BALI burns survivor David Fyfe is living proof of the virtues of Avita’s ReCell spray-on skin treatment, pioneered by Perth burns surgeon and former Australian of the Year Fiona Woods.
Fyfe was 3m from the initial blast that tore through Paddy’s Bar on October 12, 2002.
“I remember being blown off my feet,’’ says Fyfe, who managed to extricate himself despite snapping an Achilles tendon.
Twelve days later he woke up in Royal Perth Hospital with an amputated leg and burns to 60 per cent of his body.
Countless operations (including the spray-on treatment) and 15 years later, the 45-year-old Perth-based energy executive is in remarkably rude health as he accompanies Avita’s management on its quest for much-needed funds. “My burns injuries have never given me any problems,’’ he says. “I have no residual complications and have taken no medication since 2002.’’
Sadly, Avita’s body corporate lacks the robustness of Fyfe’s flesh and blood, despite ReCell’s widespread acceptance as a more efficient alternative to traditional skin grafts.
ReCell already has Australian and European regulatory approval, but has failed to win widespread acceptance by conservative specialists.
Given Woods’ profile, ReCell was always going to be synonymous with burns. But Avita chairman Lou Panaccio believes past management erred by not focusing on the bigger markets for wounds management (including diabetic ulcers) and cosmetic surgery.
In the short term, though, Avita needs to prove its cred to the US regulator by completing a randomised, phase-three burns study comparing ReCell with traditional grafts.
With a cash burn of $5 million and cash of $1.7m, Avita is scouring for investors or, better still, commercialisation partners. Panaccio says the board is cognisant that shareholders expect a return, having seen their shares erode from a peak of 25c in early 2012.
He adds that of the 700 regenerative medicine companies globally, only 25 have a product and Avita is one of them.
But there’s a yawning gap between having an approved product and a commercial product.
Given that Avita’s listing predates the Bali bombings, we reckon it already has had its chance to establish ReCell as the global burns standard of care. Avoid.
Spookfish (SFI) 6.5c
THE fledgling aerial mapper has won endorsement from industry doyen Stuart Nixon, founder of runaway incumbent NearMap.
Given other former NearMap execs are behind Spookfish, there is no love lost between NearMap (NEA, 60c) and the challenger. In fact, NearMap suspects Spookfish may have ripped off its technology and has launched discovery proceedings in the NSW courts.
Nixon emerged as a top 20 shareholder by participating in Spookfish’s $5m raising along with Amcom chair Tony Grist, NBN Co co-director Simon Hackett and Navitas founder Rod Jones.
The smart money looks even smarter after Spookfish relisted at almost double the 3.5c issue price, via the shell of Whitestar Resources. Spookfish’s IP enables high-quality pics to be taken at a higher altitude, which means images can be updated more quickly.
Meanwhile, Bell Potter forecasts that NearMap next Wednesday will post a $2.1m interim net profit, up 174 per cent, on revenue of $12m. We maintain a long-term buy on NearMap, which looks expensive in the short term but is expanding into the capacious US market.
We’ll avoid the “pre-revenue” Spookfish pending the outcome of the patent skirmish, which could be either a typical tech legal try-on or something more sinister.
Ansell (ANN) $24.50
A SUBTLE tweak to the glove and condom maker’s full-year earnings guidance, which punters feared as a “stretch” target, was enough to push Ansell stock up 5 per cent to record levels.
Unveiling an expected robust interim result, CEO Magus Nicolin said full-year EBIT was likely to increase in the “high twenties’’, as opposed to the previously stated “mid to high twenties’’.
The Swedish chief warns global conditions aren’t getting any easier. For the time being Ansell is in a “Swede” spot, although there’s a dark side to the benefits of a virile US dollar (its reporting currency) and easing latex and oil prices.
As input costs fall, customers line up for discounts. Unusually, the cash-engorged Ansell is happy to entertain a price war to grow market share.
Most of Ansell’s first-half EBIT gains, up 43 per cent to $US82.7m ($106.5m), came courtesy of acquisitions, notably the late 2013 purchase of North American single-use glove maker BarrierSafe International for $US615m.
Either through good luck or good management, Ansell made the right call on BarrierSafe which, Nicolin admits, stretched the balance sheet like an undersized glove. Hold.
The Australian accepts no responsibility for stock recommendations. Readers should contact a licensed financial adviser. The author owns Ansell shares.
AVH Price at posting:
8.0¢ Sentiment: None Disclosure: Not Held
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