PolyNovo Limited (PNV) Earnings Call Transcript & Summary

Well, good afternoon, ladies and gentlemen. It's 2:00 for you. We're now live. As previously, I'll make a few editorial comments and then pass it over to Swami to walk through quickly the presentation that we uploaded a couple of hours ago. I feel like we've already been here, to be honest, given that there's not that many changes to what we released, I think, on the 22nd of Jan, so as you'll see, as then, as now, it's all pretty good news. But just a couple of editorial comments. First of all, I made the comment at last year's AGM that I wasn't much interested in profits but rather in revenues. And the profits will just drop naturally out of that growth. And I think you've seen on the 22nd of Jan and in this release that that's exactly the case. So we keep expanding sales. And I said [indiscernible] in the AGM that, unfortunately, we might have to make profits. Well, it is sort of unfortunately, but if we can expand the business, knowing what our margins are, then I'm going to do that every day. And that means that, in terms of dividends versus profits, again I'm more focused on what's happening with our turnover and what's happening with our profits rather than on what's happening with dividends. If people really feel badly about that, then get your own dividend by selling a few shares, but I think we've got a long journey ahead of us in terms of growth of this company in terms of market cap and in terms of profits and revenues, so we need to keep expanding, I think, both in indications and in geographies. That goes we have a couple of questions, as we always do, about whether we should be announcing monthly or half yearly or quarterly and so forth. And I think, as you know, we've been doing those announcements in a pretty much ad hoc way where we've tied them to milestones such as our first $5 million, $6 million, $7 million, $8 million, $9 million month. And now everybody is waiting on tenterhooks to -- for us to announce our first $10 million month. I think in a very high-growth company such as ours which is growing like Topsy, as you can see, over the last couple of years -- that I think shareholders are better served by doing this ad hoc approach so that they get it as it happens, as opposed to waiting for a quarterly announcement, which of course you know we don't have to do, or a half year -- worse, a half yearly announcement. So we don't do it because it's just good news. We do it because I think in real time, when we're expanding so quickly, it's better that shareholders get that information when it comes out. So I quite like that ad hoc process. I know some people would like to see a hybrid where we do 3 month -- a rolling 3 months. Well, for me, that's like a monthly. It doesn't make any sense. And as you can see, if you [ graph at ] the last 3 years' results yourself, even though we've had these milestones periodically, they've been very frequent, up from nothing to $9 million months now. And if you [ graph it ] between it, the trajectory is up even though it still might be a bit lumpy. And as I said, we -- Swami and I keep using the word lumpy, and we've probably overused it now, because as we grow geographically and with the number of salespeople and so forth, the lumpiness is coming out of it. The trajectory is still one way. And I think I'm sort of reasonably happy with and the Board is reasonably happy with the way in which we're reporting at the moment. I think, just on that point, by the way, it's been obvious to everybody and to us that, if we keep expanding our sales force, then more or less, they're going to pay for themselves as they go. And whether somebody can pay for themselves in 3 months or 6 months or a year, to our mind, it's [ working capital ] in any case. And as you've seen, we've kept expanding the U.S. sales force but also Australia and also U.K., Ireland. We've got some new distributors and so forth, but the result of that is pretty obvious. And you'll see that in terms of our trajectory on sales which Swami will no doubt go through, but from the same time last year, we're now -- well, when we reported for end of December, we had 237 staff. Same time last year, it was 173, but look what's happened to sales. We're up 60% in the U.S., 150% in rest of the world and so forth. Likewise, Australia is still going up. And so this is off the back of sales rather than off the back of geographies necessarily. Of course, we're doing both, but -- and that's the prize. I mean I think the prize is to go deeper into each market but -- to get new markets and new applications. And all of those 3 things, we're working on constantly and, frankly, sometimes struggling to keep up in terms of where the market is. I think, just talking about staff, I'm going to go off on a slight tangent, but we're very close to appointing an APAC lead. And that goes to those who are interested in China and Japan. One of our preferred candidates has experience in China and Japan, been there before, so we are hoping, if we fill that -- we've got a couple of people on the short list, by the way, but I think, if we fill that position, we should be able to hit the ground running in our aspirations for mainland China and Japan in particular. And there's many other countries as well. We're -- also recently appointed, and I hope she's on the line actually, [ Ingrid Anderson ], who's Head of HR. And she's been on the ground now for, yes, probably a week or 2. And we are very close to -- I think, to appointing an in-house lawyer and in-house General Counsel. So it hasn't given us a full complement of what we think our senior leadership team [ was ], but it significantly enhanced the [ old ] structure from where we were 6 months ago or -- and certainly where we were 2 years ago. And as we grow, those people are going to grow into those positions even though we might not have needed them, let's say, 2 years ago, so we're pretty happy; and I'd just ask you to reflect on this. We're pretty happy the way in which sales are increasing because of our employment policy, but we've also now slightly expanded, we haven't made much of a deal with this, geographically as well. You know we've made a bit of a deal about India and so forth. And more on that later, but we're now seeing sales in Turkey, very large sales in Turkey, initially; and in the Middle East. Neither of those -- especially the last one was not really driven by any sales drive [ vows ] but just indicates, I think, how word is getting around. And I know, the last sale I saw, which was a very large sale into the Middle East, the surgeon who was demanding the product had been working on the East Coast of the U.S. and had used it there and was desperate to have it. So the surgeon-led, if you like, expansion is really serving us quite well. And that's underpinned by all of the publications and so forth that the surgeons themselves are doing and their own sorts of trials, so I hope Swami will touch on that. I think the interesting thing and the reason I'm asking you just to dwell on how our expansion has been going for the last 2 years is that we've seen some recent changes especially coming out of the war zones. And as you'll be aware, we gave a significant amount of product to the Ukraine and to Israel for free to handle the wounded. And we've had significant sales in some parts of the world where we suspect it's not going to that country but it's going into the Middle East, somewhere. So we're getting quite a bit of interest in that, from what I'll call those war zones, but the more interesting thing is that -- and I think I said this in the last release, that a lot of that interest is not coming from the countries themselves. Some of them can't afford it -- but from other countries who want to support the military in a fight and from charities in particular. And there's a number of discussions going on at the moment with charities and UN bodies of various sorts on the basis of not supplying water zones but not particularly trying to get the world's best medicine into some, for example, Eastern bloc countries and so forth. So those things are pretty amazing when you think about them. I mean we can build up the sales force in Australia forever, but to get orders like $1.2 million out of the Ukraine, which we did -- and we believe another one will be coming -- not paid for by the Ukraine, by the way. So even though we've been driven by distributors and by putting more feet on the ground, we're finding that there's new ways of looking at this. And it's clear to everybody, I think, that properly managed, some of the, world charities and the Bill Gates foundation and world health and [ medicines on the frontier ] and so forth could be very good allies for us. Or we could be very good allies for them in terms of getting world's best practice wound care into some of those jurisdictions. And that, as you can see, has really served us quite well in this part of the year, by the way, not in '23 or not in -- even to the end of December, but it's happening quite quickly as we speak. There's a couple of questions, I know, on the DFUs. And perhaps -- I don't know if Swami is going to touch on this, but we've been reviewing our DFU study. We've done 25 patients. And we cut it just because we weren't happy that we were getting the right sort of debridement on the wound base and the right attention and so forth. We're going to tell you what our revised strategy is on that very shortly. We're just sort of putting all of that together now, but it's almost certain that we will revise the protocol. But as a positive out of that, as we've dwelled on it, we think there's a lot more work that we should be doing as a company in limb salvage in much more serious cases and so forth, so I think you'll find us rewrite that protocol and bring the testing in house, in hospital rather than in outpatients just so we get a much more rigorous outcome on the thing. And we'll -- I think we'll extend -- either extend it or have a completely new trial at the same time on limb salvage. So more on that in the next couple of weeks. We're sort of thinking about that as we talk. Swami, I could go on for a while, but I think let's pass over to you. And I'll make some closing comments.

