The Polynovo Ltd (ASX: PNV) share price is down 5% after giving a HY21 update.
Polynovo is a business involved in helping regenerating skin that’s been lost through extensive surgery or buns. NovoSorb is a range of bio-resorbable polymers that can be produced in many formats and have unique properties that provide strong biocompatibility, control over physical properties and programmable bio-resorption profile.
What did Polynovo reveal?
Polynovo said that FY21 first half sales were 31% higher than the first half of FY20. The FY21 first quarter sales surged 75% compared to the prior corresponding quarter. The sales growth in October and November were slower than expected.
The FY21 first half saw 35 new accounts opened across all direct markets. The 2020 calendar year 2020 saw 109 new accounts opened, representing 89% growth compared to 2019.
North America growth
Polynovo revealed that first quarter sales growth was 70% and second quarter sales growth was 16%, resulting in FY21 half year growth of 41%. The sales for December 2020 were better than expected.
A promising indicator was that it received more requests for proposal (RFP) in the last three months than in the previous nine months.
It signed two GPOs (group purchasing organisations) and a number of large strategic hospitals. Progress has been slowed due to COVID-19, but the company is expecting more activity in the third quarter of FY21.
It also said that it added a second account in Canada which is using Polynovo for a challenging case through the Health Canada Special Access Program.
Other country growth
The first sale to Taiwan was made in December and Polynovo has also executed sales to Singapore, Finland and South Africa too.
New Zealand and Taiwan sales for December 2020 were better than expected.
Polynovo has also entered: Greece, Belgium, Netherlands, Luxembourg and Sweden.
In the UK it’s building its customer base with six clinical evaluations currently going on. The first clinical evaluation has been performed in Ireland. The DACH/Benelux distributor has clinical evaluations in 30 new accounts underway.
Polynovo said that year to date BARDA revenue was lower than expected because of a delay in obtaining US FDA approval. Recruitment of patients is now scheduled for late in the third quarter of FY21.
Management comments
Polynovo Managing Director Paul Brennan said: “In the short term, forecasting sales will be challenging particularly in the US, however the medium term outlook is strong, and we continue to see surgeons using and referring NovoSorb BTM to their peers. Once hospitals have more capacity, we will see US and UK sales accelerate just as we have seen in New Zealand and Australia. New geographies offer good opportunities for NovoSorb BTM.”
Summary thoughts
Polynovo is still growing at a solid pace and could grow into a sizeable business in time.
For me, it’s hard to judge what this business should be worth today when it has a lot of growth potential but is also priced for a lot of future growth. How protected is its products from competition development? How much profit will it make in three or five years from now? I don’t know, so I’d rather leave investing in Polynovo shares to someone else.
There are some other ASX growth shares in the healthcare space that look very interesting such as Volpara Health Technologies Ltd (ASX: VHT).
