$2m month for PolyNovo as it aids volcano, bushfire victims

Melbourne-based biotech PolyNovo has been using its cutting-edge skin graft technology to treat burns victims during the bushfires.

PolyNovo CEO Paul Brennan. Picture: Aaron Francis

Paul Brennan, the chief executive of listed biotech PolyNovo, is not one to get ahead of himself despite a stellar run on the ASX in the past year, making inroads into the US and being on the cusp of European expansion.

The Melbourne-based company has been using its cutting-edge skin graft technology to treat burns victims from the bushfires and the White Island volcano tragedy in New Zealand, enhancing its reputation among surgeons.

Revenue has more than doubled from $890,000 in December 2018 to $2m in December 2019, and its US sales team is employing an extra representative each month as it secures more major hospitals. This has all contributed to PolyNovo’s shares surging more than 126 per cent in the past year to become one of the decade’s best-performing stocks.

But Brennan says it has been a long journey.

“It has been very much build it as they come, rather than build it and they will come,” he tells The Australian.

“To win a hospital, it takes six to nine months. There is a lot of bureaucracy to go through.

“It is a challenge but surgeons are always looking for the best way to get the best outcome for their patients.”

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The company’s technology was developed after the Bali bombings in 2002, when it became clear there was a need for an alternative to animal-based products, which Brennan — a trained nurse — says can lead to infection.

“If you are a bio product and there is bacteria on it then you have just delivered lunch (for an infection),” he says. “You increase the risk of infection and the loss of the thermal template that you put on. Whereas we are a 100 per cent synthetic, bioabsorbable and not delivering anything for bacteria to eat.” Brennan says that since 2015 the company has grown its sales force 12-fold, from five to 60 employees and was currently adding a sales representative to its US team each month, which was adding to sales momentum.

“When the New Zealand volcano erupted, we knew people would be burned and called all the burn units in Australia and New Zealand to let them know we had plenty of product and could get them to them quickly.

“But while the fires and the volcano get a lot of the attention the product is also used for (removing) melanomas and flesh-eating diseases.”

Next week, PolyNovo representatives will attend a burns conference in Austria as part of its efforts to expand across Germany, Switzerland and Austria. Brennan says those three countries are an ideal place to launch in Europe, with 14 major hospitals in Germany currently evaluating the product.

He says Britain also looks promising with 12 NHS hospitals also expressing interest in Poly­Novo’s technology.

“So we see sales growing very quickly.”

Macquarie analysts said in a note to investors that PolyNovo was “well positioned to increase share in currently approved markets based on a differentiated product offering, with expansion into new geographies presenting additional upside”.

“Further we see potential for additional uses of the underlying NovoSorb technology … with more sizeable addressable markets relative to acute indications (eg hernia, breast reconstruction),” the Macquarie analysts wrote.