Thank you, David. Good afternoon, everybody, and thank you for joining the call. What I would like to touch upon is PolyNovo is providing what I would call as meaningfully differentiated patient outcomes. And in a relatively short history of 10 years, we have provided that to over 37,000 patients now in over 37 countries, and we are truly proud of that. It is important for me to emphasize on "meaningfully differentiated patient outcomes" because they have to be good for the patient. They have to be good for the surgeon. They have to be good for the health system no matter whether it's a developed world health system or a developing world health system. And they have to be good for the community and the patients who still need access to our products. And we continue to demonstrate that over and over again, and as long as we are focused on delivering those meaningfully differentiated patient outcomes, we believe that the revenue and profit outcomes would eventually drop in the right place. To quickly touch upon global revenue. It's AUD 49 million roughly for the first half, up by 66% versus prior year. U.S. is growing strongly at $32.2 million, up by 42% versus last year. And in the U.S., we are narrowing the gap between us and the market leader in the difficult burns category. For rest of the world, we're growing -- we are at about $10 million, almost doubling, growing by 122% versus prior year. And BARDA revenue has gone up by 133% at $4.9 million. We are very appreciative of the partnership that we have with BARDA and U.S. FDA. We are literally working together to try and see how we could bring the [ CT 003 ] trial to a close without compromising on the efficacy parameters for the trial as well as safety parameters for the trial. We are happy to share that 90 patients have been enrolled in the pivotal burns trial, so far. And just over the weekend, as we opened 2 sites for enrollment in India, we had the first patient enrolled out of India, so as of today, we have 91 patients. And India gates have opened up. We have expanded our global team. The global head count is up, as David mentioned. In addition to [ Ingrid ], who joins us today -- or a couple of weeks ago in Melbourne, we have [ Dr. Joe Amaral ], who is joining us as Chief Medical Officer. And he comes with a very illustrious history. We're just privileged to have him onboard and helping us with not just our FDA conversations and our BARDA conversations but trying to shape our clinical and medical affairs strategy so that we are able to continue to keep expanding the NovoSorb platform not just as a product portfolio but also as a professional education portfolio. So in a nutshell, I'm very grateful to our surgeons who are really driving us forward, along with our people. They are driving the awareness of NovoSorb technology. They're driving the adoption across not just burns but beyond burns. And that gets reinforced by a series of publications which keep coming out month after month literally across the entire clinical spectrum. And this is what is truly going to be a sustainable business model for us as we go forward. With that short preface, I would love to hand over to Jan to take us through some of the details. And then I'll come back before I hand it over to David. Thank you.

Great. Thanks, Swami. Just touching on what Swami already mentioned in terms of revenue growth, quite significant there at 65.6% compared to the same time last year, total revenue including BARDA of $48.8 million. BARDA revenues also have increased to $4.9 million with now just over 90 people -- or with 90 patients in the trial. And NovoSorb product sales is up, $42.2 million, up 54.9% [ from the same time last year ]. Just reading through the highlights briefly because Swami did just touch on it, but in terms of product sales and by region, looking at as a group, $42.2 million, as just mentioned, up 54.9%. Really strong growth continues in the U.S. with record sales of $32.2 million, up 41.7% from the same time last year. Also really pleasing to see is the growth in rest of world sales, so $10 million, up by 122%. And we also, as you would know from the ASX announcement in November, exceeded $8 million in monthly sales for the first time back in November, which was ahead of forecast; and significant growth in our account numbers. And just to add a bit of color to all of the above. 5 years ago, we were present in 13 countries. And today, we're present in 37 countries and still growing. In terms of compound annual growth rate for product sales, it's actually 49% for the group over the past 5 years. The U.S. is at [ 50% ]; Europe, Middle East, Africa as a region 175%; Asia Pac 25%. In terms of market leadership, we are market leaders in the advanced dermal substitutes market in U.K. and Germany, which has propelled Europe to be the second largest region of PolyNovo. We are also the market leaders in ANZ and continue to be a strong #2 in difficult burns in the U.S. Furthermore and a really important point, rest of world sales has increased as a percentage of total global sales, up from 16% to 24%, so growing that market share globally. Within that, some really interesting callouts: Canada up 168%, U.K. 92%, ANZ 73%. And that's in a market where we're already #1 in burns. And it indicates that we're able to grow outside of burns, which is great to see it's coming through in the numbers. Furthermore, Hong Kong and India continue to trade well and sales continue to grow in both these really important markets. In terms of account growth. So we added 346 accounts for the half globally. The U.S., we're up over -- just over 410 accounts now, up [ 154 ] for the half. Add another 14 in the U.K., with 85 accounts. ANZ, we added another 54 accounts and we're now with over 200 accounts [ in that region ]. And in India, we're selling into [ 101 ] hospitals, but the coverage that -- is significantly greater than that with our teams and the cities we're in. And I also just want to indicate the momentum, achieving $8 million in sales in November, a really strong indicator. We didn't actually budget to hit that milestone [ until ] April, so to achieve that many months earlier [ is a good indication of ] how things are going. Moving on from that slide, just touching on the overall performance of the P&L, so a real pleasure to present this slide. I think it really demonstrates the way we've been running the business, which has been quite effective. [ And we've been running in ] an efficient manner in the past few years, so obviously revenues exceeded OpEx for the first time. OpEx excluding noncash items is up 42% and compared to revenue growth of 65.6%. Employee growth. Same time last year, we've -- had 64 people but only 19 in the first half, so we have a higher recruitment rate in the second half of '24 (sic) [ '23 ]. That slowed a little bit in the first half, as we continue to build out our teams. [ And we don't need 3 CMOs ], for example. We're forward looking on continuing to invest in the business, so geographic expansion, indication expansion, new products, capacity and scalability. The underlying NPAT result, $5.7 million compared to a loss last year of $2.2 million; and that's excluding noncash items like [indiscernible]. So as mentioned, this slide, really appropriately titled Capital Efficient Growth, really does sum up how efficiently and effectively we've run the business over the past 5 years. We've achieved significant growth globally whilst minimizing cash burn; and have generated that underlying profit which I just mentioned, which represents a positive swing of 7 -- $7.9 million from a loss of $2.2 million to $5.7 million. We did say at the start of the year, as David mentioned, we expect to be profitable in FY '24, but it has arrived sooner than expected. And that's due to sales -- saving plan, cost management and also positioning the business to be scalable, really important. So the result really does clearly indicate the leverage in the P&L. We achieved the strong revenue growth of 65.6%. We increased our gross margin on product sales from [ 94.1% ] last year to 95.3%. And we've minimized an increase in overhead, with corporate, admin and overhead expenses only up by 23%, so I would also really encourage you to compare this graph to our peers. It's vastly different in terms of bottom line. And our growth [ is stronger ]. Now just moving on to cash flow. The strong performance in the first half really has translated into positive cash flow from operations, which is a significant improvement from prior period. So $600,000 in cash flow from operations has been generated, which [indiscernible] significantly different than the prior period of a $2.7 million loss and the preceding period of actually $4 million of cash out on operations in the lead-up to June. In terms of CapEx, we've completed the concept design and commenced detailed architectural design of a new manufacturing facility. The $1.1 million CapEx this half includes the initial design work and some expenditure for R&D on equipment and so forth as well as manufacturing equipment. Looking ahead, just through to 30 June, there will be a marginal increase in CapEx as the design process nears completion. And we expect to commence construction in the first quarter of FY '25. And you will know that the project is fully funded as a result of the capital raise we completed in December 2022. Then just summing up the P&L: revenue up 65.6%; strong product sales, up 55%; leverage coming into the business, operating expenses only up 41.3%. And again, that underlying net profit standout at $5.7 million compared to the same time last year, a loss of $2.2 million. So a pleasure to present the results today. And I'd like to hand that back to Swami to close out before we get into question time. Thanks, Swami.

