Good morning, and thank you for joining this AVITA Medical Quarterly Australian Webinar. I'm Rudi Michelson from Monsoon Communications. Joining us today are AVITA's CEO, Jim Corbett, and CFO, David O'Toole. David is in Australia for a Sydney, Melbourne roadshow this week. This webinar has been arranged so Australian investors have the chance to be briefed direct and ask questions on AVITA's progress. Now, let me point out, you can submit questions using the Q&A function, and we'll get to them after the presentation. Now over to you, Jim, to begin the presentation. Thanks.
Thank you, Rudi. And yes, this is a part of the quarter which we reserve every quarter with a, not, you know, a roadshow in Australia, and also, of course, the U.S. investors can also log on. But in any event, as... Let me begin by introducing you, next slide, to the, to the company, for those of you who don't know. Slide again. One more. For those of you who are not familiar with the company, AVITA is a commercial stage company that is focused on regenerative medicine, transforming standard of care and wound care management. Our current products are RECELL, which is an autologous skin cell delivery system, and it's approved for thermal burn wounds and full-thickness skin defects, as well as repigmentation of stable depigmented vitiligo.
We recently added a new product to our portfolio called PermeaDerm. PermeaDerm is manufactured by a company named Stedical Scientific. It's a biosynthetic wound matrix applied to treat and heal a variety of wounds until healing is achieved. I will describe this in more detail as I go through the presentation here. Our current commercial team has 58 sales territories, with 29 clinical training specialists as well. Our sales force is looking to add over 200 new accounts during 2024, and that is rather core to our growth. Total market opportunity for full-thickness skin defects, which we received approval of during June of last year, has almost 400,000 eligible procedures, and to add to the already 35,000 annual burn-eligible procedures in the United States.
Our commercial revenue growth in 2023 accelerated throughout the year, 40% in Q1, 42% in Q2, 51% in Q3, and 50% in Q4. We had a rather disappointing Q1 of 2024, growing at 6%, and we'll spend some time talking about that during my remarks. Next slide, please. From a indications point of view, RECELL is really broadly indicated. We now have the RECELL approvals for burns, as I mentioned earlier, full-thickness skin defects, and vitiligo. We are pending approval of the RECELL GO device, which is set for approval on May 29. That is when the 180 days of a review period is expected to finish.
The RECELL GO Mini, which I'll also take some time on, will be submitted during June thirtieth, and I'll just give you an update on that as we go through. We also have some studies planned to publish in Q4. Next slide. So let me give you a technology overview for those of you who are not familiar with RECELL. What we do is we are a tissue-sparing, autologous cell harvesting and suspension and delivery system. What happens is we take a very small sample biopsy of skin. We soak it in an enzyme with some additives to it, and then disaggregate the cells into a spray-on format to be used in combination with split-thickness skin grafts.
And that this all is done at bedside and covers about one RECELL kit covers approximately 10% total body surface area. And so you can get to this all at bedside with the patient, and we've been in the last 3-4 years, we've treated well over nearly 20,000 patients. Next slide. This gives you a look at the device as it is today on the, or on your left, and on your right, you see the RECELL GO processing device. This is a device that disaggregates these, and manages the soak time and the disaggregation pressure for the skin. Now, to put it again in perspective, I don't think I did that adequately, is if when you...
For example, if you had your whole back was a wound, let's say a burn, and you wanted to get enough skin to be able to cover the whole back, you would only need a biopsy about the size of a credit card. So it gives you an idea what a big advantage RECELL provides in terms of treating severe traumas, which includes burns. Now, on the right, you see the disposable RECELL GO cartridge, and it has the three, the wells, as you can see in, on the right, which corresponds to the three wells on the, the, to the current device on your left. Now, both of these are in manufacturing today in Ventura. Next slide. We sell them, so in this case, the RECELL GO device, as it is today, sells for $6,500 approximately on average.
In the case of RECELL GO, which is pending FDA approval, the processing device, we will loan to the hospital at no charge, and they will buy the cartridge for $6,500. The processing device is good for 200 uses, and so that equates in terms of its cost to make, it's about $17.50 per use. Next slide, please. We're really ready for this FDA approval. It's, if you look here, this is us doing the burn-in of the boards for the RECELL GO processing device at our Ventura manufacturing operation, which is north of our headquarters offices in Valencia. We have ample inventory for immediate release and shipment, and the sales team is trained and ready for launch.
