Hi
@mondyinvest,
I can't fault anything you've stated above, other than the "what would I know" part of course. I'd also like to add a couple of other possible reasons for the recent share price weakness since your 26 August post: AVH dropped out of the ASX300 index, and rise/peak of new COVID cases in the US during the recent wave which will affect Q1 FY22 sales growth.
As a holder, I'm happy to share my thoughts (based on Avita's presentations and webinars) on whether or not the share price will increase in the next three months due to the projected key milestones for
@Nekta.
- Japan PMDA Approval - Avita has partnered with COSMOTEC who has applied for broad label usage i.e. burns, soft tissue/trauma, vitiligo, chronic wounds. Under the agreement, Avita will receive approximately 40% of the revenue. Avita hasn't provided guidance on their estimated serviceable addressable market (SAM) for these indications yet, however, they've previously mentioned that Japan is the second largest healthcare market in the world and is roughly 1/3 the size of the US. Based on the above, my very rough (probably wrong) guesses of potential SAM for each indication:
- Burns - 1/3 x $260M (SAM in US) x 40% = $34M. Mike Perry's personal thoughts (during recent webinar) on gaining approval during this application: "certain of approval".
- Soft Tissue/Trauma - 1/3 x $450M (SAM in US) x 40% = $60M. Mike Perry: "good shot" at gaining approval.
- Vitiligo - 1/3 x $750M (SAM in US) x 40% = $100M. Mike Perry: "coin toss" at gaining approval.
- Chronic Wounds - No guidance that I can guess from. Mike Perry: "coin toss" at gaining approval. Their current estimated SAM for inpatient burns in the US is $200M so Japan approval for burns would represent a 17% increase in potential SAM/revenue, approval for burns and soft tissue/trauma would be a 47% increase, etc.
- Share price - should positively affect share price depending on which indications are approved.
- Proof of Concept - E.B. and Telomerase (reversal of aging) - both have been described as potential multi billion dollar markets but I think they're too far off to have any affect of the share price. However, it would be good to see and could create a bit of attention if proven.
- Vitiligo - Last patient enrolled - minimal/if any affect on the share price but it would be good to see one step closer in the process.
- Outpatient C Code - Expected to be announced in November and implemented on January 1, 2022 which is 1 year over due which could be another factor in the share price decline. SAM for outpatients has been estimated at $60M. 30% increase on current estimated $200M SAM for inpatients. Share price should be positively affected.
- Q1 FY22 - Preliminary result mid this month? Guidance of $7M was provided which is less than 5% growth on the previous quarter (although a good one with over 45% growth on previous quarter) due to seasonality and Delta. Q4 FY21 gives me confidence that once/if COVID abates, there is good potential for sales penetration/revenue growth.
- Short Sales - Short sales decreased from 4.61% on 26 August to 1.59% on 5 October. Worth noting?
Based on my dodgy calculations, assuming COVID continues to abate, management can deliver on or close to the timelines, and
insert any otherdisclosures that I missed, I think there's a higher chance of the share price increasing than decreasing in the next three months. Don't forget there's probably a 95% chance I'll be wrong though
(20min delay)