PolyNovo Limited (PNV) Earnings Call Transcript & Summary

Thank you for standing by, and welcome to the PolyNovo 1H '25 results. [Operator Instructions] I would now like to hand the conference over to Mr. David Williams, Chairman. Please go ahead.

Thank you very much, and welcome, everybody, for attending. Thank you very much. I normally open this with some editorial comments on my own and then pass across to Swami, but I think I'll pass to Swami, and then I'll make some ending comments perhaps before we go into question time, which will, in a normal way, be run by Jan. So Swami, welcome. Over to you.

Thank you, David, and good afternoon, everyone, and thank you for joining the PolyNovo First Half 2025 Results Presentation. If we could move to the next chart please, Kelly. Yes, we'll start off with a standard disclosure statement. Kelly, if we could move to the next chart. So at the outset, let me start off by stating the obvious. We continue to redefine the world of healing with a simple yet robust and scalable solution. I'm pleased with the growth for first half. Our commercial sales are up by 28%. Our patient impact is up more than 2.5x of that at 72% growth. We are now present in 46 countries in a very short span of commercial life, which is 7.5 years, and we have yield close to 67,000-plus patients today. Our clinicians continue to innovate, educate and provide insights. Their contribution can be seen through peer-reviewed articles, abstracts, their involvement in educating their peers, their insights in helping us develop a pipeline of new products, all of which help us live up to our promise of being a platform technology. With regard to CP-003, our pivotal clinical trial, we had already shared that we had an FDA alignment to stop the enrollment at 120 patients. Upon reviewing the safety and efficacy data, FDA has provided further guidance, which will help us start scripting the clinical evaluation report earlier than original plan. Furthermore, BARDA has extended support to us to invest in a supplemental arm for a pediatric third-degree burn indication, and we've begun our discussion with FDA in that regard. Our approach to expanding impact can be summed up with MTX. We call it go slow to go fast. If you remember 2 years ago, we had the registration of MTX, but we took our time to work with our clinicians to find the best clinical role for MTX and how could we do it in procedures where we could truly make an impact. These early adopters helped us build educational programs and case series to help us launch MTX systematically in U.S. Our limited release closed at end of April, and we started launching from April 2024. Today, in the first half, we are already at AUD 2.1 million in terms of revenue, and we continue to grow MTX exponentially. Given the global wound etiology, if we do our job well, connecting a recognized clinical need with surgeons, we expect MTX as a platform to outpace BTM in the next 3 to 5 years. Lastly, I would say we continue to invest in objective health economic papers with IQVIA. In addition to the work that we are doing with CP-003 in the U.S., we have now started investing in U.K. to provide concrete evidence to health system as to how would BTM fit into the toolkit of a surgeon along with microsurgery. That is where would they use free flaps, where would they use BTM, how are the trade-off decisions which they would be making? And how do they build algorithms where they would find a way to have the right capability in front of the right patients. We believe that this would be transformational in terms of not just in U.K., which is already facing constrained, long lead times for patients, but this is something which would be useful across the world as we can find a way of adjusting capacity to the patient outcomes and having the right capability in markets across the world. Let me now provide a bit of color to our global performance. Let me start off with U.S. U.S. continues to be our most mature lead market, growing at 28% versus prior year, but the patient impact in U.S. as we start expanding beyond burns into trauma and other procedures is now growing at 70%. As we expand into other soft tissue reconstruction procedures, we are making headway, but we are literally at the beginning of our journey in terms of trying to drive our penetration from beyond burns. We believe we have a long runway for growth in U.S. beyond difficult burns. Now rest of world is growing at 29% with a bit of a tale of 2 cities performance year-to-date. And let me give you a little bit of color to what I mean by tale of 2 cities. Europe, we have always indicated that our sales growth will be lumpy based on patient mix of third-degree burns versus rest, securing tenders or entry into new markets. In this half, we had an exceptional performance from Europe, which grew by 50%. As a total region, Europe now contributes 14% to commercial revenue and, in fact, outpaces U.S. in terms of number of units sold as well as the sheer spread of procedures across a very varied and multispectral clinician community. We were already the leaders in U.K. and Germany. We have now expanded our leadership in skin substitutes by becoming leaders in France and Turkey. Turkey is an important emerging market for us because it will teach us how do we engage with emerging markets where prices are low, and we are competing with dressings and depth to an extent. We have also become a very close #2 in Spain, and we hope to become #1 and leader soon. Most importantly, Europe is now providing a new market development muscle to our organization beyond what we do in terms of taking share away from biologics in deep difficult burns. Asia Pacific, on the other hand, grew by 10%, primarily pulled down by fewer burn presentations in Australia, the largest market. Now I do not want to take anything away from our team in Australia, which is growing its presence in vascular and other soft tissue reconstruction procedures by over 30%. The rest of geographies in Asia Pacific continue to grow at 40% plus with India growing at 73% for the first half. While 70% plus growth in India is strong, we are expecting our India business to at least double or more considering the grant of reimbursement price in central government hospitals. We are a bit behind expectations in terms of patient impact and revenue as we continue to work with each hospital's individual rate contracting and tendering system. Having said that, our fundamentals continue to strengthen as we invest in awareness, education, evaluations, again, to upgrade and move the market away from a banana peel, potato peel, allograft, autograft dressings and, quite honestly, depth. The ability to change the mortality metric in India continues to drive the India team, but we'll first establish a sustainable model before we start scaling our efforts. I will talk about Japan and China towards the end. Now if you look at our BARDA revenue, it will start tapering off as what will be left is patient follow-up costs over this year. To recap, we are pleased with our performance in first half and continue to be on track for executing our strategy. We continue to go slow to go fast and scale, always being mindful of our surgeons, our people and their bandwidth. The one thing, which is paramount for all of us is that there is a very sick patient at the end of everything that we do, we do not want to do anything that compromises the patient outcome. I'll now pass the baton to Jan to shine more light on our investment in operating expenses as well as the state of balance sheet before returning for concluding remarks on our outlook versus strategic plan. Over to you, Jan.

