PolyNovo Limited (PNV) Earnings Call Transcript & Summary

Good afternoon, everybody. I didn't know when that video was finishing or not. And welcome just to our announcement for FY '23 results. I'm going to introduce Swami in a moment. He's going to go through the pack that's been released to the ASX. I'll probably top it at the bottom of it and top it at the top of it. But it's, in a sense, more of the same but the exciting things that have happened this year, I think the continued growth we've got in the U.S. But the enormous growth we're seeing in Australia, New Zealand, Hong Kong, Canada and now India as well and so that's all very pleasing. And -- but before I go on, I presume everybody knows what our product is. I don't want to educate you on that. But everybody knows we've got a synthetic polymer, there it is. That helps in wound closing. It's biodegradable. That has a number of interesting characteristics about it in a sense that it's robust in the presence of infection. It's inert. It prevents and certainly restricts contraction as the wound heals. And it generates a dermis, which can then take a skin graft. I've said before, so, but I'll say it again anyway, because people do get confused about us and Aveda. Aveda is closing the wound with a skin graft. We're building that dermis on top of it. So we are a different kettle of fish. It's -- I don't need to say how it's gone in terms of growth. It's still up around 60% per annum. And we will continue to pursue that in the new markets that we've gone into, but also with extra staff in the U.S. The surgeons themselves, however, I mean, one of the graphs that Swami is going to share with you is how the surgeons themselves have done trials and done publications and how extensive that is. It's -- when I look at the burns trials and wound trials around the world now and the big conferences, there seems to be multiple papers at every conference on PolyNovo. And that just reflects, I think, the fact that surgeons are not only embracing it, but as I've said in the past, they're taking it in all sorts of new directions other than burns and wounds. And I'm talking about trauma. I'm talking about necrotizing fasciitis, I'm talking about diabetic foot ulcers, limb salvage now with amputations and so forth, oncology burns and spina bifida I'm sure some of you heard me tell some of that story about spina bifida in Germany. There's many more. So I won't bore you with it. But I'll come back to what I see in the future for this year in a moment. But in the meantime, I'd like to introduce Swami, who is here to present the deck.

Thank you, David. Good afternoon, everybody, and thank you for joining the PolyNovo investor relations call. It's been a little over a year since I joined and I'm very happy to share that PolyNovo, its tech and our people have more than lived up to my expectations and, in fact, over-delivered versus my expectations. I'm even more proud to say that the clinicians are now living up to the expectations of the tech and probably taking it into directions that we ourselves had -- were not aware of when we conceived the product. As many of you would know, this product was conceived as a high total body surface area burn product for deep dermal burns. But now it's being taken by plastic and recon surgeons across the spectrum of plastic and recon surgery. And many of the general surgeons have learned from the plastic and recon guys that are taking it into their practice. Many of the ortho surgeons are recognizing how easy it is to handle and occasionally, they're taking into their practice as well. So if we move to the next chart, Mel, if we can move to the next chart and the next chart, what I'm most proud to say that many clinicians today are calling us as the next-generation dermal substitute. And it's not something which we have conferred upon ourselves. But it's something which we are being received with and NovoSorb BTM is being acknowledged as. If you look at the graph on the right-hand side, there are many papers and abstracts, which are being put together by clinicians as their own case series and the kind of impact that they have observed on their patients. And as I said, these papers are being published across the spectrum of plastic and recon surgery, general surgery as well as orthopedic surgery, wherever people are seeing that impact. And due to the work which our people are doing as well as the recognition that clinicians are conferring on us, Mel, if you could move one more chart. All I'm here to share today is the story of PolyNovo's growth. Mel, can you move one more chart, please? Thank you. So today, we have grown our total number of employees. Last year, we were at 152 employees. Today at the end of the year, we are at 218 employees. Our customers are growing. We have moved up to 638 hospitals now and our revenue growth continues to be extremely strong. We have all around strength in global performance. Our group revenue is $66.5 million, growing at 59%. Our commercial revenue is $59.6 million, growing at 58%, driven primarily by U.S. at about 46% and OUS, which has grown almost at 3x the pace at 135%. Our BARDA revenue continues to be strong at $5.7 million, growing at 49%. And our pivotal trial in BARDA crossed the important midpoint mark at 64 patients. So overall, all I would like to say is that it's not just our people, but I'm extremely grateful to our clinicians who are driving the PolyNovo growth story forward along with us. And they are now taking us into new markets and helping us identify the hospitals, work with regulators and work with even customers who are going to help us take our tech forward. So throughout the year, we have gone to India, Spain, France, Hong Kong, Canada. And we are looking forward to getting into many more markets. But before we get there, let me just pass it on to Jan to take you through our financial results.