Thank you, Jan. So again, as Jan shared, we're uniquely situated to drive global growth. We believe we have a genius technology. And the reason why we call it genius is because it's simple to manufacture and scale. It's transformative in terms of the outcomes that it provides to patients, the outcomes and the experience that it provides to surgeons, the cost effectiveness and reduced complexity for the health care systems and the sheer versatility for our customers. Many of our customers tell us that BTM could be a terrific solution for replacing allograft. And there are papers which are being written about it. At the same time, it can also upshift and be a potential replacement for grafts. And many of the clinicians from U.K. and U.S. and many of the developed markets are actually writing papers about how we could provide a -- far better effective solutions for constrained economies; and low-, middle-income market situations where capabilities and tools are always constrained, so we believe in the versatility of the technology as well. At the same time, as we have shared many times before, it's an underserved market. Today, advanced dermal substitutes are available primarily in U.S.; and Western Europe; and a few markets in Asia Pacific, on the fringes. We really have a long way to go before we can truly cover the globe, and we are focused on that. At the same time, we are focused on driving capital-efficient growth which is truly sustainable. And everything that we do, we do with a focus on sustainability. We're excited about our platform technology. In terms of graftable products, we have BTM, which has already gone across the world. We have started rolling out MTX in U.S. And it has demonstrated great outcomes in open abdomen, dehisced wounds; and many other areas, so we will start releasing this across U.S. And we'll start compiling the evidence which will help us take MTX across the world. At the same time, we are also looking at building an implantable platform. We are truly excited about the platform nature of this technology and what it could do to a hernia and breast platform. We are not yet ready to share when exactly we'll be out with the products, but we are happy with all the feedback that we've got from clinicians. And we are looking at saying how do we truly build a sustainable platform in the implantable space as well. We believe we could be a truly differentiated platform not only from a clinical spectrum of acute complex wounds but also from a professional education spectrum. And we are looking at connecting KOLs across the world who can truly teach other surgeons and their colleagues across the world in terms of how to deal with acute complex wounds. We are already an -- now seen as an acknowledged expert in burns. We have -- we are already seen as an acknowledged expert in trauma, but we are going beyond burns and trauma, into oncological resections of head and neck and scalp and skin and oral cancer. We're already getting into infections which many of our competitor products cannot deliver to, like necrotizing fasciitis or hidradenitis. And we're getting into the complex vascular and limb salvage space because this is where we believe we can truly provide a meaningfully differentiated outcome and save legs and limbs from being amputated. And that really just adds to the longevity of our patients, so we're looking at places and clinical areas where we can truly provide a meaningfully different patient experience, surgent experience and a -- cost experience to the health systems. At the end, I will just say that I'm really proud of the purpose-driven customers that we get to engage with on a daily basis and our people who are the connectors for them across the world. And we continue to invest in people, partners, processes and technology, with a view to keep scaling NovoSorb across the world and realize the promise of what it can provide to the world; pleased with our results, so far, but readying ourselves for the long haul. And with that, I will turn it back to David.

