Shares in S&P/ASX 200 (ASX: XJO) company PoloNovo Ltd (ASX: PNV) have rallied in recent months following a string of positive announcements.
The last time I wrote about PolyNovo in September, shares were trading around $2.20. In less than 2 months, the share price has climbed 30% and now trades at around the $3 mark.
This company is truly fascinating, and I’m sure the long-term believers in PolyNovo won’t be selling out any time soon.
A quick recap on PoloNovo
PolyNovo’s flagship product NovoSorb BTM is used for serious burns victims and helps regenerate human tissue where it has been severely damaged. BTM is currently approved in Australia under the Therapeutic Goods Administration, in the US under the Food and Drug Administration, and also in Europe. BTM is made of synthetic material, which results in fewer complications compared to other biological applications.
This year, PolyNovo announced some impressive growth figures despite the challenging circumstances. Sales from BTM increased from $9.3 million in FY19 to $19.06 million in FY20. Distributing the BTM product requires a sales team on the ground to visit hospitals, which was still able to be done safely despite Covid restrictions.
Why the PNV share price has been rallying
Although PolyNovo does have FDA approval in the US, this has been limited to treat acute wounds only. In order to be able to treat a broader range of chronic applications, the product requires approval for full-thickness burns.
Earlier this month, the company announced the US FDA had approved the pivotal trial investigation device exemption (IDE). This means the BTM product is now approved for clinical studies and can be progressed to the patient recruitment stage, pending the approval of some hospital independent review boards (IRB).
This is really great news for PolyNovo, and it’s even better to see the company winning more approvals, such as most recently in Taiwan.
Growth in sales will be further driven by an expanding sales team and the appointment of more distribution partners to sell the BTM product.
Construction of its new hernia facility in Port Melbourne is ongoing, and the company anticipates the new product will be available by Christmas 2021. This facility will manufacture its patented Syntrel product and aims to change the way hernias are managed around the world.
Summary
I’d still be happy to add PolyNovo to my portfolio, although the share price has run quite hard recently, so I might see if it pulls back slightly from here.
This is a long-term play anyway, and I’m sure 10-20 cents in the selling price wouldn’t make too much difference in the long run.
I really like the direction this company is going, and the progress it’s making is extremely promising moving forward.