Right. Thanks, Swami. Just, if you can move to the next slide and the next one again. Thank you. Hi, everyone. Just touching on what Swami has already mentioned so; really strong growth, quite impressive, to be honest, at 58.8%. Total revenue coming at $66.5 million; part of that, obviously, the NovoSorb global sales coming in at 58.3% growth and the bulk of the difference with BARDA revenue up quite significantly by 49% coming at $5.7 million. So some of the standouts in these results; really obviously the U.S. doing really well. We've added a large number of accounts for the year where we ended financial year with 299 accounts and we're over that now as well. We're adding new customers nearly every week and a great result there, growing by 44.6%. The business continues to expand significantly in the U.S. The rest of the world was a standout as well as a percentage of overall revenue, it's increasing last year. Rest of World sales was 14% of total revenue this year, it's 22%. We've seen great performances in Germany, of 192% and the U.K. ended up 169%, which is fantastic. Canada, really strong sales this year, it's great to see that market is doing extremely well and Hong Kong and India with first sales as well, so getting some good traction there. And BARDA strong revenue of $5.7 million, up 49.2% like I mentioned. It's important that we passed our midway point to trial, 64 patients now on trial, out of 120 being the target, and that's a [indiscernible] milestone. Next slide, please. Thank you. This is a great graph. I mean you can see how we've expanded the business significantly. We've entered numerous geographic locations. We've expanded headcount. We're investing in a lot of areas that we said we would during the capital raise. And you can see by that graph, how much we've expanded the business. But we've minimized the loss, particularly compared to our peers when you think about what we've achieved. That's really important and we'll continue to do that. But I guess the important thing to take away from this slide is our operating expenses only up 48.9% excluding noncash items. We are starting to get that operating leverage coming in. And we could turn this business into profitability right now if we wanted to. The important thing is to invest the capital raising funds or raised to invest in those areas to future proof of the company and help grow the company accelerate all initiatives. So as we've mentioned, we've entered new markets, Canada, Hong Kong and India. As David mentioned in the introduction, we have expanded the indications that the product is used for. And that's been championed by our surgeons who are innovating in that space. New products, we launched NovoSorb MTX and had first sales. And we've got more MTX clearances for expansion of the MTX and BTM portfolio this year. So we'll go after that. Investing in R&D really important in clinical trials, both really important areas and we'll continue to do that. So quite choice, we've had a small loss for the year of only $2.3 million excluding noncash items and last year it was only $2 million. So to grow the business where we have and minimized losses is commendable. I think ending the period with $46.8 million cash on hands, are well resourced to continue to grow the business. Next slide, please, and just touching on the highlights of the P&L. We've touched on revenue already. We still enjoy a gross margin of 93%. Employee expenses were only up 50.9%. We do have to take into account that reversal of the share options next year on the face of the P&L. But it does look different, but that's the reality it was only 50.9% not 84.1%. In light of where sales have grown as well, that leverage is starting to come in because revenue is growing at a faster rate than OpEx. R&D spend up for obvious reasons, a really important reason is to future-proof the company with product development, investing in clinical trials. We're minimizing our corporate overhead expenses, particularly in the second half. And we'll continue to get that leverage out of admin and overhead as the business continues to grow. Overall result net loss after-tax of $4.9 million, excluding noncash items $2.3 million, so a good result all in all. I'll leave it at that, and I'll hand it back to Swami.

Thank you, Jan. So as you can see, we are excited about the future. We believe we are uniquely situated to drive global impact. We have a genius tech and surgeons allow us for our simplicity and how effectively we help them take care of their patients. Surgeons are driving our innovation, adoption across the spectrum into different disciplines. There are many new applications which they keep coming up with. And we are finding it hard to keep up with them. Overall, it is still an underserved market. Today, the dermal substitute market is available or the category is available only to 800 million people. But there's, 7.2 billion people who do not have access to categories. So that's where we believe our future would be. We will keep growing our team size. We will keep building a global footprint. But we are committed to a capital-efficient growth and scaling. And we want to make sure that we deliver profit as per the schedule that we had promised to all of you. So with that, I will take a pause and turn it back to David for his final comments. David, you're on mute.

Sometimes I sound better like that. But before I make some final comments, I might just open it up for questions. So Jan, are you going to run in the Q&A or it's just --

We're going to hear from analysts first, so the operator is going to patch them through.

All right, great.

[Operator Instructions] Your first question coming from Lyanne Harrison, Bank of America.

Can I start with where you ended up in terms of exit run rates for the '23? I know you called out a $7 million month in May. But if we think about that sort of cadence and going into '24, consensus numbers of $93 million top line revenue, still assumes a 10% lift on that cadence. What are your thoughts in terms of likelihood? I know you're not providing guidance. But is that within the realm of possibility and sort of mindful that there were some very strong FX tailwinds in financial '23 as well.

