The AVITA Medical Ltd (ASX: AVH) share price has gone from being one of the best performers on the market on Tuesday, to one of the worst performers on it on Wednesday.
In afternoon trade the global regenerative medicine company's shares have crashed 29% lower to 33.5 cents.
Why is the AVITA Medical share price crashing lower?
With no news out of the company or broker notes that I'm aware of, I suspect that today's decline could be related to profit taking from some investors.
After all, as I mentioned here, at one stage yesterday AVITA Medical's share price was up almost 29% to a multi-year high of 54 cents.
When its shares reached that level it meant they had gained a staggering 575% since the start of the year.
It also meant the company's market capitalisation was nearing a whopping $900 million. Which I thought was a touch expensive given the relatively small amount of revenue it has generated in FY 2019.
In February the company released its half year results and revealed sales revenue of $1.8 million. This excludes revenue of $5 million which is technically funding provided by the Biomedical Advanced Research and Development Authority.
And while the company's RECELL System does have enormous potential, I think the valuation was getting a little out of control.
The RECELL System is a regeneration platform which was approved by the U.S. FDA late last year as a Class III device for the treatment of acute thermal burns.
It is used to prepare Spray-On Skin Cells using a small amount of a patient's own skin, providing a new way to treat severe burns, while significantly reducing the amount of donor skin required.
Should you buy the dip?
Whilst today's sharp pullback has brought its shares down to a lower level, I'd still like them to come down further before considering an investment.
In light of this, I'll be focusing on opportunities elsewhere in the sector for now such as CSL Limited (ASX: CSL) or Telix Pharmaceuticals Ltd (ASX: TLX).
