The Avita Therapeutics Inc (ASX: AVH) (NASDAQ: RCEL) share price was trading 10.53% lower today following an investor update to do with its BARDA partnership.
For context, the broader Australian share market or S&P/ASX 200 (ASX: XJO) was trading at 5955.1, up 0.61%.
AVITA Therapeutics is a regenerative medicine company with a technology platform to address unmet medical needs in burns, chronic wounds and aesthetics indications. Treatment solutions are derived from the regenerative properties of a patient’s own skin.
RECELL is the company’s flagship product. In basic terms, RECELL can be used by doctors to ‘respray’ skin cells onto a patient suffering from some type of injury (e.g. a burn). The product takes a small amount of the patient’s skin as a sample and in around 30 minutes a spray can be created and applied.
Avita (AVH) shares fall 10%
Here are the key takeaway’s from the company’s investor presentation today:
- As expected, the USA’s Biomedical Advanced Research and Development Authority (BARDA) will procure RECELL as part of the department of Health and Human Services’ preparedness for public health emergencies initiative.
- BARDA has agreed to a vendor-managed inventory (VMI) plan valued at $US7.6 million
- A supplemental funding arrangement, in case of emergencies, of $1.6 million has also been awarded.
“We are very pleased to continue collaborating with BARDA to ensure healthcare providers have access to the RECELL System to help patients in large-scale emergencies”, Avita CEO Mike Perry said.
What now
Avita Therapeutics Inc shares were last seen trading at $7.05, giving the company a market capitalisation around $750 million. As detailed in Avita’s fourth-quarter financial results, released last week, given the company’s listing on the NASDAQ stock exchange it will now report results in USD and under US GAAP principles.
Notably, the company has hinted at weakness following the outbreak of COVID given the restrictions on patients accessing facilities, and the reduction in new burns cases. Perhaps Avita will be Australia’s next CSL Limited (ASX: CSL) or ResMed Inc (ASX: RMD)?
With full-year revenue of $US14.3 million and a market capitalization of $521 million (USD), I’d want to have very high conviction in the company’s strategy to consider buying at a price-sales ratio of 36x.