Well, I'll answer that first, and if anybody else wants to jump in, fine. Lyanne, you're quite right. We announced a $7 million month in May. But it was better than that because it was 7 point something and with BARDA, it was actually over $8 million. We didn't announce it as $8 million because we didn't know at the time, there were some late accounting and so forth. So can we keep that run rate up? Well, I think if you look at the graph of what we've done in the last 3 or 4 years, it's still pretty lumpy. I mean, we keep using that turn, but it's -- that's the truth. And so we did $7 million, $8 million depending on how you want to run it, whether it's sales or total revenue in May. And you could extrapolate that out. But that's got to get higher because that's what's been happening for the last 3 or 4 years. But it's not going to be consistent. So this month, it might be $6 million. I can already tell you, it's more than $6 million. But so -- but I don't know exactly how smooth that's going to be for the rest of the year. It's -- you would think that as we grow in the U.S. and as we grow in new markets, that it will somehow smooth itself out. But when you think about where we're going in terms of putting on extra staff in all of these jurisdictions, but also we've just released in France and Spain, for example. But China and Japan are still on our radar. So where will we end up? Your guess is as good as mine and in fact, you're a better guesser than me. But -- so I think where we ended in May and June, it's very pleasing for us.

And I would just reiterate by saying that it will be lumpy, but it will be consistently upward driven. We could have a growth of 30%. We could have a growth of 100%. And most of it would be characterized by how the business is constructed. Even today, almost 70% of our revenue comes from burns. And occasionally, when there is a strong burn season, it just takes off. And -- but we're trying to smoothen it out as we start investing in other areas of opportunities in plastic and recon space.

So and, I mean, just to embellish that. I mean I see the analysts saying 95% to 100%. I got no reason to disagree with that at the moment. But I just -- I don't know, and it probably doesn't make any sense to guess it better than anybody else. We can -- we're announcing just for interest sake. I mean I think it's very important in a company that's growing like this to announce when we get a new milestone. And we've sort of taken that to be a new milestone in terms of sales, like $5 million month, $6 million month, $7 million month, et cetera. And some people criticized me for that. But I mean, I think it's entirely what the shareholders want to know, but also need to know when you're growing so quickly. Your question itself is just a reflection of that, Lyanne that people do want to know what is, the run rate and we want to know it as well. But all we see is that apart from the lumpiness, it keeps going up. And there's no reason why it should stop.

Okay. And just a second question around -- there was a comment in the financial with '24 -- financial '24 and beyond where there was a sentence, which is the one word sentence, which is profit. How should we think about that? Should we expect '24 to be a profit year and PolyNovo returning to the black? Or is it something that we would more likely expect in '25? And how does that line up with some of your earlier comments about continuing to invest in the growth of the team and the geographical footprint?

Yes. Jan, do you want to answer that? Or I'm happy too.

Yes, I can answer that, that's fine. So we did say the capital raising last year that we do expect FY '24 to be profitable and that is still the case. The standout year will be FY '25. But this first half, again, we'll invest in the business as we have and has come on strong in the second half like we have again this year. So we have a really strong Q4 profitable run rate at the end of next year, but just a small profit for the full year. So that's where we're expecting things to land at this stage, which is consistent with what we said at the capital raise.

I mean I'd add to that, Lyanne, is that I wouldn't say I'm not interested in profit. I mean, obviously, we're all interested in profit. But for me, the bigger prize is to keep expanding the geographical base, both in country, like in the U.S. and keep increasing that sales force as quickly as we can. And -- but also in new geographies as well because as you can see, they grow very quickly. And the other thing that happens with some of the new geographies is and you don't see this is that, for example, in the U.S. and Australia, our primary sales are in burns. But other things are increasing quite quickly. But in the U.K., for example, our primary sales are in trauma and now we're moving into burns. So some of these new geographies are going to be quite interesting for us in terms of how they grow. Some of them are really unknown. I mean, one of the slides that Swami put up, for example, was how much of the world is under serviced at the moment. So there's big quay of the world in India and China, rural and Indo and so forth that don't have a product like ours. No competitors, because it's just too expensive. So it's going to be great to see -- and how we go in India. We've got first sales. So that's a good sign. But I think if we cut our cloth, we're going to introduce a product to -- when you look at those countries that are not -- don't even have a dermal matrix, you're talking about $7 billion. So I'm getting back to your question, Lyanne and that is that as the year goes on, we can -- and as I just said, we can be profitable now if we want to. But -- and at the moment, we're saying you're going to see it in '24. If something great comes up and there are some great things sort of happening in terms of new territories, but there's also some very great things happening with regulators like FDA and BARDA and so forth. And some of those things will change the trajectory of our growth in sales and BARDA in particular, but there are other things as well.

Okay. And just one last thing around that cost structure. So in '24, you added quite a fair number of headcount. I think it was 21 in the first half and a bit heavier probably around 43 in the second half. How should we think about that in '24? Are you going to continue to add headcount at that sort of cadence? Or are you largely there in terms of headcount in Q4?