We expect to go to our top 28 accounts during the month of June, so that is, of course, pending FDA approval. Next slide, please. Let me spend a minute on PermeaDerm. This is really an amazing wound dressing. It's temporary, biosynthetic, which means it's breathing, and it's compatible with the skin, and it does two things: It really lets air in, and it lets the natural, for lack of a better word, oozing that a wound needs to do to breathe and heal well. Now, its features that make it quite different is that it's clear, and in the course of treating a patient, for example, who has RECELL, you don't want to continuously have to lift the dressing to see the progress and the condition of the wound.
So with PermeaDerm, you can see through it, so it's stretchable, and you can modify the porosity and the breathing, of course, improves the healing. Now, this is a product that can be used in every one of the RECELL cases applications. So whether it's a burn or full thickness skin defect, it can be used on all of them. So really, a tremendously large market. There's a range of sizes and also gloves, 'cause it turns out gloves, hands are one of the common areas where burns occur. And of course, it's been proven effective in for as long as 7-14 days. Next slide.
From a market point of view, the key terms of the agreement, we signed the agreement with Stedical in January tenth, and we're the exclusive distributor for PermeaDerm in the United States. We have an average selling price sharing arrangement, where we will always get 50% of the average sale price, so this will be a 50% gross profit product for us. The term of the agreement is five years, with an option to earn an additional five-years term. So this is a very long-term and durable relationship. Next slide.
This is also corresponding with our emerging strategic direction, where we're thinking about the patients who are treated with RECELL, and the customers who are treating those patients, and all the other needs those physicians and those patients need in terms of having their wounds treated, broadly speaking. So there is a continuum here, and left to right, you can see where RECELL is, which is near the top end of it when there's a skin graft. But prior to that, there's wound bed hemostasis. You have to stop the bleeding. There's wound bed preparation, and there, that's a combination of antimicrobial treatments and debridement, so we're exploring opportunities in that field as well.
And then, often, the wound is so deep that you have to put in what's commonly referred to as a dermal scaffold, to encourage granulation and ingrowth of cells. And then, of course, there's epidermal replacement, which is what RECELL does, and then dressings, which you put on top. So when you think about this continuum, our sales organization is present during all of the use of these types of products, so it'll be a very strong leverage opportunity for us, but also where we are providing a more full, comprehensive solution for our customers. Next slide, please. This gives you a visual of how all this works together, and you can see in the wound bed preparation, at the very base of the wound, there's a need, in many cases, to deliver antimicrobial protection.
Then, as I mentioned earlier, the dermal scaffold is in the green, and that provides a structure for skin cells to to grow. And then, of course, there's RECELL plus a meshed split-thickness skin graft in the light blue, covered by PermeaDerm. So all in all, this creates a very thorough, broad solution for our customers and gives us a lot of opportunity to leverage our organization. So from a strategic point of view, this is the direction we're driving for the company. On the next slide, please... We take a little bit on the commercial side, just so we'll give you a picture of the full thickness skin defects. And this comes with just an enormous change and an unusual event.
I've mentioned this some of my past investor presentations, but on the left side, you see 127 annual eligible procedures. When we were originally submitting to the FDA, it was for a narrower group of skin graft applications, and it had the word acute in it. And the FDA removed that, the word acute, and by doing so, added all the wounds that you see on the right, which is another 271,500 eligible procedures. So all in all, it just created a huge market opportunity for us. Now, it creates some challenges for us, which I'll share with you here in the coming slides as well. But suffice to say, we don't have a direct competitor with RECELL.
We have a tissue sparing and unique solution, and now we have a really huge opportunity to capitalize on. Next slide, please. This is one of the opportunities and challenges for us, and one of the things that, in fact, has slowed down our growth in Q1, which we're thinking we will recapture as we move through the year. But we have to submit to Value Analysis Committees, and these are committees that most every hospital has. And most every hospital would like to have control over what comes in their hospital. So they have a set of requirements, and they review and approve new products. And you can see that we have submitted Value Analysis Committee submissions to 178 hospitals.
