 510(k) clearance. That would be the start of 2025. We would be using the same sales force, and so we're not adding any additional headcount to sell this product. We have exclusive rights to this product for five years, with an extension of five years contingent on certain criteria.
We do have a 50-50 ASP split with Regenity at this point, ASP being the average sales price, and that average sales price split will go to 60% after 2025 based on the outcome of the clinical work. So this is the preclinical work that we've already done with Cohelix against two major competitors. And there are three criteria that we were looking for that really were important in a dermal matrix. One was days to graft. How long does it take before the dermal matrix is ready to be grafted? And the second one is uptake, skin graft take, and then the third one is wound closure. These pictures show this is in a pig. This work was done in porcine.
This is a collagen-based dermal matrix, and after seven days, you can see, Cohelix is ready to graft. Competitor A, in general, and it's a large market share competitor, wasn't ready to graft at seven days and, in fact, is on average ready around the 10- to 12-day process. And then competitor B is even longer, in the range of 20 days ready to graft. And so we think we have a great product. Again, this is preclinical. We're gonna have to do clinical work once we get 510(k) clearance.
But there are also pictures here showing seven days post-graft, and we are just as good as the competitors, if not better, after the grafting has taken place. So from a financial standpoint, we had a great quarter in Q2. We had $15 million of revenue, which was 29% year-over-year growth. Our gross margin has stayed pretty steady at 86%. We do have enough cash. We have cash of $54 million as of June 13th. Sufficient cash to meet our goals and to meet our overall objective of becoming profitable and cash flow breakeven in Q3 of 2025.
From a revenue projection standpoint, we have given guidance that our revenue for this quarter will be in the range of $19 million-$20 million, and the annual guidance of revenue this year is $68 million-$70 million, which would be a 37% year-over-year growth rate. This just shows our revenue for the last nine, ten quarters. You can see that Q1 was a very big disappointment for us. We missed our guidance by around $4 million, and we made some major changes after doing that. We made a management change at the commercial head.
Jim took over, our CEO took over, the entire commercial organization, put in some very stringent processes and procedures, did a lot more management of the commercial team, and you can see the results that we're at $15 million, back on the trajectory growth that we were expecting, in Q2. And when we meet our revenue projections this quarter of around at the midpoint, it's $19.5 million, that'll be a growth rate of 44% and a significant sequential growth rate quarter over quarter. So in summary, it's all about sales execution for us, this year and next year. We're heading towards profitability. We're heading towards cash flow breakeven. We want to reach our goal of having 45 new accounts per quarter on full-thickness skin defect.
We want to make sure that all of our existing customers are converted to RECELL, RECELL GO. And the product portfolio expansion is very important to us. It's going to drive revenue. Although we're giving up margin, we're only getting 50%. We're adding no additional cost, so that 50% margin is dropping to the bottom line and considering operating profit. The international expansion will continue to happen on a selective basis. Once we get CE mark, we're gonna launch with RECELL GO. And then lastly, I think the...
And I've mentioned it many times. I'll just mention in closing with it that the biggest milestone that we're going to achieve next year is, and it's a big one for this company that's been around for a long time, is that we will be cash flow breakeven and GAAP profitability in Q3 of 2025.
So thank you. I do have a few minutes if there are any questions.
Yeah?
Regarding the RECELL GO, where you use 200 times, and you try and send you some refurbishment, and then they go back and serve-
Yeah.
Does that fix the thing?
Once they have been used for 200 times, they no longer work. They stop working, and they would need a new machine. We would bring them back and give the new durable to the hospital.
The old machine, what?
It will be disposed.
Disposed.
It's d-
So it's, how much does one of these, from a cost of goods perspective, how much does one of these things cost?
So the cost of the durable is around $3,500. So we would be amortizing that over 200 uses, which is $17.50 a hit to COGS every time it's used. So insignificant.
Yeah.