Yes. Well, I think there's 2 parts to the headcount. One is what are we doing on the sales side? And I've made it pretty clear in the past that one of the great things about this company is to put on a salesman and any he or she pays himself very quickly. Now we argue internally and we argue with that in the U.S. about is that 3 months? Is it 6 months? Is it 9 months? The answer is it's all of those because if it takes the salesman out of Integra, they might be making a profit at month 1. And if you get somebody cold, it might take them, 6 months. But the short story is that that for me is working capital. So it's going to pay for itself real quick. And so I don't have any problems about that whatsoever. On the other side of it, so I'm talking about non-sales direct staff and especially some of the higher-level ones like Head of HR, Head of Kit of low or et cetera. Some of the positions that we don't, at the moment, have and they're pretty expensive people. They're not out there selling. So -- now we've still got a little bit of work to do on that. There might be another 2, 3, 4 positions. We're still sort of debating that internally. But for example, we may have an internal legal officer before the end of the month as the case may be. So we're going to add some more heads there. But there won't be many heads, but they'll be expensive ones. We'll add a lot of heads in the U.S. and hopefully in other jurisdictions, we're in even, for example, in India, where we have 20 people on the ground. So -- but I wouldn't be focused on those. If I was you, I'd be focused on what are we doing to build the capital base? What are we doing to build the building blocks that are going to enable us to scale even further? And that's the sort of -- that's the real cost as far as I'm concerned.

Your next question comes from Rachael Harwood with Macquarie.

Just firstly, on gross margins. I mean how should, we think about gross margin going forward just as you expand outside of the U.S.?

I can answer that Swami. So we do enjoy a really high gross margin in the U.S. market compared to other markets. And we've also recently increased prices globally. We never had done so in the last 4 years and time to do so. So that will help with margins. I guess as we have more sales from rest of the world, like we indicated in the graph, we had 22% of sales rest of world this year compared to I think it was 14% last year. That will sort of dilute the overall margin a little bit. But at the same time, the growth in the U.S. that's left the taking is significant, and the margin is so great. It won't be that dilutive even with the rest of the world growth. So I expect still to see gross margin in the sort of 93% to 95% range. And what will impact it as we move forward is, just the facilities that come online. So we just had Unit 2 come online in May and then we decide a little bit more manufacturing overhead and that does have an impact. When the new facility goes live in a couple of years' time, again, it won't be fully utilized, and that has dragged down the margin a little bit. But we're setting ourselves up for success. So it will be in the 90s for some time yet.

Yes. Okay. That's really helpful. Just secondly, could we maybe just talk about your entry into the Indian market? Maybe just comment on how this is progressing and maybe expectations into FY '24.

Sure. I can take that. In India, we have launched from the month of April. We trained our people, our reps in the month of April. We have started trialing the product across all the 29 states that we have in India. And in India, the big burns go to the public sector and public sector works through tenders. So literally, we are writing out the tenders along with the state governments in each of the key markets. And most of those tenders would get approved over a period of the first 6 months. So I expect that our revenue would take a sharp northwards trajectory from the first quarter of next year. Right now, we are getting a majority of our sales from the private sector and the people who are trialing this across the multiple private nursing homes and the private hospitals which [ dock ] India.

That's great. And just last one. I think you've given us an update on the chronic wound recruitment. Do you have any expectations of how long you expect this trial to ramp up and you'd be able to gain reimbursement?

Yes. We are doing the trial for reimbursement. But what we have disclosed in the first 25 patients and the first set that we did was the mechanism of action of NovoSorb BTM is completely different from what clinicians are used to doing. And that's the reason why our trial would take a little longer than what we had anticipated at the beginning. Most likely, it would take another 1.5 to 2 years for us to completely calibrate the clinicians who are going to do the trial for us. And then we're going to apply it and enroll the patients on our behalf. So it will take longer than what we had anticipated. But we are pretty sure that eventually will win with the trials.

Rachel, can I just emphasize a little bit of that and perhaps demonstrate my lack of education in mathematics from Baronial High School. And that is this, if you imagine our company as having a cost of sales. It doesn't matter what it is. Let's say its $40 to make a bit of 10/10. And we're selling it for $900. We might have a margin of 95%. Now when we tell you we might go, we are going into India, obviously, but we might go into India or China or something like that. And let's say, we decided and we haven't decided yet. But let's say we decided to sell it for $450 instead of $900 and $950 which is what we sell for at the moment. Well, guess what, the margin is still over 80%. I mean it's still better. And that's why I think we can add the people who are under service at the moment in poorer developing countries. We can add a product where it's still profitable for us. But we can do a good public service and social good by introducing something that they don't already have at the moment. So I think that's the most important thing. I think Swami and Jan have probably already captured this. But the other thing is that as we get more and more into, let's say, diabetic foot ulcers, I had somebody on the phone this morning talking about whether it could be used as a filler in nasal problems. And I got some feedback from our guys already saying, yes, it could be done. Well, they're small pieces. Spinoff are in an unborn baby could be as big as your little nail on your tiny finger. So trying to get the price of those that you'll get off a burn where you might be trying to cover your whole arm is another thing. But for me, it just adds to the versatility of the product, just adds to the revenue. And we're going to get to a situation where a lot of our salespeople are selling down that on selling something to burns and selling something to trauma and selling something else to oncologists. So for me, it just adds to the richness.