We've received approval in 73 who have bought on top of our burn portfolio of hospitals, which is about 140. We have 46 expected approvals during Q2, so really going to transform the rate of approval than what we have experienced in the first nine months of submitting a Value Analysis Committee submissions. It has been taking us some number of months to get approval each at each hospital on average, and we're now learning how to shorten that time, and we're very focused on the execution of these. So during Q2, these 46 accounts are very important to us achieving our growth objectives. I get asked often: "How often do you get turned down?" And really, it's very rare. This number eight rejections has been 8 before, it's currently 8.
And that 8 has gone back down to 5. So when we get rejected, sometimes we get to come back and try again. So one of the issues, if you go back to the previous slide for the moment, that we underestimated, is that when we go to a value analysis committee, we are seeking approval to use RECELL on basically all of these procedures. And that includes multiple physician specialties, so includes a trauma surgeon, a plastic surgeon, a general surgeon, not just a burn surgeon, which was our previous experience. And so the complexity of that approval process involves getting multiple physicians sponsors. It includes vetting the reimbursement and different indications to make sure that from a hospital point of view, that the RECELL, the cost of RECELL will work for them economically.
So along with this really great market opportunity, came a more challenging lift-off, so to speak, of converting the hospitals in the early stages. So if you go forward again. And so we've got big momentum here, and we're submitting. This is as of May tenth, so these new accounts number is growing during the quarter. We're going to save it and not create additional disclosure requirements, but the 46 that were pending on May tenth, we expect to happen during May and June. Slide forward. Now, commercializing RECELL globally, I've shared this concept before, but first of all, this is a gross operating margin upside for the company, not a cost to globalize.
We're choosing to only go to markets that have a sophisticated enough healthcare system to use RECELL, that have adequate reimbursement in their healthcare system to pay for it, and a big enough population to make the market worthwhile. This really lowers the number of countries we might go to. So really, our market opportunity is Australia, European Union, and Japan. We presently have approval for burns in Japan, and the European Union and Australia will be launching throughout the year. But in the current moment, we entered into an agreement with a company known as PolyMedics Innovations, that's in Germany, Austria, and Switzerland. We expect the... There's a launch underway. It's in the early months. We did training in January, and they are doing cases.
We plan to identify additional distribution partners in the EU countries and Australia during the remaining part of the year. I will say that RECELL GO is pending its CE Mark under the medical device under the MDR, which covers the European Union and Australia. So we have finished our audit, and we have submitted a technical file, and we've been notified the technical file is complete, and they are proceeding with their review. So we think during as early as September, we will get RECELL GO for these additional markets, and we'll be launching RECELL GO into them. Next slide. As many of you know, one of the applications of RECELL is the vitiligo treatment, so that's repigmenting stabilized vitiligo lesions. Now, we received FDA approval in June.
However, the study that we did for FDA approval was designed to be a comparative study on the same lesion on the same patient. So in fact, we didn't cure any of those patients. We demonstrated, under FDA, safety and effectiveness. So post-approval, we initiated a study called TONE, which is designed to treat affirmatively vitiligo lesions and restore pigment. Those patients were fully enrolled by early January, and with a total number of patients treated of 109. We hit the six-month follow-up in July and expect in August to be able to share the six-month results. And of course, as you recall, in January, we've completed the 109th patient enrolled. So that means in January 2025, we'll be having the one-year follow-up.
Now, to get approval for vitiligo to really for broad use, you need to get commercial payer reimbursement policy, and that is different than most medical products, which can start with Centers for Medicare and Medicaid Services reimbursement. In this case, we will need to go to the commercial payers for one primary reason, the patient here is about 40 years old, and CMS is really a system designed for 65 and older. So there's a combination here of the RECELL TONE study data at 6 months and 12 months, and a healthcare economic study that is underway, which we'll publish by year-end. And in that study, what we're looking at is a combination of the market claims data, as well as the outcomes of our TONE study.
What we've found so far, and have confirmed, is that vitiligo patients utilize greater healthcare resources than the average person, and it is one of the heaviest drivers, is mental health, depression, and the like. So what we're following in the TONE study is a number of indicators of the improvement in mental health after repigmentation of their vitiligo lesions. So that's a study that is dependent on the vitiligo TONE study data, but also of external data, looking at patients who have vitiligo and what their cost of care is over time. So the case for coverage with a commercial payer is that treating the patient with RECELL for their vitiligo lesion has a result in improving their mental health and lowering their cost of care over the long- term.
