Vancouver, British Columbia--(Newsfile Corp. - June 26, 2013) - Zacks Investment Research has initiated coverage on Avita Medical (OTCQX: AVMXY) (ASX: AVH). Analyst Jason Napadano gives the company a buy rating and a $4.00 US price target, a premium of 95% over the $2.05 price the day the report was issued.
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Based in the United Kingdom, Avita Medical develops and distributes regenerative products for the treatment of a broad range of wounds, scars and skin defects.
Avita's patented and proprietary tissue-culture, collection and application technology provides innovative treatment solutions derived from a patient's own skin.
The company's lead product is ReCell Spray-On Skin, an autologous cell harvesting, processing and delivery technology that enables surgeons and clinicians to treat complicated skin defects, including chronic wounds, scars, burns, depigmentation, and aid in rejuvenation or reconstructive procedures using a patient's own skin cells to facilitate the regenerative process.
Clinical experience generated by the company shows the system can be successfully used to promote healing and the formation of new skin structure after a severe injury, such as a burn or scald.
Data also shows that ReCell can improve the appearance of acne scars, remove areas of discoloration and restore pigmentation in patients with vitiligo, and aid in the healing of chronic wounds such as venous leg ulcers and diabetic foot ulcers.
The ReCell system has received CE Mark in the European Union, but is not available for sale in the United States, where it is currently classified as an investigational device limited by federal law to investigational use. However, a Phase III FDA trial is in process.
In other areas outside of Europe, such as China and Turkey, the company is partnering with distributors.
On a global basis, Zacks sees ReCell, conservatively, as a potential $250 million product. Approval for use in chronic wounds has the potential to double that peak sales number to more than $500 million on a global basis. The company's respiratory business provides meaningful revenues and cash, having generated $3.4 million in product sales in fiscal 2012.
For a small biotech company, Avita is surprisingly well capitalized, with $12.3 million in cash as of March 31, 2013, which Zacks considers sufficient to fund operations for the next three to four quarters.
Analyst Jason Napodano stated, "We believe the shares are set for a major re-valuation on the pending phase 3/PMA data from the burns and scalds trial currently being conducted in the U.S., with data expected around the middle of 2014"
The shares are currently trading at $2.58, well below Zacks' target of $4.00, and with 16 million shares outstanding, the company is capitalized at $41.3 million.
The stock price on the OTCQX has been consistently over $2.00 for the past few months, which would qualify the company for listing the American Depositary Receipts on a major exchange, such as the NASDAQ- CM.
For more information, please visit the company's website www.AvitaMedical.com or contact Sharoni Billik at 818-827-1675 or email sbillik@AvitaMedical.com.
For more information about Zacks Small-Cap Research or to obtain the report on Avita Medical, visit their website at www.zacks.com.
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