The AVITA Medical Ltd (ASX: AVH) share price may have tumbled 13% lower on Wednesday, but it is still one of the best performers on the Australian share market over the last 12 months.
Since this time last year the global regenerative medicine company's shares have rallied an incredible 509% higher.
What is AVITA Medical?
AVITA Medical is a global regenerative medicine company that provides a novel approach to skin regeneration.
Its products provide innovative treatment solutions which are derived from the regenerative properties of a patient's own skin.
In addition to this, the company's proprietary technology has evidence for other skin applications beyond treating burns, such as chronic and traumatic wounds, scar revision, and vitiligo. More on that later.
Why is the AVITA Medical share price 509% in 12 months?
The strong growth potential of AVITA Medical's RECELL System has largely been the reason why investors have been scrambling to buy its shares over the last 12 months.
The RECELL System is a regeneration platform which received U.S. FDA approval late last year as a Class III device for the treatment of acute thermal burns.
RECELL has proven safety and effectiveness. In fact, in respect to the latter, the treatment area is a massive 80x the donor area. This means that a skin sample the size of just a credit card can be used to treat a patient's entire back.
It is partly because of this that the platform can provide significant savings to burn centres. Management estimates that a typical burn centre with 200 patients could reduce treatment costs by almost a third if they used RECELL.
What is the market opportunity?
Management has its eyes on a number of markets which have the potential to generate significant revenue.
Its core burns market is estimated to be worth US$5.7 billion per year in the United States. Whereas the Vitiligo and Skin Aesthetics markets are worth US$2 billion and US$22 billion per year, respectively, according to management.
Should you invest?
Whilst AVITA Medical certainly has a lot of potential, there is still a long road ahead for the company.
On Tuesday the company released its quarterly update and revealed revenue of A$4.7 million for the three months ended March 31.
I would suggest investors keep their powder dry for now and keep an eye on its sales growth over the coming quarters. In the meantime, healthcare shares such as CSL Limited (ASX: CSL) and even Telix Pharmaceuticals Ltd (ASX: TLX) could be good alternatives.