Your next question comes from Madeleine Williams with Wilsons.

Sorry, I hope you can hear me. I just wanted to ask maybe Swami and Jan, just a question in regards to the U.S. growth and just wanting to know sort of your perspectives of how that's sort of coming through. Obviously, you've added a lot of U.S. sales reps. And just understanding, is that growth coming from the new account additions? And are you seeing sort of that intra-account growth now coming through? And then whether or not you're getting sort of the benefits from the Integra Recall. And if I can just add to that, just a comment that was just made in regards to pricing. We sort of had in our head that maybe there was essentially a set of the pricing of some of the competitors? And how is that pricing uplift come from the recall?

Jan, I think you go first, and I can top up.

Sure. So I think that first part of the question was on additional hires and so forth and where we see the growth going. We do get a lot of the planned highs, 28 in fact that we have since the capital raise in the U.S., which is what we said we would do and that was on top of his gives sales rep hires earlier in that FY '23 financial year. So the year ahead, there will still be a few more. But we've got a pretty established team of about 70 in the sales team over there, including sales management, and so forth. We are seeing, I guess, orders growing at a faster rate than what revenue is. So that means that the hospitals are reordering more. We're also expanding where the product is being used. So moving across from burns into trauma smaller indications, and that's reflected in the higher order numbers and the repetition of orders coming through as well. So that will continue. And outside the Burns business, that part of the business will continue to grow even at a faster rate. We are seeing the accounts that penetration occurring, particularly within groups of hospitals and so forth. And the longer the reps have been with us they're just getting. I guess more coverage across their customer base and getting that penetration as well. So it's evolving as we hope we always would and it will continue to evolve and improve even further in terms of penetration, increasing orders and overall sales. I think your next question was on pricing. The pricing increase we put through was the strategic decision, not related to the recall of Integra. That was something we've decided to do after 4 years of promising low price rises, and we went through COVID and so forth. But now it was the time to do it given the inflationary pressures and really do our promises with our customers and we've gone and implemented that. It's been well received, so but not related to Integra recall. Do I answer all your questions Madeleine I'm not sure?

Yes, yes. And just in regards to the Integra Recall, just did you see sort of any benefits in sort of the back half of the year or?

Madeleine, the Integra product, which was recalled was PriMatrix. We are already well ahead of PriMatrix in the burns space as well as in the trauma space. So we saw a little bit of bump, but I would not attribute too much to it. So again, if I were to square off all your questions, we are growing in existing account with existing surgeons. We are growing an existing account with new surgeons. And we are getting into new accounts as well. So we are seeing growth all over from U.S. And we expect the U.S. to be a growth driver for us even in 2024.

Okay. That's very helpful. The only other question that I had was just in regards to dimension of the new sort of products in regards to hernia and breast. That's obviously sort of being put on the backbone for the last year or so. And just wanting to know sort of where they're at and what your expectations for the year ahead?

So we continue to have a program which is going on. And it will take more time to develop and bring the product to the market. But we continue to invest in hernia. [ Vega ] continues to look at breast. But that will take more time versus what we had promised before.

Okay. And is -- the product is finalized for hernia or not at that stage yet?

We are in the stage where we are doing through multiple iterations and we are testing those.

There are no further phone questions at this time. I'll now hand the conference over to Jan Gielen to address the webcast questions.

Great, thank you. There's quite a few questions. Some have already been answered. So I'm happy to answer this question specifically, that is why. First question, it's actually already been answered. Apologies. Sorry I keep coming through ready or not. Okay. First question, cost control at the first half -- second half was very impressive, especially in corporate. Will this continue into FY '24? I'm happy to answer that. So yes, it will. We are seeing some leverage coming to the business. There are still some roles that we do need to fill in corporate, which are quite important for a company that's in multiple jurisdictions but we are investing. We have invested a lot in processes and technology and so forth to make the place [indiscernible] economies of scale. And that's starting to come through and we continue to work on that, so to answer your question, it's yes. Moving on to the next one. We have another question about the recall. What impact, if any, are you seeing in the U.S. following the Integra product recall from the Boston facility earlier this year, including SurgiMend?

So we do not have a product which competes with SurgiMend. SurgiMend goes into the breast space. But we do have products which go for PriMatrix. So there is some degree of help, which we have got in the space of trauma and to an extent in burns, but not a lot.

