We have previously discussed on this forum the possible reasons for product sales in H1 2025 growing less than in H1 2024. Both Swami and David provided some insight today.
On the one hand, H1 2024 sales were boosted by a couple of payments that arrived late in that half ($900,000 from Germany and $400,000 from Turkey).
On the other hand, H1 2025 sales were negatively impacted by hurricanes that hit the United States in September and October. Hurricane Helene in September was particularly disruptive, impacting a major manufacturing site of Baxter (the primary manufacturer of IV fluids in the US) and also causing major disruption to distribution networks. This led to both cancelation of elective surgeries and delays in payments from hospitals. It was reported that the situation is now back to normal.
It’s amazing to think that PolyNovo only entered France and Spain in FY24 and is already the market leader in France and soon-to-be market leader in Spain. Swami explained that use of skin substitutes has been less common in the EU than in the US and that PolyNovo is developing the market there more than replacing other skin substitutes.
After entering Turkey 4 years ago, PolyNovo has also become market leader in Turkey where it is now supplying all the major burns hospitals (I believe that BTM finally getting traction in Turkey might relate to the war in Gaza). With a population of 68 million in France, 48 million in Spain and 87 million in Turkey, these new markets look promising.
Swami was also very happy with the detailed market entry plan devised by PolyNovo’s chosen Japanese distributor. Burns trial data for the US PMA submission will be available in June and that will also be used as part of the regulatory submission in Japan.
Work on regulatory submission for China is also due to commence soon.
Gaining traction in India has been slower than hoped due to the complex tendering process required for each hospital. But Swami says it’s just a matter of time. In the meantime, $700,000 sales have already been made in this market. Sixty tenders are in the pipeline but PolyNovo’s initial focus is on the top 10 hospitals in India.
PMA Submission for BTM Use in Severe Burns
Data should be collated by June and PMA submission is expected in July. The timeline after that is dependent on the FDA, but the normal time for PMA review is 180 days. With luck, a PMA will be received early next year and BTM will join Integra IDRT as only the second dermal template approved by the FDA for use in severe burns. Finally, the end seems within reach after an almost decade-long journey since the initial feasibility trial in severe burns commenced in 2016.
When asked what impact he believes that PMA registration might have for PolyNovo, Swami replied that he believes that “strong Level 1 evidence” will not only help with PolyNovo’s regulatory submissions in both Japan and China, but also drive growth of PolyNovo products across the board. He believes that the PMA approval will particularly help with gaining traction with plastic and reconstructive surgeons and general surgeons.
I was pleased to hear that the company is also looking to submit a supplemental application for use of BTM in severe burns in the paediatric population (<18 years). What’s more, BARDA has offered to assist with costs.
MTX
Swami explained that a “go slow to go fast” approach has been used with Novosorb MTX. Prior to launch in April last year, there was a lot of groundwork done with surgeons to determine how the product might be best used. Following launch, the product has been well accepted. There have already been $3m in sales this financial year and MTX is said to be destined to become PolyNovo’s “bread and butter” product. Several hospitals are already placing repeat orders in excess of $100,000. Swami predicts that sales of MTX will surpass those of BTM within 3-5 years.
One exciting finding to date is that MTX can often be used, particularly in younger patients, without the need to follow with a split skin graft.
New Products
A 510(k) submission for a particulate form of MTX is expected by the end of this calendar year (FDA review then takes 3 months). Particulate (flowable) products have seen strong demand in the reconstructive field as a volume fill solution for irregular wounds with varying depths. These products are also used in undermining and tunneling wounds. Swami believes the MTX particulate product will not only be highly effective, but also very price competitive.
After years of painstaking development, a commercialised hernia product is finally coming closer to reality. PolyNovo expects to make a 510(k) submission for the hernia product in the first half of next calendar year.
Innovation Centre
In addition to the third manufacturing site which is due to be finished in December this year, a new Innovation Centre based at Melbourne HQ is expected to be operational by June. PolyNovo has received an Industry R&D Infrastructure grant from the Dept. of Jobs, Skills, Industry and Regions, worth a total of $2 million, to build, equip and run an innovation centre for 5 years. The Innovation Centre will allow R & D manufacturing to be conducted separately from commercial production. Swami said that this should assist the company to drive new products faster.
Tariffs?
David Nayagam from Evans & Partners sought management's thoughts on potential US tariffs. David Williams said he had been advised that tariffs on Australia were unlikely but said that he was relaxed about the issue either way. It was pointed out that if tariffs are applied, PolyNovo is relatively well placed due to its low manufacturing costs. In addition, PolyNovo already has 12 months inventory in place in the US. Manufacturing in the US is another option that could be looked at and Swami mentioned that BARDA, as part of Project BioShield, had offered to fund production in the US, if PolyNovo was interested.
Personally, I found today’s webinar very positive and am very happy with where PolyNovo is at – other than the share price!
After observing the market reaction today, I can only conclude that some stitching up is taking place, and I’m not referring to surgical placement of BTM.
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