Macquarie released the following this morning:-PolyNovo (PNV...

Macquarie released the following this morning:-

PolyNovo (PNV AU)
Sales momentum building

Key points
 Sales momentum building, up 59%, with 15 new accounts added in 3Q22.
Clinical trials on-track, with 510k expected to be filed for Matrix in FY22.
 3Q22 BTM sales were largely in line with our run-rate expectations.
 We remain positive on the medium-longer term. Retain Outperform rating.

Event
• PNV provided a sales update for 3Q22.

Impact

• Group results: PNV recorded Mar-Q revenue of A$12.3mn, an increase of
~59% vs pcp. Revenue included A$1mn income from BARDA and A$108k
from a Victorian State Government grant. Our forecasts assume BTM sales of
A$23.5mn in 2H22, implying A$12.2mn of BTM sales required in 4Q22 to meet
our expectations. Further, we assume A$3.5mn of BARDA revenue, implying
A$2.5mn required in 4Q22 to meet our forecasts.
• Cash position: Cash at 31-Mar-22 was A$3.8mn, an increase of A$517k
(prior to the sale of Port Melbourne property). Proceeds from the sale and
leaseback of A$6.35mn are expected to be received on 13-Jun-22.

• Key commentary by geography:
 US: The US had record quarterly sales of A$9.5mn, an increase of ~79%
vs pcp. An additional 15 accounts were added in 3Q22, to a total of 169.
 UK/Ireland: Sales of A$248k were recorded in Mar-Q, up 55% vs pcp.
Notably, ~51% of these sales were recorded in Mar-22 (A$127k),
potentially indicating positive sales momentum. Sales staff increased from
3 to 5, with an additional territory manager for Northern England and
Scotland expected to commence in Apr-22.
 Australia/NZ: Sales rebounded in Mar-Q to A$1.2mn, up ~82% vs pcp (of
A$635k). Access to hospitals and face to face conferences are returning
in the ANZ region.

• Clinical update: Trials remain on track, including recruitment for the BARDA
trial and enrolment of the first patient for the DFU trial. PNV note they remain
on track to file for US FDA 510K approval for the Matrix product during FY22.

Earnings and target price revision
• No change.

Price catalyst
• 12-month price target: A$1.60 based on a DCF methodology.
• Catalyst: CEO update; SynPath top-line results

Action and recommendation
• We see the sequential increase in US sales as positive for the balance of
FY22, with new accounts helping support sales going forward. More broadly,
we continue to see PNV as well positioned to increase share within existing
indications, with diversification outside of burns. Retain an Outperform rating