Okay, thank you, Swami. Very nice. Just reinforcing, I think, something that Swami ended up on, which is that -- look at our results. They're exemplary in every way. And even many of them are beyond our imagination and new markets that we've never anticipated, new ways of doing business we never anticipated. I think that's having a great effect on our staffing, and that's what I wanted to emphasize. Swami just touched on this. It's that this is enthusiastic for all of our senior leadership team and our Board and me in particular, but for our staff, what better job do you want? Sell a product that saves lives, makes profit, makes a difference, embraced by charities and others. So it's a fantastic thing for our staff. And we really have -- starting to build a fantastic team across the globe, for that matter, and so I'd ask you just to reflect on that for a moment. Jan -- a couple of things that Jan reflected on. I mean, first of all, we have now become #1 in quite a number of markets around the world, within categories such as burns in the U.S. and so forth. Even though -- Jan mentioned it. And I think our view is, look, we just want to [ stand with a radar ], for the moment. We might be #1 in burns in the U.S., so what? Who cares? Let's just make a couple of more wins, first, and eventually the market will catch up with us. So when I read on social media and people talking to me about whether this company is better or that company is better, what I say is look at the data. Wake up and smell the coffee. We're kicking goals all over the park. And just get onboard and hold onto the reins is what I say. The second thing that Jan mentioned was profit. And let me just say he's an accountant, right? So therefore, this is a sort of thing that he gets his rocks off on. I'll reemphasize what I said last October or at AGM. I'm not really interested in profit. It's going to come, by definition. It's not that I'm not interested. It's, by definition, going to come. And what we've got to do is keep our eye on the board in terms of expanding geographical and in the ways in which we know best but also at the new ways that we're now seeing coming out of some of the war zones and the charities and so forth. It's very interesting when I reflect on the Ukraine, for example, where we just started supplying this $1.2 million order. We didn't have anybody on the ground. I mean, fortunately, there have been some British surgeons that have gone there and done a bit of work and gone home again, but Marcus Wagstaff at Royal Adelaide, on behalf of the British orthopedics association, put on a training course. So there's big orders going in there to a lot of surgeons who don't know the product or certainly haven't used the product, and Marcus put on a training course for over 30 surgeons at once. The British orthopedics association then translated that into the Ukraine. And each of you can see this, by the way, because it's public. It's on the BOA's site. Marcus says -- it's very gory. I should warn you, but here is a different way of operating that we would normally -- he said, "Listen. Ukraine is on our agenda. I don't have the bandwidth for it." We can't put people on the ground. We can't have people going around to do surgeries and so forth. And here is a way where it's not ideal, but people like Marcus are putting their hand -- not just him, by the way. There's other surgeons in the U.K. in particular who were very [ keen to us. And ] so we see there are some pretty big untapped sort of areas of growth for us. We're still going to get it out of expanding our workforce. We're still going to get it out of expanding our indications, but we've got some new ways of getting it as well. One little tidbit of information is that I've mentioned that we're getting good sales in India. And I think everybody knows that's into the private market, but the big prize for us is that there's a half a dozen tenders that will enable us to supply into public hospitals. We've been getting some pretty good [ soundings ] out of India. And I'm sure Swami probably doesn't want me to say this, but we're optimistic, very optimistic, that in the near term we'll have something positive to say about India as well. So there are some big, lumpy bits quite apart from the growth that we've got. And don't forget growth this year, 65% for the half. So -- and that's a fantastic growth out of rest of the world, which we're really just touching the edges on, really, fantastic growth still out of Australia and New Zealand; and fantastic growth, by any other company standards, by the way, out of the U.S. alone. So welcome onboard. And let's report in another 6 months, but I think the direction of where we're going, with your help as shareholders, and -- is very much appreciated. And our staff, in particular, I very much appreciate that support as well. So yes. I know we had a few questions to start with. And I think I've touched on a few of them, DFUs and reporting time table and so forth, but have you got...

Yes, you've covered all the written questions we received prior to the webcast, in your introduction, which is good. We're now going to move across to covering analysts who are going to dial in to ask questions. [ And of course, you know that ] we'll go to written questions from everyone else on the platform, webcast platform. So operator, if you can patch through the first analyst, [ if you could do that, please ].

Your first phone question comes from Lyanne Harrison with Bank of America.

Swami, you made a comment there that in the United States market PolyNovo is closing the gap with the market leader in difficult burns. In terms of the feedback that you're getting from surgeons, why are they choosing the competing product over NovoSorb BTM?

Thank you, Lyanne. That's a very good question. If I were to read how clinicians make their decision-making -- and I'm not a perfect purveyor of this, but the feedback that I get is, whenever there is a difficult burn, clinicians choose BTM just because of the robust nature of BTM and the confidence that they have in the product to deliver consistent patient outcomes. If you have a difficult patient with a pretty difficult burn with a lot of comorbidities associated, we become the go-to choice for many clinicians. If it's a small TBSA burn or whatever -- there could be many choices which they could make. We are today only covered by DRG. We are not reimbursed specifically, so clinicians have to also make sure that they sustain the health system within which they work, but that's my read of the situation, which is supported by many clinicians. So that's the reason why we continue to keep narrowing the gap between us and the market leader in U.S. Does that answer your question?

Okay. And -- not quite. Because I understand that the surgeons are choosing BTM because of its robust nature, but you're saying you're closing the gap to the market leader, so that would imply that the surgeons are still choosing the competing product for whatever reason. Do you have any feedback to suggest what that -- those reasons might be for choosing the competing product instead of BTM?

The leader is -- has been around for 35 years. And if I were to look at the volume share and the value share, we are closing the gap pretty quickly. And that just depends upon how burns get presented in the market. If it is a difficult burn, high total body surface area, et cetera, clinicians might choose one option. If it's not, clinicians might choose another option. And this market has close to 300 competing products, including a lot of free products to be given away by a lot of competition, so we do not make choices for clinicians. Their -- I mean the market is spoiled for choices. And it's spoiled with a whole lot of free goods being given out as well for trials, but having said that, we are very happy with the support that we are getting. And we are extremely happy with how the U.S. clinicians keep talking about us not just in U.S. but outside of U.S., because these are the clinicians who are taking us out into Middle East, as David spoke about, or into India because they are the ones who become our global ambassadors on the basis of how they see the product perform in their OR settings. We are a 5- or 6-year history, with 2 years of COVID in-between, and we are very proud and happy with what we have achieved, so far. A lot of our clinical trials is something which is ongoing. And once we are able to close out the clinical trial, we should be able to probably provide much more meaningful evidence from a clinical perspective as well as a health economic perspective to our clinicians. Not just in the U.S., but we should be able to take that data across the world.

Lyanne, can I just add onto that? I'm sure complexity of the wound and the patient is important. We know that, but there's a whole lot of other things with some of our competitors, some to do with the stock that hospitals still have and have to be used, some to do with their own key opinion leaders and who they've been paying and so forth, so -- and as Swami said, just the [indiscernible] that comes with having [ handled either ], but we are, if not beyond them, knocking on their door. And it's happening very quickly.

Okay. And if we could move on to rest of the world growth in revenue. Obviously that's very strong at 122%, but -- and Jan read out some numbers there in terms of the percentage growth from different jurisdictions, but if I think about the dollar revenue growth, where is that coming from in the first half? Which countries or which markets are showing the biggest increase in revenue in dollar terms?

That would be the U.S., Lyanne, in terms of dollar terms, naturally, because it's our biggest market. And U.K. is a real standout with what they've done there in terms of doing -- doubling their revenue but again a smaller market and much smaller than U.S. but a really good result. And in Australia and New Zealand, as I mentioned, growing by 73% and the market where we started out and we're already well established, is a good indicator of how we're expanding out of burns, but the U.S. is really, in terms of dollar terms, driving that overall sales growth.

Okay. And so outside of the U.S., in terms of the rest in the world, that dollar growth you're seeing is coming from U.K., Australia and New Zealand. And which country would be the third on that list?

Germany.

Germany, okay, great. And then one more question is obviously there was some discussion about some BTM product going into war jurisdictions. Do you have an estimate of what -- the total that might have gone into those jurisdictions outside of those that you've provided without any charge? I'm just trying to understand what the underlying growth might be if you exclude that.

Yes. Lyanne, I can take that. Firstly, from U.S. as well as U.K., a lot of clinicians who are associated with military hospitals do carry the product along with them when they go to Poland or the surrounding areas to support Ukraine or to support Israel. So that is something which we can never get a complete handle on, but they are the ones who are training surgeons and seeding ground for us. In terms of actual numbers as we disclosed in our prior announcement, Jan, if you could just share the numbers for Ukraine order that we have supplied, so far, and which is on the anvil. Because that will be the true number. The rest of it will be sales which are going through Turkey or other places because patients will be flown into Turkey wherever possible. Or some of the surgeons from Turkey will travel to some of the war zones in Middle East and support patients, but that will not be -- that will be very difficult for us to tease out. But we know exactly what is the order which is coming from charity, which we have announced recently.

