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Why the Avita Medical share price is rising 5% higher today

The Avita Medical Ltd (ASX: AVH) share price is soaring 5% higher today as the S&P/ASX 200 Index (INDEXASX: XJO) has started to recover recent losses.

This afternoon, Avita announced an update with regard to a new study it is undertaking in relation to soft tissue reconstruction.

Avita Medical has been the best performer on the ASX 200 over the last 12 months with its share price rising from $0.139 this time last year to now be trading at $0.635 at the time of writing. This represents a massive 357% gain, driven by strong sales of the company’s RECELL System.

Avita’s RECELL System

Avita Medical’s FDA-approved RECELL System is used in the treatment of acute thermal burns in patients 18 years and older. It is used to prepare Spray-On Skin Cells by using a tiny amount of a patient’s own skin. This provides a revolutionary new way to treat severe burns, while also significantly reducing the amount of donor skin required.

Details of the new trial

Today, Avita Medical announced the commencement of its pivotal study evaluating the RECELL System for soft tissue reconstruction. With this, the first patient has been enrolled for the study at the Arizona Burn Center at Valleywise Medical Health Center in Phoenix, Arizona.

The study will evaluate the safety and effectiveness of the RECELL System when in combination with more widely utilised meshed autografts, currently used to treat patients that have no association with any former burn injury.

Avita Medical will be evaluating the effectiveness of the new study by analysing two key outcomes. The first outcome will be to evaluate what is referred to as ‘superior donor skin sparing’. This is analysed by comparing the actual expansion ratios of donor skin used to treat the wounds. In addition, the company will analyse non-inferior incidence of healing eight weeks after the treatment.

Further commenting on the study, Avita added that the healing of the patients in the trial will be evaluated by a qualified clinician who will be blinded to the treatment allocation.

Management commentary

Commenting on today’s announcement, Avita Medical CEO Dr. Mike Perry said:

“The commencement of this pivotal trial is an important milestone for AVITA and a critical step toward making the RECELL System broadly available to help patients heal from traumatic or soft tissue wounds with the use of less donor skin than the standard of care.”

Further commenting on the study, Dr. Kevin Foster, Director of the Arizona Burn Center at Valleywise Health Medical Center, said:

“We are eager to evaluate use of the RECELL System as a way to reduce the amount of donor skin required. In burn care, where RECELL is currently FDA-approved, clinical and health economic benefits have been demonstrated. Relative to burn treatment, autografting for non-burn injuries occurs far more frequently, so this has the potential to be a significant treatment advancement for a large number of patients.”

In related news in the ASX healthcare space, Clinuvel Pharmaceuticals Limited (ASX: CUV) this morning announced it has secured a meeting with the US Food and Drug Administration (FDA) to progress the use of its drug, SCENESSE, for the treatment of vitiligo. This news sent the Clinuvel share price rocketing as much as 25% higher today.

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Phil Harpur has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of Avita Medical Limited. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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