Hey @roughie12I post most of my research on Tw'tter and am happy...

Hey @roughie12

I post most of my research on Tw'tter and am happy anytime to discuss things. DM me there - you can't DM here, which is a real limitation of HC.

With regards to AVH management, I have not spoken with them and don't feel they're so accessible. I have serious reservations with not just their performance, but their performance payment and incentive structures. I think they are completely out of line with shareholders interest: over paid, short term focused, low benchmarks. They are paid magnitudes more than comparative companies like MVP, but even more than major companies like SHL. There is simply no justification for this. I shared this post before, but you can see that essentially around half of revenue in the past three years has gone to management alone:



Management is the one thing stopping me from taking a serious punt on Avita. I actually feel that they have probably passed an inflection point, though valuation is still a bit stretched. I wrote a piece on Tw'tter about the three metrics I look at for Avita. Specifically adoption rates, revenue growth and adjusted SAM.

The adoption rates I am most bullish on at the moment. I think this has been a major problem for Avita - they have been overly dependent on <20% "super users" which is not how you scale. I reckon in the past report they sort of branched out from that in to the early adopters (~50% of trained surgeons had used Recell in the past twelve months, significantly up on priors). It's hard to compare apples and apples, because every report they use different metrics (another red flag for management).

The revenue growth has been there, and seems to be growing (ex Barda). So for me that's good. I think we had 45% QoQ in the last report, so just monitoring that to ensure it is in that 30-50% range. It needs to be that high to start seriously talking about the scaling of the product and meeting the current stretched valuations.

The third is adjustable SAM. I take a lot of their TAM and SAM with a grain of salt, so I use my own adjusted SAM to make it more conservative. The ‘Adjusted SAM’ I think is reasonable is ~$300m right now, with a full potential of ~$850m. This includes thermal burns ($300m), Japan expansion ($100m), and other skin injuries ($450m) in trauma centres (same procedure, different sites, but for non burn victims).I exclude from the SAM Vitiligo ($750m) as it is at such an early stage (current clinical trial 23 patients), Epidermolysis Bullosa & Rejuvenation. If they come off, great, but I won’t pay for it in the share price right now.

The best hope for shareholders is a change in management and the executive, it's probably not another BARDA-like contract. It's nice to see a pop today, but reality is the valuations remain stretched and I'm not sure how sustainable this is.

VDU.

P.S. Go the hawks.
P.P.S AGL is probably a value trap.