So all of this is underway, and in the future, we expect from a practical reality point of view, that we'd have the opportunity to achieve regional commercial payer policy by Q4 2025, which really means the vitiligo is a 2026 revenue story for the company. Next slide, please. And on the financials, I'll have David take over from here for a little bit.
Thanks, Jim. So we've talked a little bit about this already. First quarter results were very disappointing for us, with just $11.1 million of revenue, representing just 6% over the same period in 2023. There are a number of that we've done a lot of analysis on why that revenue missed the mark for the first quarter, and we can talk about a number of those reasons. One of the main drivers of that miss was what Jim talked about earlier, around the VAC submissions. We had expected, through the end of March, that we would have had somewhere in the range of 130 new accounts, and we only had 73.
The VAC process did turn out to be more complicated than we expected, and so the new accounts that we had expected to drive the revenue growth in the first quarter just didn't happen. We have done a lot over the last few weeks to make sure that we're on target to get back to 15 new accounts per month, as we indicated earlier. That is around 40-46 for Q2. We have looked at some of the data around burns, because burns was our burns business was softer than in previous quarters. And the data that we looked at indicated that the burn admissions for January over the last 3 years was down 20%. We don't necessarily know why that is, and we don't have data for February and March.
But even if they were flat over the previous years, we would still be down for burns. And so it's been a combination of burns being softer and not having getting through the VAC process, and getting new accounts ordering as quickly as what we thought was going to happen. Jim, I don't know if you wanted to add anything else to that commentary.
No, I think you got it quite right. You know, the job one for us is to reinvigorate that approval process of the value analysis committees, and we see good progress of that through the quarter. And the burns market appears to be returning. So both of those are encouraging, but I think you described our Q1 well.
Yeah, and the only thing I will add is I am here in Australia, and we are still committed to being here in Australia every quarter. Jim was planning to be here with me, but he is in Los Angeles because we made some changes at the top of the commercial organization. Jim now is in charge of the commercial organization and is managing that organization very effectively. We have put some new changes in place that we believe will drive significant revenue growth over this quarter, plus the second half of the year. So, yeah, Jim has significant experience in running commercial organizations over his extensive history.
We are looking to replace the Senior Vice President of Commercial, but we're gonna take our time and be very diligent about it and find an individual that is focused on execution and managing large sales organizations. Our sales team, complete commercial team, is over 100 now, and we need to find the right person that has the experience managing those larger teams. We still had a great gross margin for the quarter, 86%, 86.4%, which is right in line with where we expect our RECELL gross margin is going to be. Our gross margin, just, will decrease a little bit over the next few quarters.
We do have PermeaDerm that we only get 50% gross margin on, so there will be a small degradation on our gross margin on that. We will also have some cost of goods sold around the RECELL GO implementation. But overall, we don't see a large decrease in the gross margin through the second half of the year. Cash at the end of March 31 was $68.2 million. We acknowledge that we did have a significant amount of use of cash in the first quarter. But a lot of that was from a one-time sort of expenditures that will not be recurring.
The largest one was we incurred about $4 million worth of cost with our PermeaDerm Stedical Scientific distribution agreement. $3.1 million of that was inventory that we will be selling over the next period of time. With a 50% gross margin, we would be looking at around $6 million of revenue from that $3.1 million of inventory. As far as guidance, Q2 of this year, we're looking at $14.3 million-$15.3 million. And for the entire year, we still reaffirm that we can be at the lower end of guidance, which is $78.5 million. And when we achieve that $78.5 million, that'll be a growth rate of 57% over the full year 2023.
And lastly, we still expect to achieve cash flow break even and GAAP profitability no later than the third quarter of 2025. As far as the debt facility, we have $40 million of debt that we drew down last year. There are two more tranches that we could take. One of them being at the end of this year, 12/31/2024, and then the other one would be June thirtieth, 2025. We do not see the need for either one of those tranches at this point in time. We believe we have sufficient capital to meet our goals and reach profitability. Next slide. I've covered most of this. I-...