Yes, [indiscernible]. AUD 1.2 million, Swami, the Ukraine order.

Yes. Thank you.

Okay, great. That's very helpful. And one more question, on head count plans. So obviously increase in head count for the first half. What are your expectations for second half '24?

Jan, do you want to take that?

Yes, sure. We're currently at 237 in terms of head count at 31 December, but we will likely get close to 262 is -- or around 260 is the plan, so roughly about another 25 hires to come. They will be within the U.S. sales team; locally here in ANZ, a slight expansion in sales team; also in R&D and manufacturing given the output that's required to service demand, so -- but it is, I guess, slowing. And I think, if you looked at for the year-on-year, it was 64 that were hired. And there's 44 in the first half '24. The first part of the year, calendar year, [ there were only ] -- I think it was 25 in the second part of the -- second half of the calendar year. So our teams, we've got finance and back office and other areas, [ full teams ]. And we've got that scalability in place. It's now just adding to the sales team to drive growth and ensuring we can meet demand with production and everything that goes along with that, but yes, we'll be closer to 260 staff by 30 June.

Your next question comes from Rachael Harwood with Macquarie.

Yes. Firstly, just around the BARDA trial. You've now treated 90 patients. Are you still looking to get to, I guess, 120 patients? And then could you just maybe remind us the process that follows trial completion with the FDA?

Sure. Thank you, Rachael. So today, we are at 91 enrolled patients because we had 1 patient enrolled from India over the weekend. So while we have announced for 90, we literally had 1 enrolled over the weekend. BARDA and FDA both have been working very collaboratively with us to take a look at the design protocol of the study as well as to take a look at what happened after the 15-patient review and 30-patient review and 60-patient review. So there are 3 options that we are working along with their guidance. The first option is to keep marching forward towards 120. With their support and with India opening up, we believe we should be close to 120 by May or so. There is a second option which FDA and BARDA are looking at. In terms of trying to see if we could convert the design from interim assessment to interim analysis, that is a call which FDA and the biostatisticians and the surgeon panel need to take. And they will be taking that call shortly. And we do not know the answer to that, so we'll get back to you whenever we get that answer from FDA. So again, very pleased with the partnership. And they are working together with us to try and see how we could bring this clinical trial to a meaningful close without compromising on the patient safety and patient efficacy. And we are very pleased with all the guidance that they have been providing. The third thing which I will share with you is there is another agency from the FDA which is looking at real-world evidence to see if that could give us some added claims. And that's again a process which we are going through but very happy with how they have supported us, so far. They have already done a review of the first 60 patients post 30 days. So they are lockstepped with us and they are changing as appropriate as they see the data coming onboard. As I keep repeating, extremely appreciative of all the guidance and support which comes from both those agencies. Is that helpful, Rachael?

Yes, that's really helpful. Just a question just around the MTX product: Do you have any update on how this product is progressing?

Yes. MTX has done quite well in the -- what we call as limited market release, wherein we worked with clinicians who were truly knowledgeable about BTM and could give us the clinical problems that MTX could solve very differently from what are the options today. And we have worked with those clinicians for over a year now and we are feeling very confident that we should be able to take their learnings and start rolling it out across the U.S. We will do a full-scale launch for MTX from July, but we are very happy with the outcomes that it has provided in open wounds or dehisced wounds, open abdomen and some of the pressure ulcers for our patients.

That's great. And last question for me. You did mention and you previously have mentioned entry into Japan and China. Do you have any kind of expectations around time line or when you'd like to be in those markets?

Yes. We have a partner identified and ready in Japan. What we are waiting for is if we could work with the U.S. FDA. And if there is a way in which we could get the interim analysis data, then we will be able to take that data to Japan and work along with KOLs and reimbursement agencies in Japan to see how we could get an innovative product status in Japan and be able to fast-track our entry in Japan. So we are in a state of readiness and waiting for Japan. We have a partner identified. We have a KOL who is extremely happy with what he has seen and heard about the product across the world, but we would really need that data to engage meaningfully with agencies in Japan, the ministry of health and the reimbursement agency. So that's the status, as far as Japan is concerned. For China, we have identified a few pathways, but we are not yet plunging in. We have gone into Hong Kong. And we are looking at how we could engage with the belt on the South side of China, in the Shenzhen area. So we are still a little further away from China.

Your next question comes from Andrew Paine with CLSA.

Just on operational leverage. Obviously that's going to come through with the revenue growth exceeding expenses, but I'm just thinking. Is there going to be a period where you have to ramp up investment in, say, rest of world markets or within R&D that may offset this revenue growth? Or do you anticipate a pretty clear runway in terms of delivering operational leverage for -- over the next few years?

Andrew, the leverage -- I mean [indiscernible] high gross margin. I mean that does help stating the obvious, but in terms of [indiscernible] moving forward, I mentioned that, in terms of our hiring and back office and all those sort of areas, it's not -- we've built scalable teams. Where we will be investing is in R&D. There's a few more hires in that area. And then we've got plans to continue to develop our pipeline, so that will incur slightly greater costs than what we've incurred to date, but it's important to future-proof the company with new products. Moving forward, I guess, if you look at all the analyst reports, one of which you write, there's general consensus out there that we'll grow by upwards 30-odd percent. And that leverage will be maintained and grow. And it really is a function of all of the above, so the gross margin does help significantly. We will continue to invest in R&D. It's really important, but we're really cost conscious as well in terms of how we structure the company and ensure it's scalable and efficient in all those areas where it needs to be. Does that answer your question?

Yes, yes. Look. That's great. Just kind of thinking of obviously [ you're going to have new employees ]. And you mentioned, last time, investments in the U.K. and Germany. And that seems to be coming through, so that all kind of looks like you're getting to that high-investment phase in the OpEx but obviously continue to invest in R&D that you'll be able to kind of really deliver in -- or over next 3 to 5 years...

Sure. [ And other ] regions [indiscernible] within Europe. As that grows, that's become a much larger region for us now that we might provide further investment to help run that whole region, but at the same time, we do it responsibly. We don't get ahead of the curve. And there's enough profit margin there now to propel it forward even at a faster rate, but one important thing is driving that top line, as David has mentioned earlier on the call. It's the #1 priority, but with where the scale of the business is at now, that profit is just coming through on a consolidated basis.

Yes. That sounds great -- sorry.