Thanks, Swami. Next question, how are the sales tracking this quarter so far?

We continue to do better than expectations. It's been a dry spell in major part of the Western Hemisphere. And we are seeing more burns than what we would have normally seen. So it's an extremely good start to the year, but it will be lumpy. So we are not going to lay too much of effort at that. We're just interested in serving the patients and the demand as it comes through.

And the only thing I'd add to that is doesn't give you much information, but in July, which was the only complete month we have made or just done better than budget. So if you go back to Lyanne's question about run rates and so forth, we're pretty happy with where we are at the moment. But one spring doesn't make us follow. We're happy in the -- all of the signs, as I said previously, with respect to new geographies and new staffs are heading in the right direction.

Thanks, David. Where do you see the most significant opportunities outside the U.S. over the next few years? And what headwinds, if any, we're looking to overcome?

I see us getting a lot of help from Europe in the way European surgeons are using us in many more innovative ways, whether it is in cranimaxillo facial surgery in cancer excisions and many European surgeons are taking more liberties with BTM and how it performs when it comes to flaps, because especially in U.K., you can see significant pressure on the entire health system with some degree of nurses and doctors going on strike. And surgeons are looking for simple solutions and NovoSorb them provides a very simple solution and they can upshift and down shift. And I was quite impressed to run into a term by a British surgeon. He called NovoSorb is providing him the reconstructive elevator options. He can do it -- use it as a dermal substitute. He can use it also in case of flaps where he doesn't have the experienced staff to support him in the microsurgical procedures that he would have needed in the past. So we are providing many more options to surgeons in terms of the sheer versatility of the tool. And we expect to see a lot more literature come through from European surgeons as they continue to grapple with some degree of constraints in the health system there. I do not see too many headwinds as of now, just given where we are in our journey and our maturity. And as long as we continue to be humble and keep learning and listening to surgeons and keep involving them in how we want to progress our business, I see tremendous upside for PolyNovo and NovoSorb BTM going forward.

Thanks, Swami. Regards to the BARDA trial, when do we think the trial will be completed, the recruitment? And what does it mean for our business model once the trial is completed?

The trial so far in U.S. is to get 2.4 patients per month. But there have been months when we have suddenly got 4 or 5 patients. What is exciting is the FDA approval for us to take the trial to India. And with that, we hope that we are able to accelerate the trial significantly as well as get a cohort of 30-odd patients from India. Our ideal aspiration is to complete the trial by this year. But if I were to give you a time scale, it would go into the first quarter of next year. But we are really hoping that we're able to complete the BARDA trial by fiscal 2024 so that we are able to move into the next phase of BARDA trial of evaluation.

Energizing as well, gentlemen that our relationship with BARDA is excellent. And through them, our relationship with the FDA is also excellent. So we're buoyed by our relationships, especially in the U.S.

Thanks, David. Next question; it seems the share market didn't appreciate today's results announced. What's the near-term milestone for PolyNovo? There's a number, isn't there really? Happy to go answer that, so I'll kick it off. We've kind of covered them, I guess. So this year will be a really important year. We'll continue to grow at a very strong rate and get penetration in all our geographic locations that we've recently entered. We've already demonstrated that this year. We've talked about profit and what we're going to live up to that is what we said at the capital raise has been an important milestone. We recently passed just the mid-weight point of the BARDA trial, just Swami touched on that, that's really important and the rate of recruitment is increasing. So getting that recruitment finished is a very important milestone as well and continuing just to build on what we've been doing and expanding the current portfolio of BTM and MTX. So you expect to see more 510(k) clearances this year for expanded range of those products. So quite a number of milestones and we hope that I tell you short.

Well, I mean the short sellers look like they've gone. I mean this is still about 2% or something. But there don't seem to be much action there and I don't expect them to come back. But -- so how can I explain it? I can't explain it. And frankly, as much as I've got a lot of shares and I'd like everybody else to be higher -- there isn't a silver bullet on this in terms of how you value these types of companies. It's not like we're making fizzy drinks and you could point to 20 other people and tell you what the EBITDA model is and what the revenue model is. We're doing everything right with one step in front of the other. And I'm pretty happy. The share price aside, pretty happy about the way in which we're going.

Thanks, David. Given the recent now new fires, are we any closer to the BARDA emergency stockpile order?

Firstly, about the Maui fire. Most of them were emulation injuries and the people who were impacted, unfortunately, passed away. But there was no real demand for the deep dermal burn inserts that we see. With regard to the BARDA stockpile, right now, we are focused with BARDA, making sure that they keep our part of the date that is making sure that the enrollments get done and we try and drive towards the PMA approval as our #1 priority. And then we will work on the stockpile and eventually, we will get there.

Thanks, Swami. Any detail how Europe and the U.K. are performing.

Yes. U.K. has -- I think Jan read out the result in -- was it 190% growth you mentioned?

