'Highly confident': Avita Medical says vitiligo treatment coming

Tom RichardsonMarkets reporter and commentator

Sep 15, 2020 – 4.34pm

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Skin repair specialist Avita Medical says the start of a clinical trial on vitiligo patients in the US this week brings it closer to commercialising its Recell treatment for vitiligo sufferers in that market.

Vitiligo is one of the world's commonest skin pigmentation disorders, which is estimated to affect 6.5 million Americans, and up to 2 per cent of the world's population.

Avita's chief financial officer David McIntyre said the US clinical trial has been designed as a label expansion play on the back of Avita's pre-market regulatory approval for its Recell therapy to treat burns victims.

"We've already treated 1000 patients internationally [for vitiligo] and there's eight peer reviewed scientific publications on Recell used for repigmentation. So we have a fairly high degree of confidence it's going to be successful," Mr McIntrye said of the trial.

Avita already boasts a $US20 million ($27 million) to $US25 million per annum revenue run rate from sales of its Recell therapy for burns victims. The spray-on-skin therapy, developed by Perth-based burns expert Professor Fiona Wood, takes a sample of a patient's healthy skin and then repurposes it into a living layer of skin that's sprayed on wounds.

"We like to think that we're going to complete enrolment during 2021," Mr McIntyre said of the vitiligo trial. "It's probably one of our most exciting opportunities, if not the most exciting."

Research house Morningstar estimates the vitiligo treatment, if successful, could go on sale in the US by financial 2023.

The single-product business has two other clinical trials for Recell at the enrolment stage, to treat scalds in children, and soft tissue trauma in adults.

Looking ahead

Heavy investment in growing its presence in US burns clinics resulted in a ballooning $US42 million loss in financial 2020, with cash on hand of $US73.8 million as at June 30.

In July 2020, Avita switched its primary listing to the US Nasdaq index given 95 per cent of its revenue comes from the US with nearly all its employees there too.

Morningstar forecasts a loss of $US14 million on sales of $US42 million by financial 2022 and has a fair value estimate of $18 on its ASX-listed shares. Bell Potter, which helped raise $120 million for Avita in November 2019, values shares at $15.

On Tuesday, the shares changed hands for $7.51 and are up more than six-fold in five years on the back of its US sales growth; the shares on Wall Street last traded at $US27.18 based on five ASX CDIs being worth one share in the Nasdaq listing.