Andrew -- sorry. If I can answer that other way: If we can be truly an outcome-focused company working with our clinicians and making sure that they are able to educate clinicians to deliver meaningful patient outcomes, that's where the true leverage would come in. And that's how we are planning to keep investing in the business. I mean the Board has never disallowed any investment which can keep driving growth, but we constantly keep looking for sustainability of outcomes because that's our true ticket to consistent growth. If we can keep delivering meaningful, differentiated outcomes for patients, number one, which are also easy for surgeons and health systems to execute which come at a meaningfully different cost level as well as a lower complexity, those are the things we keep establishing. Once we are able to establish that, then it's the surgeons and the health systems who keep innovating and driving us forward.

That's great. And sorry to stay on margin, but just thinking the outlook for pricing or gross margin, would there be any margin impact as you grow more materially in rest of world markets or into new indications? And if possible is your longer-term kind of margin expectations.

Sure. I'm happy to take this, Swami, if you like, but the U.S., up until now, is obviously, in terms pricing, the most established market with the most support from the government, I guess, in terms of reimbursement; is the most -- highest gross margin for the group. In Europe and U.K., some of the NHS sets the pricing and so forth. And ANZ. All those countries combined, at the moment, leads to the gross margin we've got, but [ the correct is we ] do get into other markets and developing markets such as India. And India has a greater, I guess, piece of the pie in terms of overall revenue. That will drag the margin down a little bit. It's got a way to go yet. The U.S. does have significant sales in terms of total sales for the group, so -- and with that, we get an increase. On the flip side, we're getting increased output through the facility. We're absorbing the overhead across [ all the units ] that we produce. And we continue to make records in how much we manufacture, so all that needs to be taken in consideration as well. And we did go for a long period where we didn't rise -- increase prices in the U.S. market or any market. And then we have to endure COVID, but we do have a program now where price increases do need to occur each year. And we do look at that and apply that, so that does counteract the impact of other markets developing, such as India, at a lower price, but I will say it still attracts a really good margin even in developed markets. But hopefully, that answers your question, Andrew.

Yes. No, that's great -- and sorry. Just one last one, just on manufacturing capacity. If I'm remembering it right, I think we asked at a couple of calls ago. And you were saying something around AUD 60 million in capacity and putting on another $60 million. Is that -- and then like outside Europe is increasing capacity as well. Is that the right way to still be looking at it? And are there any concerns that you're going to hit any manufacturing capacity for the next year or 2?

Let me take that, Andrew. So again I'm really proud of how our manufacturing and supply chain teams are delivering on quality of our product and taking volumes up significantly. Just to give you a little bit of an idea: We manufactured 17,000 devices in fiscal year '22. We manufactured close to 38,000 devices in fiscal year '23. In the first half of this year, we manufactured close to 49,000 devices, so they have done a terrific job in terms of scaling the capacity without compromising in any way on the quality. And just love the way in which the teams come together to keep identifying energies or opportunities where we can keep improving how we do each part of our subprocess. So we have got a good continuous improvement rhythm established into our teams, so they just take -- keep taking volumes up beyond their budgets. And more importantly, they keep reducing the costs as a result thereof. And they keep looking at cost improvement opportunities not just within the Melbourne facility but also in terms of how we reach the product to our customers, including with airfreight and all. There have been close to 70% efficiencies that they've been able to deliver versus the prior year, so very happy with how our manufacturing and supply chain team and quality and R&D are all coming together to keep driving that consistent improvement in our processes and help us with scaling our manufacturing.

Okay, great. So -- and that sounds like no concerns in terms of capacity.

And just to add to that. We are also coming up with [ mega ], which is our third plant of -- so we should be getting the final design shortly. And we should be able to get into the actual construction of that plant, which is right next door, in early next fiscal year. So again, everything is moving in -- on track in terms of the capacity for the next couple of years but also for capacity beyond that.

Your next question comes from John Hester with Bell Potter.

Swami, what are you planning to do with the PMA once you get -- you're going after full thickness burns, [ but actual ] BTM is already being used in that, so is it more like you're going to use this to get a price increase in the U.S.?

We might enjoy a price increase, but we believe that, that would drive our adoption even harder. And I just go back to Lyanne's question: If clinicians and health systems are able to charge the product to multiple insurance agencies in the U.S., we believe the adoption would go up even more significantly than where it is today. So without the PMA, there are many clinicians who are using it for difficult burns, but they're probably using other options whenever they get -- and this is just me reading into how I see the consumption of different products across the burn world in U.S.A., but with PMA, with the right reimbursement, we do believe that the adoption curve could go up significantly.

All right. And just one other question, if I may.

Sure.

There are a number of one-off sales in that first half result. And you've talked about the $1.2 million order to the Ukraine. I'm just sort of wondering. You were asked a question before about what is the sort of run rate [Audio Gap] and sort of quite -- to, please, retouch on that because it wasn't quite clear to me what you think that -- the carrying run rate for revenues is at the moment, excluding sort of first large-ish one-off orders.

Well, the -- I think that, the first half, John -- and obviously we just announced the Ukraine sale. That wasn't included in the first half. And we'll -- it's only in February it came through. And so with the first half itself, I guess the number that's been presented pretty much is the run rate. There's nothing in there that's overly -- to do with donation or to sales to war zones in any way. So they came through in February, so yes, as it's presented is kind of [indiscernible].

The other way I would caution you, John, in terms of reading too much into run rate is, at one point of time, we used to have close to 65% of our procedures coming from burns. Over a period of time, that has come to between 30% to 40% in our most developed markets. That's U.S. and Australia, but those 30% to 40% of our procedures still end up contributing close to 70% of revenue. And we will serve whoever is the customer or whoever is the patient on the table. And that's the reason why we say that we are focused on making sure that we are providing sustainable patient outcomes to all possible patients across all clinical spectrum. We are glad to see that we are expanding beyond burns. And there will be anniversarying impacts of an occasional Ukraine order. And we'll keep providing visibility into all those subcomponents of our sales going forward, but as long as they are meaningfully moving upwards from a growth trajectory, we are very pleased with those results.

And just to be clear. That 30%, 40% you're talking about, that's generating 70% of revenues. That's U.S. burns market...

That's U.S. and Australia. So again, there could be a burns season which becomes a -- much higher versus the normal. Or occasionally it's much lower versus the normal, and we will just take it as it comes.

So our next question comes from David Nayagam with E&P.

I'm just curious on whether you're intending to provide any updates on your guidance for CapEx to complete the Port Melbourne manufacturing facility. Previously I think you noted $25 million. And could you speak to any -- I think you sort of touched on it already, Swami, with any yield or efficiency initiatives that you're thinking about in this facility and how these might impact your longer-term gross margins?

[ I'm able to ] answer, if you like, Swami, just in terms of our capital spend profile. That's why we mentioned we're looking at starting construction early in fiscal '25. So the detailed design is being worked on at the moment. In terms of the spend profile, we -- it will be circa $25 million over a 2-year period. That's how it will take to construct the facility. And it just depends on the contract that we have in place with the builder and the milestone payments and how that plays out and what work gets completed when, also the timing on machinery. Some of it is custom made and shipped from the other side of the world, so it depends on that profile as well, which can take up to about a year before we receive certain items of machinery. So that's where it will come into play, but it's fully funded. We completed the capital raise mainly for that reason and also to provide working capital and which we've been using to grow the business; and it's working, as you can see.

