Dear Shareholder, COVID-19 in FY21 had a significant impact on hospital trauma, burn and elective surgery activity. Notwithstanding limited hospital access, lockdowns, and travel restrictions, we adapted our business and had continued material sales growth with global BTM sales up by 33.8% (AUD), US BTM sales up by 49.0% in local currency (USD) and the Group achieved a small underlying profit (excluding non-cash items) of $258,756. We signed three General Purchasing Organisation (GPO) contracts during the year to 30 June 2021 with further negotiations currently in progress. These contracts will enable faster account acquisition and deeper US market penetration in FY22. We continued our investment in building our platform for post COVID-19 growth with personnel growing from 78 to 106. Growth in our sales team was a significant driver of our sales momentum. Advanced digital programs including webinar and promotional activities are now part of our “normal” business processes. Many virtual trade shows have been conducted where we established new leads, presented NovoSorb BTM to large audiences, and reached new markets. Sales in all our direct markets continue to grow with the second half providing strong improvement in revenues, new account acquisitions and sales team expansion. Importantly PolyNovo achieved a small profit (excluding non-cash items) and was cash breakeven, a significant company milestone. Our cash on hand position is strong as at 30 June 2021 and forward cashflows are building despite forecast expenditure required for growing sales teams and investing in new product development. Continued manufacturing of inventory completed during FY21 means we have stock available for customers in all markets. Production capacity is high, and we increased capacity including redundancy through the completion of our new manufacturing facility. This new facility will house our polymer laboratories, film extrusion, new foam cutting machinery and ultrasonic welding capabilities. Our new equipment and skills in production enable PolyNovo to rapidly develop new medical devices constructed from our existing NovoSorb polymers. The new manufacturing facility has been commissioned and is currently undergoing internal qualification which is expected to be completed by the end of September. New, smaller NovoSorb BTM sizes will enter specific markets in October 2021 addressing the European, UK, Australia and New Zealand demands for economically treating lesion excisions, diabetic foot ulcers, arterial ulcers and venous leg ulcers. Recent publications and presentations by Flinders University (South Australia) demonstrate great promise for the role of NovoSorb BTM in arterial leg ulcers. PolyNovo is supporting further investigations of this application. The first phase of a diabetic foot ulcer study in the US concluded in July 2021 with enrolment of the first ten patients. We will now review the progress of these patients and adjust any trial protocols to embark on the recruitment of the next 40 patients. The data from this study will be used to submit for insurance reimbursement coverage for chronic wound applications in the US market. This market segment has a total addressable market of USD $400 million with market entry anticipated in 2024. The BARDA funded pivotal burn trial has commenced and we are in the process of enrolling 20 US based and 5 Canadian based burn centres in performing the pivotal burn trial. BARDA revenues are expected to increase commensurate with the trial activity in the year ahead. The R&D team has demonstrated an ability to adapt by producing finalised hernia devices called Syntrel VP in FY21. We commenced a large animal study in July 2021 to generate the data on resorption, toxicology and biocompatibility that will support our dossier submission to the US FDA in approximately March/April 2023 for our hernia product. We anticipate gaining approval to sell in the US by August 2023. FY22 has begun with positive sales momentum, continued sales force expansion, Syntrel VP (hernia) animal study commencement and improved customer access with the expectation of receding of COVID-19 restrictions. Clinical Trials FY21 Our $15m USD BARDA funded US pivotal burns trial is underway. This trial will compare NovoSorb BTM with the selected hospitals’ standard of care looking at wound closure together with cosmetic and functional outcomes. Enrolling Canadian burn centres into the program will also facilitate our market entry to Canada in FY22. PolyNovo will continue the health economic and clinical trial for diabetic foot ulcers and venous leg ulcers to generate the data required by US health insurance groups for a reimbursement code. This clinical data will ultimately lead to entering the US chronic wound care market and generate supporting clinical data for NovoSorb BTM in the treatment of these wounds in all markets. NovoSorb BTM already has regulatory approval for use in all chronic wound applications in all markets we are in. New Markets FY21 PolyNovo has expanded its European and Asian markets during the period to 30 June 2021. To enable faster EU penetration, we have adopted a distributor model in key European countries supported by our existing UK based marketing and business development team. We have entered Belgium, Luxembourg, Netherlands (Benelux), Norway, Denmark, Finland, Sweden, Poland, Italy, Turkey, and Greece. Although European markets have also been impacted by COVID-19, we have seen NovoSorb BTM sales with continued growth over the six months to 30 June 2021. CHAIRMAN AND MANAGING DIRECTOR REPORT
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$2.17 Sentiment: Buy Disclosure: Held
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