Avita Medical (ASX:AVH) share price jumps on FDA approval

Avita shares have landed in the green from the market open. Here are the details…

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The Avita Medical Inc (ASX: AVH) share price is in the green in early afternoon trade. Avita shares are on the move after the company gained regulatory momentum overnight.

Let's discuss further.

A quick refresher on Avita Medical

Avita Medical is a medical technology company that has expertise in regenerative medicine. Its flagship product is the revolutionary Recell system, used to help skin recover from burns.

In addition, Avita is trialling Recell on other domains such as soft tissue reconstruction and paediatric scald injuries.

At the time of writing, Avita Medical has a market capitalisation of $587 million.

What did Avita announce?

In a positive for the Avitia Medical share price, the company has realised some regulatory tailwinds overnight.

To illustrate, in an announcement Avita advised that the US Food and Drug Administration (FDA) approved the company's request to amend its pivotal clinical trial investigating Recell's application in vitiligo lesions.

Vitiligo is an autoimmune condition that results in the loss of pigmentation of skin.

Recall that Avita originally sought the "strategic decision" to amend its formulation "based on data from other research efforts".

Avita's decision effectively restructures and simplifies the study design. Therefore, the company can progress the program "in a timely and cost-effective manner".

Moreover, the program "is on track" and Avita is confident it could have Recell available for vitiligo applications "as early as the second half of calendar year 2023".

In addition, the new "single-arm" study design allows 23 subjects at 15 sites to be evaluated. This is in contrast to the previous, 3-arm study of 84 patients.

Based on "other research efforts" mentioned above, Avita understands the "1:20 expansion ratio" is the best regime in this application as it used the "least amount of donor skin".

Speaking on the release, Avita chief executive Dr Mike Perry said:

The design change allows this program to progress in a timely and cost-effective manner toward bringing a novel therapeutic option to an underserved population. Our ongoing multi-media outreach and clinical and advocacy group referral programs are generating significant interest in the trial.

Avita Medical share price snapshot

The Avita Medical share price has jumped following the announcement, landing in the green in midday trade. To illustrate, Avita shares are now exchanging hands at $4.76 apiece, a 0.85% jump from the open.

The Avita Medical share price has posted a loss of more than 3% this year to date, and 25% in the past 12 months.

These results have lagged the S&P/ASX 200 Index (ASX: XJO)'s return of around 25% over the past year.

The author Zach Bristow has no positions in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of and has recommended Avita Medical Limited. The Motley Fool Australia has recommended Avita Medical Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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