I don't think I need to comment any longer on this, except for the fact that with the exception of the first quarter, and that's the most recent, 2023 was a great year for us. We had amazing growth, you know, at 40% in the first quarter, 42% overall for the full year, compared to 2022, was 46%. We have some work to do to get back on that trajectory, but we have made the necessary changes in the commercial organization team, and we are managing the VAC process very carefully to make sure that we add those new accounts on a quarterly basis, which will drive our growth. Next slide. Jim, I don't know if you wanna-
I'll, yeah.
Go to the-
Yeah, I'll take this. Our big focus here, this is the 2024, our agenda for the year. We're gonna add 45 new accounts per quarter. That's our objective. We're on pace to do that in Q2. We're gonna continue to penetrate, adopt, and grow our core burn centers. That is gonna be really enhanced by the RECELL GO. One of the elements that drove the development of RECELL GO was a few things. First of all, RECELL, in its present state, requires an extra technician in the operating room, or nurse, dedicated to setting it up and helping the physician manage it.
Second, to keep them trained with shift changes and turnover, it's a full-time activity just to train and keep that operating staff with technicians who know how to manage the procedure. With RECELL GO, you don't need that extra person. A physician who's trained on it could direct somebody to execute the preparation of the spray-on skin by him or herself with a nurse that had just moderate exposure. So the—because it is incredibly easier. In fact, often between 1 and 2 RECELL kits are used on a burn patient, which means they have to do it consecutively.
With RECELL GO, they'll be able to bring two RECELL durables into the operating room at the same time, and do that biopsy once, and process enough for our 20% total body surface area, all at the same time, and be preparing the... While that's happening, can prepare the patient to receive the spray-on skin with the split, split-thickness graft. So it really changes the adoption, kind of mechanism that the physicians and the hospitals have to go through in burns. In full thickness, we have the same training challenge with all these different indications, different physicians, different staff, that will be in similarly really reduced when we have RECELL GO, which of course, we expect very, very shortly. So execution here, with the combination of RECELL going to RECELL GO, we expect to get rapid adoption with RECELL GO.
We expect it to be used more, and, but we have PermeaDerm to sell with it. So, as you look across our coming year, we are prepared. We have enough inventory for our launch in June for RECELL GO. We have enough inventory for PermeaDerm, and we're going to achieve approval for the, and under the MDR for international markets, sometime before the fourth quarter. So there's a lot for us that we have right before us, in our control, that we are gonna be executing through the remainder of the year. So our objective here is to execute on our plan, and so throughout the rest of 2024, we'll be keeping you updated on our progress here. Next slide. I think now we'll take some questions.
Thank you, Jim and David. We'll move on to questions. If you have any questions, you can continue to submit them using the Q&A function. I'll now hand over to Jessica Ekeberg to run the Q&A.
Thank you, Rudi. Speaking to the RECELL technology, can you update us on the regulatory path going forward? Are there opportunities and hurdles, as well as the platform, the technology versus competitors that could potentially come up in the market?
Okay. I think that's a question for RECELL GO with FDA and about competitors, right?
Correct.
So in the first instance, we are in the breakthrough device designation, and that means a real-time review, except in the instance where they require additional testing. That did occur during this submission, and we submitted that data 90 days, approximately, 83 days ago. So we have approximately 7 days to go, okay? We currently have no open questions from the FDA. We will certainly get some over the next several days, but we... They are required statutorily to respond by next Wednesday, U.S. time. So there isn't a lot ahead of us, we don't think. So we'll just have to wait and see if there's additional questions and answer them within the timeframe the FDA requires, which will be required before next Wednesday.
So, they'll be and Monday is a U.S. holiday, so it's soon. With respect to competitors, there's two kind of issues to think about. One is the regulatory approval, and one is the intellectual property. So it happens that two issues. Of the PMA process requires a clinical study in the beginning, which we did one with burns, we did one with full thickness, we did one with vitiligo. It then requires a what's called a PMA supplement, to modify it. So if we handed a competitor the formula for the RECELL enzyme, for example, it would take them two sequences of a PMA, a feasibility and a clinical study to be able to come to market, and that would take three or four years. Secondarily, all of our future IP is encompassed in RECELL GO.
By the time someone could come to market, and there's no one pending at the moment in our vision that we've seen, so they would have to get through that 3- or 4-year period, but by then, the market will be using the automated processing of RECELL GO, so they'll have to compete with that. From a long-term competitive protection, we're quite strong, and one reason we want to build around RECELL.
