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Avita on Mad Money


Avita on Mad Money

Sometimes value is visible in plain sight. Avita Medical’s (ASX: AVH) RECELL technology solution for burns patients represents the commercialisation of the invention of West Australian, Fiona Wood.

Instead of harvesting large amounts of skin for painful skin grafts, RECELL sprays on a fine layer of skin cells, taken form of up to 97 per cent less harvested skin, which heals with virtually no scarring. The impact of the work undertaken by Fiona Wood and her team into tissue engineering technology is well known and has had a global impact. ‘Spray on Skin’ – allows skin grafts to be applied much sooner which reduces the risk of infection and results in less scarring. Avita Medical is now rolling out the technology globally and spray on skin is now being used around the world.

Avia Medical’s CEO, Dr. Michael Perry joined Jim Cramer on CNBC to discuss the company’s game-changing medical technology RECELL and points out the possibility of a new standard of care for burns victims along with growth from new geographies, deeper penetration within existing geographies and new markets in paediatrics and possibly cosmetic surgery. You can watch the video here.

Early last month Joseph Kim published an article on the upside for Avita Medical, which you can read here.

The Montgomery Fund and Montgomery [Private]  Fund own shares in Avita Medical. This article was prepared 05 December 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.


Roger is the Founder and Chief Investment Officer of Montgomery Investment Management. Roger brings more than two decades of investment and financial market experience, knowledge and relationships to bear in his role as Chief Investment Officer. Prior to establishing Montgomery, Roger held positions at Ord Minnett Jardine Fleming, BT (Australia) Limited and Merrill Lynch.

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.

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  1. I’m fascinated by the Fund’s holding of this company ‘as a core holding’, as described in a previous post, and the characterisation of the business as value in plain sight. At around 100 times revenue, to grow into its current valuation, would I be correct in assuming that your team is virtually certain that Recell is going to become the worldwide standard of care, displacing or relegating all other current standards of care?

  2. I’m by nature a sceptic…

    from the article “points out the *possibility* of a new standard of care for burns victims along with growth from new geographies”

    This is from academic article Zhe Li & Peter Maitz Burns & Trauma
    volume 6, Article number: 13 (2018) “Cell therapy for severe burn wound healing”

    Cell therapy has emerged as an important component of life-saving and wound healing procedures in treating burns. Although progresses have been made to demonstrate the potential and feasibility of various stem cells for burn wound healing, *there are still scientific and technical issues that should be resolved to facilitate the full potential of the cellular devices. More evidence is needed from research and large, randomly controlled trials to define the clinical efficacy and safety of cell therapy in burns*.

    From Wikipedia ..

    September 28, 2017 Avita Medical announced submission of U.S. FDA Premarket Approval (PMA) Application for the ReCell device for treatment of burn injuries. The PMA submission includes clinical data from the two U.S. randomized, controlled trials with combined enrollment of 131 patients at twelve leading burn centers across the United States. The later trial demonstrated over 30% reduction in donor skin harvesting while achieving comparable near-term healing and long-term scar outcomes for treatment of third-degree burn injuries. Results from the earlier trial demonstrate a 97.5% reduction in donor skin harvested for treatment of second-degree burn injuries. The submission also includes a review of 55 cases of compassionate use of ReCell for extensive burn injuries.[7]

    That seems life a small sample size if this technology is being used across the US?

    I think the narrative is that we want this technology to work and it feels good to invest in but is this really value or is this hype??

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