Why is ASX 200 listed AVITA Therapeutics share price up today despite reporting FY20 loss?

Summary

  • ASX 200 listed healthcare company AVITA Therapeutics reported FY20 revenue of US$14.263 million from RECELL Systems, up 161%.
  • However, The Company reported a loss of US$42 million for the year ended 30 June 2020, due to an increase in operating expenses.
  • AVITA also highlighted that July 2020 represented record monthly sales for RECELL Systems in the US since its launch in January 2019.
  • The Company anticipates quarterly revenue in the September quarter to resume growth, and sales to exceed US$3.9 million.
  • AVITA share price was up ~11% at the end of the day’s trading session.

ASX 200 listed company AVITA Therapeutics Inc (ASX:AVH) reported its results for the financial year 2020. The Company reported a 161% increase in revenue and reported a US$42 million loss for the year ended 30 June 2020. However, after the announcement of the annual results, AVH share price closed the day’s trading session at A$6.820, up by 10.894% on 28 August 2020.

Let us find out why AVITA Therapeutics’ share price rose 10% despite reporting a 67% loss in FY20-

About the Company

ASX 200 listed healthcare company AVITA Therapeutics is a global regenerative medicine player that offers a novel approach to the regeneration of the skin. Products of AVITA provide innovative therapies developed from the regenerative properties of the patient’s skin. The proprietary technology of AVITA can be used for additional skin applications other than burns treatment, like for treatment of scar revision, chronic and traumatic wounds, and vitiligo.

The Company’s medical devices work by preparing a RES® REGENERATIVE EPIDERMAL SUSPENSION. This is an autologous suspension of patient’s skin cells required to redevelop the natural healthy epidermis.

AIVTA reported a 161% increase in RECELL Systems revenue

On 28 August 2020, AVITA Therapeutics updated the market with its annual report for the financial year 2020.

The highlights are-

Source: Company's report

Outlook-

AVITA stated that the Company’s future financial performance and ability to successfully commercialise its products totally depend on the ability of AVITA to manage any future growth effectively. The Company anticipates making substantial investments to accelerate its future growth through-

  • New product development.
  • RECELL System clinical development to areas such as trauma injuries, pediatric burns, and vitiligo.
  • Clinical trials for additional problems.
  • Marketing and sales infrastructure funding.

ALSO READ: Two Companies Primed for Impressive Growth: AVITA Medical, Southern Cross Media Group

July Witnessed Highest Monthly Sales for RECELL Systems in the US

On 26 August 2020, AVITA provided an update on corporate development highlighting the US RECELL® system sales and clinical studies-

  • AVITA stated that July represented record monthly sales for RECELL Systems in the US since its launch in January 2019.
  • The RECELL Systems’ unaudited sales in July were reported at US$1.83 million.
  • July 2020 also observed the broad utilisation of the RECELL System with fifty-seven unique account orders, and over 90 doctors using AVITA’s RECELL System.
  • AVITA Therapeutics anticipates quarterly revenue in the September quarter to resume growth, and for sales to surpass the US$3.9 million earlier reported for the three months ended 30 June 2020.

Updates from Clinical Studies

Bottomline

Even after reporting a significant loss for FY2020, investors seem to be buoyed by the results with AVITA’s share price moving up sharply. However, the loss, which was due to increased operating costs, was partially negated by the jump in revenue.

The impressive growth in revenue, the record monthly sales in July, and AVITA’s anticipation of revenue expansion in the September quarter, might have boosted investor sentiment.

GOOD READ: The Burgeoning Leads from Healthcare Space- CSL, CUV, AVH

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