One of the biggest movers in morning trade has been Airxpanders Inc (ASX: AXP), with an incredible 28% rise.
Although the shares of this medical device company have since dropped back a touch, at the time of writing they are still up by over 17% to $1.32.
Its shares have gone gangbusters following an announcement that the company has received U.S. Food and Drug Administration (FDA) de novo clearance for its AeroForm Tissue Expander System.
AeroForm is a needle-free alternative for women that choose reconstructive surgery following a mastectomy. Activated by a handheld wireless controller that administers small amounts of carbon dioxide in just seconds, it gradually stretches the tissue to prepare for a breast implant.
This FDA clearance means that the Class II medical device can now be sold in the massive US market. In light of this news the company is now building a sales force and plans to launch the device commercially in January of next year.
According to its president and CEO Scott Dodson, the market opportunity in the United States is extremely lucrative. He estimates the addressable market to be worth more than US$800 million a year.
As tissue expansion technology has changed little in the last 40 years, I'm quite optimistic that AirXpanders has a good chance of disrupting the industry. But should you invest at this point?
Although this is an exciting development, I think it is just a touch too soon for an investment. I would recommend investors hold off at least until initial sales results are provided next year. That way we can gauge how the device is being received in the market.
Until then an investment in Nanosonics Ltd. (ASX: NAN) or Cochlear Limited (ASX: COH) might be a better option if you ask me.