Thank you. This is, you basically just spoke about this, but just how confident are you as it relates to RECELL GO approval?
Well, I'm confident in a few things. I'm confident that, number one, the regulatory requirement to answer, the FDA will answer by Wednesday, that will next week. That is, I'm quite confident about. Secondly, we have answered all of their questions, and we have no outstanding questions. So therefore, with everything I know, I think it, we have high reason for optimism. Obviously, you don't know till you know. But in fact, there's no outstanding issues that we know about at this time.
Thank you. Let's look at, for David, how should we think about operating expenses for the rest of the year?
Yes, thanks, Jessica. So we added an additional 18 sales reps and 9 new clinical tissue specialists in the first quarter of this year. All of those hires have been done, and we are now standing at around 108 total in commercial team. The step up for commercial will happen in the second quarter. We'll have a full quarter of those expenses, but then we do not see the rest of the year additional commercial expense step up. G&A will stay primarily relatively flat for the rest of the year. There may be a small step up. We don't have a lot of headcount that we're going to be adding.
And then R&D, we will stay relatively flat there also, unless we do a PMA, which we are planning, but it's still, we need to get the right set of products in place to do that PMA. And so if we do that, R&D may step up a little bit in the second half of the year, but again, we don't see operating expenses increasing significantly over the next three quarters. And just to stay on the first quarter of 2024, that is usually a quarter that has a higher operating expenses because of a number of compensation expenses reset after the first, after the, in the first quarter. And so those expenses are higher, and then they taper off in the rest of the year.
We also had a significant amount of recruiting expenses for our expansion of our sales team in the first quarter. So Q1 did step up, but we see that rationalizing, normalizing over the rest of the year.
Thank you. This is for either of you. What do you think about the current share price?
Well, and this is Jim speaking, so you kind of see me. The current share price really reflects our Q4 and Q1, where we missed our guidance, so we missed on our execution, and the share price reflects that. And the only way for us to get that back is to demonstrate and perform going forward. And one of the, the good news, the -- that's sort of why the share price is where it is. That's on us. That's on the execution of the management team. On a go-forward basis, we are really well prepared. Our, our, our, we're, we're, we've got the organization in place. We've got RECELL GO pending approval in less than seven days. We've got PermeaDerm inventory, so we already have it. We have a very full pipeline of new accounts that are in a Value Analysis Committee.
We will launch in the international markets, which will be a operating margin plus, because we're not incurring much cost to do it. So we have a lot to recover with, and we intend to make that become reality. So that's, you know, the share price is a reflection of our Q4 and Q1 performance, and as will, we believe, reflect going forward, our execution.
Thank you. Here's another question: I received a call from a proxy solicitor. Why is it important that I vote?
So as you know, or you may know, the company trades on both ASX and on NASDAQ, and so there's different rules on ASX and different rules on NASDAQ, which we have to comply with both. As it turns out, to have an effective AGM and to affect any resolution, there has to be a 50% plus one quorum that votes. So, I encourage you to vote. It helps the company achieve quorum, it helps us govern the company. And, so that's the reason. That's not required on ASX, that same quorum definition. It just happens to be the NASDAQ one.
Thank you. This one's for David. You briefly touched on this. Can the company reach cash flow breakeven without any more dilution, or do you plan to tap into the OrbiMed debt?
Thanks, Jessica. Our operating plan for the next 5 quarters indicates that we can reach cash flow breakeven by the third quarter of 2025. When we achieve the revenue projections at the lower end of guidance, $78.5 million for this year, we will be exiting 2024 at a significant revenue run rate. We don't see that revenue run rate going down in the first quarter of 2025. We would only see it accelerating in the first and second quarter. With that acceleration, we will reach cash flow breakeven by the third quarter. With that, we don't see any need to tap into either of the tranches for OrbiMed. They're $25 million each.
The first one, as I indicated, needs to be drawn down by the end of this year, and if we don't draw down the first one, the second one is not available. Again, we don't see the need, at this point in time, to draw down either one of them.
Thank you, David. What incentives does executive management have that align their interests with the rest of the shareholders?
