With regards to adjusting for the index - maybe not a good...

With regards to adjusting for the index - maybe not a good comparison as the index is weighted so heavily made up of much more developed companies that would be paying dividends and not growing much beyond inflation.

I expressed the belief that biotech/medtech company valuations have not risen in value over the past two years in line with inflation and suggested this was reflected in the relevant indices.

For example, the All Ords Index has risen approximately 17% and the ASX300 Index by roughly the same over the past two years. In comparison, the ASX300 Pharma & Biotech Index has fallen ~7%. In the US, the NASDAQ Small Cap Biotech Index is down ~13% on two years ago, following on from a 42% fall in the previous two years. In contrast, the NASDAQ Small Cap Index has risen ~17% over the same period.

A large percentage of US biotechs are trading under the value of their cash holdings.

The reality is, the last couple of years have been a time of rising bankruptcies in this sector, rather than a time of rising valuations.

https://www.biopharmadive.com/news/...rket-turmoil-uncertainty-acquisitions/747210/

https://www.biospace.com/business/b...biotech than,the gale pressuring the industry.

https://www.fiercebiotech.com/special-reports/2024-biotech-graveyard


Yes Kerecis has much higher revenue. Though at the time of acquisition I remember looking into it and it was much higher priced so in terms of product used it was quite similar. Do you have any info on what they are charging?

Unfortunately, I don’t have any up-to-date information on the cost of Kerecis products.

In 2019, the cost per square centimetre was reported to be ~$47. One New York hospital reported that Kerecis was roughly 2.5 times the cost of BTM.


Would also be interesting to know what their cost base is?

Gross margin for Kerecis has been reported to be ~85%.

In 2022, with ~A$113m sales, the company made a profit for the first time.

In 2022/2023, on the A$187m sales you reported, the EBIT margin was estimated to be ~10%.

The Kerecis US sales force is certainly much bigger than PolyNovo’s. Currently, Kerecis is reporting a 230 person US sales force, whereas PNV has 80, with ~16 to be added this year.



Do you know why BTM was denied LCD? Seems strange given the attractive cost.

Qualifying for coverage is not simply about the cost of the product.

To qualify for coverage by Medicare for use in DFUs and VLUs, a skin substitute graft or cellular tissue-based product will need to have quality supportive evidence to demonstrate product safety, effectiveness, and positive clinical outcomes. Specifically required will be a well-designed randomized control trial with sufficient sample size, appropriate follow-up period, meaningful primary & secondary endpoints and low risk of bias. Recent publication of evidence in a peer-reviewed journal is also needed.

The stringent requirements that are being introduced come in response to a blow out in costs caused by a perceived overuse of skin substitutes in chronic wounds. In one extreme example, US$9.8 million in costs was claimed for treatment of one patient over the course of a year.

The most expensive products are those derived from human tissue. They can cost over US$4,000 per sq. cm.

Looking to the future, and I think that Trump is already giving us a sneak preview, I think we’ll be seeing cost benefit analyses being applied, not just at Medicare level, but also by private health insurers and within hospitals.

Swami spoke about the need for PolyNovo to build its health economic story for Novosorb products and stressed that it’s not just about the cost of the device, it’s about the entire resource utilization. As well as procurement committees, hospitals now have value analysis committees that look at the resources used across an entire procedure, not just the cost of the device itself. As he said, you need to be able to give the right resource utilization resource story to the clinicians and to the people in the hospitals who make the decisions.

https://www.cms.gov/medicare-coverage-database/view/lcd.aspx?LCDId=35041

https://www.medpagetoday.com/special-reports/exclusives/114717

https://www.linkedin.com/pulse/hidden-insights-dfu-vlu-care-impact-lcd-evidence-review-kerecis-jlo4e


Are you aware Kerecis pays physicians far more than PNV do - seems they have been a lot more aggressive in this area. These payments are for speaking and education engagements. The bulk of the below payment from Kerecis was in 2023 ($4,220,387.75)

No, I wasn’t aware.

I notice from your graph the sharp upturn in spending on physicians in the year before acquisition. This would at least partly explain the high sales growth rate seen that year. High sales staff numbers would be another contributing factor.

Also aggressive, according to Swami, was trialling by Kerecis in many burn centres through 2022 to 2023. He said that while trialling like this would never take away the use of BTM in the most difficult burns patients, it does and did impact use of BTM in less serious burns.