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PolyNovo share price rises as CEO plans aggressive growth

Kate O'Brien
healthcare shares concept

The Polynovo Ltd (ASX: PNV) share price has been on a tear this year, up more than 56% so far.

In December, sales of the company’s NovoSorb BTM product cracked $2 million for the first time, a 134% increase over the previous December. NovoSorb BTM is an implantable would dressing that can be integrated into the body as it heals.

Today, the company released to the ASX a transcript of a recent interview by PolyNovo CEO Paul Brennan.

Brennan flagged plans for aggressive growth, with company strategy focused on putting money back into the business to drive top-line growth. Cash is being invested in employing more salespeople and driving marketing activities to generate revenues and gross profits. 

In January, PolyNovo launched its product in the UK, Germany, Austria, and Switzerland, with surgeons in these regions reporting impressive clinical results. Sales in the US are strong with PolyNovo effectively adding one sales rep per month in the region. Brennan also reported the company is making significant inroads to key accounts, with plenty of headroom for growth remaining. 

What is NovoSorb BTM? 

NovoSorb BTM works to regenerate the dermis (the underlying structure of the skin), providing a synthetic scaffold that blood vessels can migrate into. This allows new cells to regenerate and repopulate the structure before the product dissolves away.

NovoSorb BTM can be used in conjunction with the RECELL system by Avita Medical Ltd (ASX: AVH), which works on the epidermis layer. Here, NovoSorb provides a surface upon which cells of epidermis can re-proliferate. 

PolyNovo’s NovoSorb BTM is the only synthetic product in its space. Competitor products are sourced from animals which creates a risk of infection. Animal-based products also require the body to remodel foreign collagen, so blood vessels must effectively burrow into the product. The Novosorb BTM product, on the other hand, provides an empty scaffold which blood vessels can more easily migrate into.

CEO Brennan estimated the market for the NovoSorb BTM product is conservatively valued at $1 billion, with the US market for alternate care for chronic wounds valued at $400 million alone. 

Future uses of PolyNovo’s technology

PolyNovo plans to use its polymer technology in other spaces, including hernia repair. According to Brennan, the hernia repair market is valued at $2 billion and is growing at 7% per annum. The hernia product will be used for abdominal wall repairs with usage of the product planned in 2021 in the US market. A factory is being built in Port Melbourne where the commercial product will be made and shipped to the US.

Other potential uses of PolyNovo’s technology are in the breast market, which is valued at $2.5 billion to $3 billion, and to create drug eluding polymers that can go under the skin and release a dose of a drug per day.

According to Brennan, PolyNovo has a lot of development potential that is limited only by the company’s scope of imagination and investment in R&D. 

The post PolyNovo share price rises as CEO plans aggressive growth appeared first on Motley Fool Australia.

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Motley Fool contributor Kate O'Brien has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The Motley Fool's purpose is to help the world invest, better. Click here now for your free subscription to Take Stock, The Motley Fool's free investing newsletter. Packed with stock ideas and investing advice, it is essential reading for anyone looking to build and grow their wealth in the years ahead. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson. 2020