Yes, Germany, 192% growth and U.K. 169%.

Yes. So both U.K. and Germany are doing quite well. And in fact, in U.K. as well as in Germany, we are now the market leaders in the dermal substitute market. When it comes to Germany, we get real data from the government in terms of the number of square millimeter or square centimeters of the product use. So we have got a 56% market share in the last fiscal year, the last full year. So we are very happy to declare the market leadership in Germany. And likewise, in U.K., we are now #1 at close to 45% market share in U.K. And we'll continue to keep growing the market because now the job for us in European market is not to take share away but to find out ways of growing the market for us.

Do we expect to complete another capital raise any time in the near future?

No.

Easy one, back on the Integra recall as well. Has this changed the clinician sentiment toward regarding biologics versus synthetics and has it opened doors for our sales team?

Yes. All I would say is clinicians are already adopting us in rows. So I would not say that this particular incident has changed the clinician attitudes towards us. But as someone asked before, we today do not have a CPT code and we are not reimbursed by a majority of the systems. And as we get the PMA approval for burns, along with the other deep dermal inserts, I would see our own adoption curve go up even more dramatically, but are not necessarily attributing our adoption to the Integra recall. I think people are adopting us because they see that we are a very robust tool in their hands. And we are extremely versatile and they are in control. It's a very simple device, which hacks simply and which reduces the burden on the operation theater environment, including the circulating nurses. Those are the reasons why our adoption curve is going up versus the recall.

Thanks, Swami. I still have a couple more to go. What is our China strategy? How do we plan on penetrating that market where we use a partner?

Yes. We will use a partner in China. We are working on the regulatory strategy for China as well as Japan. In terms of our regulatory strategy, we are probably closer in Japan than we are in China. But those 2 are very large markets that we are focused on. And we are looking at who will be the right partner for us to help us get into China.

Thanks, Swami. One comment just about our share price and are we prime takeover a bit?

It's a market. Anybody can come at any time. And I said it recently, even with the share price down little bit today, it's a big bite for somebody. So I don't think -- one of the things I would say to shareholders and the analysts is go look at the market, go and have a look at our competitors and have a look at how much money they're losing. And have a look at what their sales are compared with our sales. And we've come from nothing in a few short years. So the reason I'm not saying that to bag anybody. But rather they haven't got the wherewithal to keep going with the other capital raisings that don't make a place for somebody like us. And so even for somebody like an Integra, even though it's quite profitable, there are other products than those that sort of compete with us. And it's also -- it could be a problem, for them where you going to a surgeon and you're selling a biologic and you're selling it. And it's like selling VW's and Mercedes at the same time. So it's certainly going to ask you, well, what do you think? So I think if somebody does make a bid for this just meandering around, nobody -- you all know as well as I do that it's likely to be another big pharma company that wants a new silo for their business and not necessarily in the business at the moment. But listen, all we want to do is keep one baby step in front of the other, keep the sales going, get into new geographies, and that will be -- that's all we can do.

Thanks, David. Another question here. Do we plan to expand our European operations and add more sales staff and so forth?

Yes. We are looking at how we can keep expanding our momentum in Europe. We have got the top 2 geographies covered. We are working with distributors in the next 3 geographies. And we're looking at what other options could we have to make sure that we are able to have a better impact than what we are able to do with distributors there.

Thank you, Swami. Just a question here. Avita's product has been approved for full thickness skin defects does this application extension make it a direct competitor to PolyNovo in some areas?

Avita always has been a complementary product to us. But surgeons look at us as the primary product to rebuild the dermis and then they have an option of using a split sickness, skin graft or they can use an Avita product. It does not necessarily compete. But that's a clinician's view that I'm sharing with you. There could be someone else who could be thinking differently. I would not know.

And much more, I don't think Avita's thinking that way either.

Yes. You are expanding your facilities to service, $500 plus million revenues with the new facility build versus current capacity of $100 million. Why are you expanding capacity so significantly? Do you expect to fill that capacity in the medium term?

Yes, of course. I mean it's not cargo color not building a port in beginning and hoping the ships come. We're building it because growth is so strong and there's so many markets that we're not yet servicing. So we don't want to get caught short.

Yes. Into the next question, would there be a need for a manufacturing facility in Europe or the U.S.

Well, not in the immediate term, but it's possible that some time in the future. We want to put something up in the U.S. or in Ireland or something like that. But at the moment, we've got a few years of runway in front of us even at a growth rate of 60% plus year-on-year.

Thank you. A couple more to go and we're coming up on the hour, so we'll get through these. What are we doing in terms of monitoring distributors versus the opportunity to go direct in markets in Europe and so forth?

We will constantly keep reviewing our business with distributors. And as long as distributors or sales agents keep driving the impact that we want them to have, we will continue to support them. But there are times when the business direction could diverse. Those are the times that we would want to take control back of our business from distributors and then invest in building the business ourselves.

