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Why the AVITA Medical share priced rocketed 16% higher today

James Mickleboro
bull market investing

The AVITA Medical Ltd (ASX: AVH) share price has been one of the biggest movers on the Australian share market on Thursday.

In afternoon trade the regenerative medicine company’s shares are up 8% to 47.5 cents but were up as much as 16% to 51 cents in earlier trade.

Why did the AVITA Medical share price rocket higher today?

Investors have been scrambling to get hold of the company’s shares after it announced that the health economic model of the U.S. burn care pathway has been published in the peer-reviewed journal, Advances in Therapy.

According to the release, the model demonstrates that utilising AVITA Medical’s RECELL System for the treatment of in-patient burns is cost-saving or cost-neutral and results in a reduced length of hospital stay as compared to the current standard of care.

What is the RECELL System?

The RECELL System is a regeneration platform which received U.S. FDA approval late last year as a Class III device for the treatment of acute thermal burns.

The treatment area that the RECELL System can handle is a massive 80x the donor area. This means that a skin sample the size of just a credit card can be used to treat a patient’s entire back.

The company’s chief technology officer, Andrew Quick, was pleased with the outcome of the model.

He said: “This model is the outcome of an outstanding collaboration between industry, government, medical, and health economics experts to develop the first economic model of U.S. burn care, allowing for robust evaluations of changes to practice including use of new products such as the RECELL System.”

The release explains that by utilising the model, health economic data projects that the use of the RECELL System to treat in-patient burns could save a major U.S. burn centre up to US$28 million annually compared to treatment with the current standard of care.

This is the equivalent of around 14% to 17% of the average burn centre’s costs according to the release.

So with nearly half a million Americans suffering acute thermal burns that require medical treatment each year, the market appears to believe that AVITA Medical’s RECELL System could have a sizeable opportunity given this latest development.

Elsewhere in the biotech industry today, the CSL Limited (ASX: CSL) share price has edged higher after UBS retained its buy rating but increased the price target on its shares to $223.00.

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James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of CSL Ltd. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The Motley Fool's purpose is to help the world invest, better. Click here now for your free subscription to Take Stock, The Motley Fool's free investing newsletter. Packed with stock ideas and investing advice, it is essential reading for anyone looking to build and grow their wealth in the years ahead. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson. 2019