David, the one important caveat for the third facility would be it's designed for modularity. It's designed for flexibility. And it's also designed for a significant increase in the output because we believe our future will be with many more SKUs versus what we have today. And today, while we are able to scale up within our current facility with our current SKUs, if we have to deliver those number of SKUs in the future, that's what we are designing the new facility for, so it would -- the productivity would increase manifold. And we will keep giving you or sharing those numbers when we keep getting closer to our [ design phase ].

Great. Next question I had was just on the surgical mesh prototypes that you discussed for hernia; and just wondering what your clinical development pathway is to evaluate this as well as the other indications that you've talked about. How will your new CMO and medical liaison team work with the surgeons that you've talked about who are really driving some of these innovations around the world to identify and develop the clinicians' [ test ideas ] and bring them into the company without stifling the innovation because of the sort of the corporate R&D engine that [ is involved ] when you bring them into the fold?

Thank you, David. So there are 2 aspects to your question. One is the actual products that we build working with clinicians and partners. And you referenced mesh. So we are working on developing a NovoSorb mesh. And we are looking at comparing it with the #1 leader in the market in terms of the benchtop testing as well as how it performs with animal testing. We are also looking at comparing, sharing this with our clinicians; getting it for them to touch and feel; getting their expectations of what they want in terms of added strength or flexibility. We are [ toying of ] multiple generation of products to go beyond the mesh. So that's as far as product R&D is concerned. We are also looking at antimicrobial space in product R&D and just different thickness of MTX as well as BTM because dermis is very different in different parts of the body. And that's where we have got a lot of insights from clinicians which is driving the product development. In fact, we have already submitted an MTX tech product for FDA to review. And hopefully, we should be able to get an approval from FDA by end of this year, end of this fiscal year. So that's number one. When it comes to clinical innovation and using our current products across multiple clinical spectrums. And I did mention oncological resections. I did mention how it works in necrotizing fasciitis or complex vascular or limb salvage procedures. And this is where clinicians from different parts of the world, including Australia and U.K., are supporting us by writing clinical papers and case series about how BTM works in a far more superior and cost-effective way versus their current standard treatment today which could be a flap or which could be something else that they are currently using. So that's where the surgeon-led innovation is also going to help us. And their papers and their podium presence would help us drive these innovations across the world. Majority of this innovation, we see coming from U.K. and Australia.

Okay, great. That's good. Do you expect to be positive at the NPAT line for FY '24 given the increase that you flagged in operating expenses and CapEx in 2H '24?

Yes.

Okay. And just one last question and then I'll get back in the queue: the $722,000 [ sales ] within government COVID-19 assistance. That was a one-off for this period, correct?

That's correct, yes.

Your next question comes from Madeleine Williams with Wilsons.

I just wanted to go back to what you were sort of mentioning with the -- NovoSorb's use in burns and then [ kind of more ] trauma. I mean maybe starting off with the U.S. and what you spoke to in terms of the breakdown of what's contributing to revenue there. Maybe a good question to ask would be where NovoSorb is currently being used and why it's not being used and sort of how you're sort of educating the sales reps and surgeons as to why NovoSorb could be used in that indication.

So Madeleine, thank you for the question. We are focused on the burn centers in U.S. because that was the birthplace of NovoSorb as a product. It was designed for difficult burns. And we have our clinical programs which will provide the evidence to support that from a U.S. perspective. After those burn centers, we are also looking at level 1, level 2, level 3 trauma centers. And if we look at the total universe for that, that's close to [ 650 ]. We are at about [ 400 or so ] as of now. The way plastic and recon surgeons think about decision-making is burns are the most complex and acute wounds because they're associated with a lot of comorbidities, and this is where true surgical skill and acumen is needed. Now having performed so well with burns, there is an automatic buzz which goes out which encourages people to use us in simple deglovings and friction injuries, but these are problems which can be solved with or without advanced dermal substitutes. So that would take some time to diffuse throughout the system, but we are making significant headway into the trauma world in U.S. We are also doing quite well with necrotizing fasciitis, and now we'll get into the complex vascular space with MTX as well. U.S. is a far more segmented market compared to a market like U.K., if I were to just draw a parallel, where it is far more easier to diffuse an idea and a clinical problem-solving [ methodology ] from one operation theater to others. So we see far bigger diffusion of our products in U.K. or eventually in Australia. And I expect the same thing will happen to us in India because people will start looking at very creative clinical problem solving that would generate evidence for us to keep building on that momentum in future. So we depend a lot on clinicians to truly give us what is it that we can do to help them. And that's how our pipeline is getting developed, but they are also coming up with papers and educational material which would just seed and diffuse that clinical acumen across their network. So they are becoming our ambassadors and champions, and we are truly grateful for what they bring to the table.

Okay. And just to clarify: And you said that you're in around 400 of the trauma centers. Is that correct?

Yes. It's 393 or roughly, but Jan has the number.

Yes. 410 at the moment, 393 at half year-end.

Yes, okay, so -- and then just to confirm the U.S. sales reps number. I think I missed that during the call.

Sure. There's 65 sales reps associates and 10 in management, so 75 in the team. And that's about to go to 85 imminently in terms of total team, sales team.

Yes. And I think then just picking up on that and then the expectations for rest of world. I mean you said, Swami, that with the U.K., NovoSorb is sort of the market leader there. And then looking to sort of maybe Australia and New Zealand, I mean, is that much -- do you see sort of much growth left in those markets? I understand that you're in a lot of new markets, but just the markets where you are a market leader, I mean, [ are there sort of ] indications that you can [ go into their lift ]?

Yes, Madeleine, thank you for the question. So even for a market like Australia which you would classify as one of our mature markets -- it's growing at close to 75%, if I'm not mistaken, Jan, so we see a lot of opportunity even in a market like Australia. We have had a strong burns season in the first half, but our growth outside of burns and into the vascular space has been significant. And when I talk about complex vascular, these are inpatient cases where you have a vascular surgeon solving very difficult problems. And almost 80% to 85% of those difficult problems are untreated, under-treated or difficult-to-do diabetic foot ulcer kind of cases, so when they go inpatient, we see a stronger propensity of success because -- just off a very clean debridement and the way in which a surgeon treats those wounds in an operation theater, including we have seen very successful limb salvage cases, where we have a meaningful potential to be a standard of care pretty soon. So that's why we are accelerating our limb salvage studies in U.S. and in other parts of the world.

We are showing no further questions on the telephone. I will now hand back over to PolyNovo.

David, would you like to make any closing comments?

[indiscernible] we've got a few queries online, questions online, David and Swami, if we're happy to spend a few more minutes. Just a question on Germany: How is the German distributor performing?

