On Monday, BTIG maintained its Neutral stance on Avita Medical Ltd . (NASDAQ: NASDAQ:RCEL) following the FDA approval of the company's new product, RECELL GO, in late May. The device, an automated version of the legacy RECELL system for skin harvesting, has begun its initial use in clinical settings.
A surgeon with expertise in trauma and burns provided feedback on the new system, highlighting both advantages and drawbacks. The surgeon, who uses the legacy RECELL system in a significant portion of burn cases, anticipates a more limited application of RECELL GO for full thickness skin defects due to its lack of flexibility in adjusting cell concentration, a feature valued in the original device.
Despite these reservations, the automated nature of RECELL GO is seen as potentially beneficial for less experienced practitioners, offering a more efficient, user-friendly option. The ease of use could reduce labor, especially for scrub technicians, enhancing procedural efficiency.
BTIG expressed optimism about the future potential of RECELL GO, particularly in terms of attracting new users and expanding the user base in the second half of 2024. However, the firm also cautioned that the anticipated rapid sales growth might require a revision of revenue expectations for the latter part of the year.
In other recent news, AVITA Medical received FDA approval for its advanced wound care device, the RECELL GO™ System. This advancement in autologous cell harvesting technology is set to be launched in top burn treatment centers in the United States in June. The system is designed to improve the healing process by using a patient's own skin cells, potentially reducing hospital stay lengths for burns covering less than 50% of Total Body Surface Area.
Meanwhile, AVITA Medical reported a Q1 commercial revenue of $11.1 million, a 5.8% increase from the previous year, but below the anticipated targets. The company also reported a net loss of $18.7 million, despite maintaining a strong gross profit margin of 86.4%. BofA Securities maintained a Buy rating on the company, with a steady price target of $21.00, while increasing its operating cost projections for FY24 to FY26.
These recent developments include the anticipated launch of RECELL GO on May 31, 2024, and the planned submission of RECELL GO Mini's premarket approval in June 2024. Furthermore, the TONE & Health Economic studies expected to be published by the end of 2024 are seen as instrumental in securing reimbursement for Vitiligo treatments in the 2025 calendar year. AVITA Medical remains optimistic about the upcoming launch of RECELL GO and its international expansion plans.
InvestingPro Insights
As Avita Medical Ltd. (NASDAQ: RCEL) navigates the market with the newly FDA-approved RECELL GO, investors are closely monitoring the company's financial health and stock performance. In light of the recent approval and BTIG's neutral stance, let's consider some key insights from InvestingPro that could provide additional context for those interested in RCEL's prospects.
InvestingPro Data shows that Avita Medical currently has a market cap of $205.52 million and is experiencing a notable revenue growth of 35.44% over the last twelve months as of Q1 2024. Despite this growth, the company's operating income margin stands at -98.35%, indicating significant operational costs relative to its revenue.
The stock has been under pressure, as reflected by its 3-month price total return of -49.07%. This is compounded by the fact that the company's stock price is currently trading near its 52-week low, at only 35.81% of the 52-week high, with a previous close price of $7.92.
InvestingPro Tips highlight that Avita Medical holds more cash than debt on its balance sheet, which is a positive sign of liquidity. However, it is also quickly burning through cash, which may concern some investors. Additionally, there are more InvestingPro Tips available for RCEL, including insights such as the company's liquid assets exceeding short-term obligations, which could be crucial for investors assessing the company's short-term financial stability.
For investors seeking a deeper dive into Avita Medical's financials and future prospects, additional InvestingPro Tips can be found at https://www.investing.com/pro/RCEL. And for those looking to access these valuable insights, use the coupon code PRONEWS24 to get up to 10% off a yearly Pro and a yearly or biyearly Pro+ subscription.
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