That's a very good question. One of the biggest changes that we made 18 months ago is, from an equity compensation point of view, management does not receive any restricted stock units, which when they vest, they're always worth something, and they do not fully align in a growth company with shareholders when that is the single approach. Our single approach is with options, equity options, and the only way management can make money on them is to have the share price grow. So we are absolutely, fully aligned with the shareholder interest for the share price to grow with that structure. So management will get 0 if the share price does not perform, and the share price will only perform if the company executes well.
Thank you, Jim. In relation to full year guidance, does it assume approval of RECELL GO? How would you quantify it?
Very simply, yes, it assumes approval of RECELL GO. And absolutely, without quantifying it specifically, because I haven't done so externally, otherwise, not getting RECELL GO approval would make it so that we would need to make some level of change to our guidance, so it's absolutely required. We're with inventory now, and we're prepared to ship the day following FDA action, presuming approval.
Thank you, Jim. Shifting to PermeaDerm, can you share the market opportunity for PermeaDerm, and how does it compare to its competitors?
Yeah, I can. So in terms of market opportunity, it's, it's really, really large. Let me give you an example. For a 10% TBSA burn, that's 2000 square centimeters. 2000 square centimeters of PermeaDerm will cost about $2200. That means $1100 in gross profit for us on top of RECELL, times 35,000. So that's the burn opportunity for PermeaDerm alone, and depending on the size of the wound- every one of the full thickness is an opportunity. So we're talking hundreds of million dollars of potential. Now, it's a crowded market, wound dressings are, and some people- some prefer to use different wound dressings for different reasons.
The reasons you would use PermeaDerm is that you value the ability to see through the dressing, to see the progress of the wound and make sure there's no infection. You value the ability to stretch the dressing as you apply it, to adjust the porosity. That is, those are both unique qualities to PermeaDerm. Third, that porosity allows the two-way process of healing, so the wound can breathe both ways. It can express excess bodily fluid, and it can receive air. So it's really, from a feature benefit point of view, a really wonderful dressing that is really helpful in healing many indications. So yes, there's competitors, but we also have both the ability to sell it while we're selling RECELL and into all those indications.
A really good market opportunity for the company and a good product for our customers to use.
Turning to RECELL GO mini, and there's a point of clarification or question here. In February, we were told that RECELL GO mini was designed for wound sizes less than 5% TBSA, but now it's been reduced to less than 2.5% TBSA. Can you explain the reasons behind this change?
Yes, I can. I did say it was targeted for less than 5%, and that's still true. The design was always 480 cm², and I wasn't clear about that. 480 cm² against the standard RECELL kit, which is 1920, is 25% of 10%. It's 2.5%. In fact, we didn't change it, and I'll give you a reference. In the full thickness skin defect clinical trial, the average of the wounds treated in that PMA trial was under 300 cm². 480 will capture the broader, smaller size, full thickness skin defect market, we think, quite well. We're late in the development of that product. We've designed it.
We're doing the validation testing, similar that we did for RECELL GO, and we'll be prepared to submit it, sometime within the first 30 days after RECELL GO approval.
A follow-up to that, what do you expect pricing and reimbursement for RECELL GO Mini?
So, we haven't made final pricing decisions yet. We've done some work. We do understand and expect that we will sell it for less, and so we'll have more to say about that. But I think you could expect that it will be in the order of 20% less than RECELL GO, the 1920 version. So that's one area. The... With respect to reimbursement, it will fit into the current reimbursement codes.
Turning to international expansion, does the FDA approval of RECELL GO enable Cosmotec to commence the Japan PMDA submission process for RECELL GO, and the indications for full-thickness skin defects, defects and vitiligo?
Okay, so the FDA approval has zero influence on what happens in Japan with respect to the submission there. So RECELL GO will have to go through the submission process in the PMDA in Japan. And that is in a very early preparatory mode, so it hasn't been submitted yet. So, I'll have an update on that, perhaps at the August quarterly release.
Looks like we are nearing the very end of our questions. Any updates from PolyMedics?
No, what they're doing is they're building early KOL sponsorship. There is a process in Germany, particularly, which is where their focus is first to get reimbursement, so that is underway. So we don't expect a broad adoption until that's solved.
This is the last question from our registration questions. Let's see. Are you still on track for completion of the expansion of the manufacturing facilities during the third quarter of 2024?
The simple answer is yes, we expect to complete it in July.
Great. That concludes the questions I see.
That concludes the webinar. We thank you for your participation.