Avita Medical receives FDA approval for full-thickness skin defects
It has been 30 years in the making, when Dr Fiona Wood and scientist Marie Stoner recognised the potential of tissue engineering to treat burns and a skin culture facility was borne. Their product evolved from cultural sheets of cultural epithelial autograph (CEA) to aerosol delivered cell-clusters and today it is known as “spray-on skin”. The skin cells then grow on the patient and the technology has been patented and commercialised through Clinal Cell Culture, which became Avita Medical (ASX:AVH).
The Avita Medical share price is trying to do the round trip, peaking at $16.90 in February 2020 and troughing at $1.30 in June 2022, and yesterday – at one stage – it jumped 15 per cent to $5.00. Timing can be everything in the share market!
The company has just received U.S. Food and Drug Administration (FDA) approval, via the Breakthrough Device designation, to use its RECELL System to treat full-thickness skin defects. “The FDA approval now offers surgeons a best-in-class treatment option for a multitude of severe wounds within inpatient and outpatient settings.”
It is understood this represents an expansion of the company’s market opportunity of at least five times, with 145,000 targeted procedures versus the current 25,000 targeted burn procedures.
Avita Medical has more than doubled its field sales organisation in readiness and the commercial launch will commence July 1, 2023. The RECELL System was first approved in the U.S. for the treatment of severe burns in 2018 and prepares, produces, and delivers a regenerative cell suspension, Spray-On Skin Cells, using a small amount of a patient’s own skin.
Currently, skin grafting requires the harvesting of donor skin, resulting in an additional wound to the patient. Significant pain, delayed healing, risk of infection, the need for multiple procedures, discolouration, and scarring are associated with donor site wounds.
Based on results from Avita Medical’s pivotal trial for soft tissue repair and reconstruction, RECELL demonstrated statistically non-inferior healing rates with statistically significant donor sparing, meaning less skin from the patient is required to repair and close the wound without compromising the healing outcomes relative to conventional autografting.
Avita Medical’s sales hit US$10.6 million in the March 2023 Quarter, up 40 per cent on the previous corresponding Quarter. With the five-fold increase in the market opportunity, it will be interesting to see if the Company can deliver on its potential over the medium-term.
The Montgomery Funds and Australian Eagle Trust Long Short Fund own shares in Avita Medical. This article was prepared 08June 2023 with the information we have today, and our view may change. It does not constitute formal advice or professional investment advice. If you wish to trade Avita Medical you should seek financial advice.
Chief Executive Officer of Montgomery Investment Management, David Buckland has over 30 years of industry experience. David is a deeply knowledgeable and highly experienced financial services executive. Prior to joining Montgomery in 2012, David was CEO and Executive Director of Hunter Hall for 11 years, as well as a Director at JP Morgan in Sydney and London for eight years.
This post was contributed by a representative of Montgomery Investment Management Pty Limited (AFSL No. 354564). The principal purpose of this post is to provide factual information and not provide financial product advice. Additionally, the information provided is not intended to provide any recommendation or opinion about any financial product. Any commentary and statements of opinion however may contain general advice only that is prepared without taking into account your personal objectives, financial circumstances or needs. Because of this, before acting on any of the information provided, you should always consider its appropriateness in light of your personal objectives, financial circumstances and needs and should consider seeking independent advice from a financial advisor if necessary before making any decisions. This post specifically excludes personal advice.