A question on Ukraine and Russia. Would it be beneficial for PolyNovo to give both Ukraine and Russia, some products as a humanitarian gesture, pay dividends in the future after?

We support the clinicians who actually go there with training and with the product. But we'd normally don't want to give the product away because it will be a travesty if it does not get used appropriately. And there is a difference between how our product gets used versus the predicates. And that's the reason why we insist on training and making sure that the clinician is always available to support the clinicians who are going to use the product in Ukraine.

Just on that and not for general distribution. As I say, this was 300 people on the call. But I have a message from the Ukrainian ambassador this morning. And he and I have been having some discussions over the last week about the Ukraine. But I should emphasize what's finally just said is that nobody is talking to us about gifting. There are certain companies and governments and so forth that are thinking about how relevant we are, so it's those who -- them who approached us, not the other way around, and we would be delighted to help. I mean, we already are helping, by the way, for airlifted people that have got trauma and they've been airlifted into the U.K. or into Germany. We know we're getting news there. But we'd be delighted to help in the Ukraine itself. So there's some green shoots. Let's see.

Thanks, David. Just 2 more questions left. Can you provide more explanation around the comment that burns demand is seasonal?

Yes. Different geographies in the world have different seasonality to burns. And it's the summer season and barbeque season in the U.S. Similarly, I've heard different stories in different parts of the world. And that's the reason why we say that burns are seasonal. They are not necessarily all year round. Trauma continues to be all year around. And that's how we are trying to build our portfolio of indications as we keep moving forward into the future. Our birth was in burns. But our future would be everywhere, wherever the surgeons want to take us. And we're just grateful for how they are innovating on our behalf and using the product to solve many clinical issues that we did not even think about.

Look, I think the other thing is that we're going to see very different evidence coming out of some of the countries like India and rural China and Indo and so forth, where there are a lot of people who are living in a flat or not so much flat but huts, that have got fire in them. So there's, a lot of women and children who fall in those fires, their sari catches fire or whatever. So I think we're going to see a very different complexion of cases coming out of, say, India or China than we see in North America where Burns and Australia where burns are largely men and industrial. And so, I think it's going to be quite exciting. And that -- well, exciting. I mean I think it's -- we're going to be able to provide a fantastic product for women and children, in particular, at the right price.

Thanks, David. Just one last question. How is the diabetic foot ulcer trial going in the U.S.?

We just shared at the beginning. We have close to 25 patients that we have already completed. While we completed 25 patients, we realized that the protocol, which was followed for these patients, was not in line with the mechanism of action that we want for our product. And that's the reason why we are rewriting the protocol and recalibrating the clinicians who will be working with us into the DFU trial. It might take a little bit longer. But based on everything that we've seen across the world, we have got an exciting product for DFU as well. We want to make sure that we do it right even in U.S.

Yes. Thanks, David and Swami. That's all the questions we've got online and it's on the hour as well. _

So listen, thank you all for attending. And a couple of things. What can you expect to see in '24? Well, in my answers early on, that $7 million a month, $8 million month, $7 million a month depending on how you count in May, we don't think it's a one-off. We see our average revenue and our average sales just continue to increase the way they have been done for the last 4 years. And what you'll see therefore in '24 is us reaching profitability or not if we chose to pursue something other that was very prospective. You're going to see a lot more staff, not only in the U.S. but wherever else. You're going to see us entering new geographies, not just France and Spain. But some other things in Western Europe and perhaps China and Japan, and that would be very exciting. I think we're going to see -- we think ourselves that we're going to see some pretty interesting regulatory decisions in our favor, which might cause BARDA to act more quickly than what you might think. And I think people like BARDA signing off will be a great thing for us. So I think there's a lot to be looking for, I think, in -- and we're still going to get support from surgeons. I can't go to a conference now without seeing those papers and trials and drafts and so forth. And for those of you who are on my e-mail list, I'm sending a few of them around as they come through. There was another one out of the U.K. yesterday, so enjoy those. And just on behalf of all the Board and the management, yes, thank you for giving us your support. You may be interested. But we're one of the most attended AGMs in -- on the top 200 for some people really are interested in this. And in particular, I'd like to share just to add a little bit of liberty to the Qantas cabin staff because I don't know what it is, but every time, I'm on a plane, getting accosted by ladies. So we all seem to have shares in PolyNovo and recognize it. I just -- I'd like to just like to say that thanks for being on board, but you could upgrade me every now and again is what I would say. Look, I think the year ahead looks great and pretty happy about it. So thank you all for coming. And we've got some ideas for how the AGM might run as well. So I know you know that in the last couple of years, we've had 1 or 2 staff members from either U.S. or here or a surgeon. We plan to do that again and give you a much deeper insight. I think, into how people are using the product and how they think about it. So thank you very much.

Thanks, everyone.

Thank you.