PMI is doing a terrific job for us. Our market share the last time we checked -- because in Germany we get a pretty accurate read of the actual square centimeters of the product used. And it was 56% share, so we're a clear market leader in Germany. So we're very happy with the support that PMI has given to us over last 5 years or so, probably more. I -- but they've done a pretty good job for us.

Thanks, Swami. Next question. "Are hospitals doing automatic replenishing orders of BTM once it expires?" [ Generally it doesn't ] expire. And it gets used. Right before then is a 3-year expiry -- and rare occasion that will happen.

That's right. And generally we are not on automatic replenishment. It's always on order largely across the world. Hopefully, we'll get into that automatic replenishments system soon.

Thanks, Swami. Next question. "The times of strong growth might result in challenges to meet the required growth demand. And my question is how PolyNovo is ensuring that all products and markets are served with the appropriate capacities and quality."

Thank you. When we look at a market, we look at what is the disease spectrum of the market. And how is the patient pool served within each market? And then we pick and choose the areas that we want to work in and make an impact, and we normally would then allow for the market to diffuse itself. And if I were to give away loose example, if I think about a very complex market like India: It's a massive pool of untreated, under-treated patients. And in fact, for even simple burns, at times, surgeons as well as families would find it -- it's an unfortunate comment but cheaper to allow a patient to die versus to try and sustain the patient. And this is where we are trying to look at how can PolyNovo step in and help through the public systems and working with the public insurance system as well as with NGOs in those markets to see if we can serve those who are underserved today. We are making a conscious choice of, as much as we have made a lot of headway in many of their trauma wounds and DFUs and limb salvage in markets like India, we are focused on burns because this is the biggest problem. And if we can find a way to solve that through the public system, we would have done biggest service to that market, so for each market, we are very focused. We've talked about U.K. before. U.K. [ took birth ] during the middle of COVID. And because we could not support the clinicians, we got a lot of initial uptick through trauma, but after the COVID restrictions were lifted, we focused on burns. And now it has become a self-sustaining market. And that burns supremacy, if I were to call it, is helping us get into a whole lot of other areas that we would probably not have thought about before. So each market is very different from an access -- what kind of evidence is needed for that market to be supported? And what kind of support system do we build from a trial generation and supply chain and so on and so forth? We look at each market from an access and reimbursement and clinicians -- and how could we help them solve the difficult problems? And then they take it over to some of the simpler problems themselves.

Thanks, Swami. You mentioned earlier, since you're working with the FDA, to bring the BARDA trial to a close. Does this imply potentially speeding up enrollment?

Yes. One of the suggestion of BARDA and FDA was to get into India to speed up the enrollment because there's a larger patient pool even with some of the big burn centers in India. And we have -- as mentioned before, we've got the first patient already. Thank you...

Thank you, Swami. A couple to go: What is the barrier to entry of competitor -- of a competitor copying the products chemically and distributing a generic product?

I think there will be 3 barriers to entry, the way I see this. Number one, we have the IP in markets which respect the IP. Number two, we have a PMA which would, again, provide a very strong moat for us in markets like U.S., but number three will be the physician comfort and once they see consistent robust outcomes coming from us. Surgeons don't like to experiment for the sake of experimentation. And surgeons listen to other surgeons when it comes to markets, so that becomes our moat over a period of time. And if we can truly establish ourselves as someone who can solve acute complex wound problems, our equity will spread among the surgeons. And that will become a competitive barrier in itself.

Great, thanks, Swami. Still on India. How is the process of establishing sales and channels to market in India? Or what is the process?

So we are taking very measured steps in India. We have close to 16 reps in India. They are located strategically. We are pursuing the tenders in India because the big burns go to -- they are from low- and middle-income households who go to the public sector. And we are focusing on getting the tenders. As David mentioned, we are close on winning a federal tender. In fact, we have won the tender. We are going through a whole lot of administrative processes associated with it, but that would open up the gateway for surgeons who have already been trialed, educated to start treating the patients. It just makes the process easy for surgeons to procure through a government [ portal ].

Great, thanks, Swami. A question on credit management. "With the increase in the customer base, are you able to keep on top of credit management and ensure we get paid for new sales and not incur bad debts?"

I would leave you to answer that question now.

Sure. So we do have an effective credit management policy in place. Markets such as India, distributors pay upfront before we ship any goods. And I think, just the nature of the industry we're in with public hospitals and also private hospitals are generally well funded, credit management hasn't been an issue, nor bad debt, so -- but we do have a rigorous process in place before we take on any new customer. So moving on. Do we have any advantage in the marketplace by being synthetic rather than animal-derived product, for example, in Muslim countries such as Indonesia and Pakistan?

Yes, we do, but what we have coached our teams to do over a period of time is not necessarily focus on synthetic versus biologic but focus a lot more on the differentiated, I would call it meaningfully differentiated, outcomes for patients, for surgeons, for nurses, for health systems and from a cost perspective because it's important to focus on the benefit that we provide versus the feature that we have, in terms of synthetic versus biologic.

Great, thanks, Swami. Next question. Given the wide revenue sources with a developed sales pipeline management -- sorry. This question [ may be convoluted ]. I guess the question is can we expect to grow by 100% again and 60% in the U.S. The answer to that would be no. No, [ we won't be able to grow by ] 100% next year. So [ I'm encouraged to look at ] analyst reports that are available, but I think we've given good indication [ as to ] momentum in the business and where it's likely to land for FY '24. And then as we go off a larger base, it does become more difficult to grow at that higher [ pace ], but we're opening up new geographies and expanding our product pipeline. That will only help in achieving a strong growth rate as we move forward. I don't know if you have anything to add to that, Swami.

No. I -- again, we are focused on providing meaningfully differentiated patient outcomes. Once we are able to establish that clear advantage with surgeons and nurses and hospital systems, they will take us to whatever revenue we can service them with, so we focus more on process. And at times, the outcomes surprise us. At times, there will be lumpiness, as we have shared before, but we have a massive opportunity ahead of us. We are just looking at how do we address that meaningfully without necessarily getting greedy just with product sales. So product and professional education together are extremely important in this category to retain the trust that clinicians have with us.

[indiscernible], Swami. And the very last question, and this is for David. "And now that PNV have moved from red to green, David wear a green jacket [ this time ]."

It's funny you should say that because I have a green jacket, but it's this one that some fund manager in Hong Kong sent me. And he'd Photoshopped it, so I might put that on my website.

Awesome, fantastic. Well, that's the end of the questions...

[indiscernible] lucky color in China, so we will just take whatever jacket color you have, David.

I've got it. Expect to see it up in about half an hour.

Great. Well, that was it with the online questions, so I hand back to David to close.

No, no. No more points to make. I think we've gone over it; and just thank all our shareholders for supporting us, hanging around. I won't say it's been a rocky road, but the fundamentals are there. It will keep going. Enjoy the ride.

Thanks, everyone.

Thank you, everyone.