Great. Thanks, Swami. Just move to the next slide, please. Great. Thanks, everyone, for joining the webcast today. It's a pleasure to present results for another successful half for PolyNovo. Starting with the top line, total revenue for the period was $59.9 million, up 22.8%. NovoSorb product sales were $54.1 million, up 28.2%, which is an increase of $11.9 million. Included in total revenue is BARDA revenue of $5.4 million, which is up 10.2%. We experienced continued strong growth in the U.S., achieving sales of $41.2 million, up 27.9%. And in local USD currency, sales are up 29.6%, which is a great result. In regards to the rest of the world, we recorded sales of $12.9 million, up 28.6%, with strong results in a number of markets and traction in new markets. Included in the rest of world result sales to distributors, and this is an important point. They can be lumpy. So for example, we received a $900,000 order alone from Germany in June last year and a $400,000 order from Ireland in June being the last month of financial year. So that can impact like-on-like comparison. Important takeaways from this slide really are the order growth up 58%, units sold up 62% and NovoSorb MTX sales of $2.1 million for the half. As of today, we've actually sold $3 million year-to-date of MTX, which is fantastic news. The continued strong order growth rate and the units sold growth rate is an indication of the expanding use of NovoSorb for different types of indications outside difficult burns. Following the successful launch of NovoSorb MTX in the U.S., we recorded sales of $2.1 million, as mentioned. And this just further indicates the wider use of NovoSorb products in trauma, plastics and reconstruction that NovoSorb MTX is not cannibalizing BTM. We expect sales of both BTM and MTX to grow significantly as we win more market share as we tend to in difficult terms and work towards becoming the standard of care in other indications as we've done so. We'll move on to the next slide, please. So in regards to P&L, I'm pleased to report continued profitability, recording a net profit after tax of $3.3 million versus the same time last year of $2.7 million. EBITDA was $7.9 million for the period. But after adjusting for significant items, namely unrealized ForEx gains of $4.6 million, the underlying EBITDA result was $2.6 million, marginally less than the prior period, which is fine. This period's result as well as in prior year's results is an indication of the continued long-term plan investing for sales growth, and this will remain a priority. Just moving on to the next slide, please. Now on to cash flow. We ended the period with $30.5 million cash on hand. The ending cash on hand is lower than expected, but this is due to slower U.S. customer payments in the second half, particularly between September and sort of November. This improved significantly in December, where we achieved positive cash flow from operations in that month, and we're seeing an increasing rate of collections from the U.S. customers since then. And in regards to capital expenditure of $5.1 million, we commenced construction of our new manufacturing facility and new innovation center for research and development activities in Port Melbourne, which is exciting to see the progress there. And finally, we remain really well resourced to continue to execute on our strategic plans. So thanks for that, and I'll hand back to Swami.

Thank you, Jan. If you move to the next chart, please. So all I would say is we continue to be in track in terms of redefining healing, getting clinicians to switch their algorithm for care in developed markets to ensure that we are able to do a better job than majority of the biologics, which are the leading market share skin substitutes today. And in terms of developing markets, we are literally providing an option to many of those developing markets of saving and resuscitating patients who had no hope in the past. If I were to just take you through the 4 big pillars, starting off from our core of difficult burns and our first patient was cured 10 years ago in Southern Adelaide, we have now started radiating outside of difficult burns to try and cover the entire plastic and reconstructive spectrum, surgery spectrum. In terms of geographic expansion, let me first start off by stating that U.S. will continue to be our primary focus because we still have a long runway of growth in U.S. While we have done a terrific job in what we call as difficult burns, we also need to do a lot more with plastic and reconstructive surgery. And after we do that, we still see a significant room for growth in trauma and in general surgery over the next 5 to 10 years in U.S. It will be a multiyear journey for us in U.S. In terms of our most important markets in Asia Pacific, I'll just quickly update you in terms of where we are with Japan and China. In Japan, we have signed up with a distributor who has done an outstanding job of providing one of the best market entry plans that PolyNovo ever has had the opportunity to lay its hands on. And we have had detailed discussions with this distributor. We have also had 1 round of conversation with PMDA so far, and we have 3 conversations lined up for PMDA over the course of this year. The CP-003 report will be available by June, which we intend to submit to the Japanese PMDA for their look. And then we would start conversations with MHLW, which is a reimbursement agency to ensure that we are able to get innovative product pricing and reimbursement for us in Japan. In terms of China, we have again done market entry plan. We are evaluating various options, and we will be starting the registration process soon; again, following the Japanese example of using the CP-003 data to see if we could have fast track access in China. In terms of new indications, we are looking at reimbursement capability in U.S. to ensure that we are able to tap into the innovative new device category as well as to work with different insurers for burns so that we can come down the difficult burns mountain into some of the other burns. We are investing in U.S. for trauma as well as limb salvage. There is a lot of work that we are doing in terms of clinical evidence, case series as well as health economic outcomes for these categories. We are investing in U.K. for oncological exigents as we spoke about -- as I spoke about at the beginning of the presentation. And we are investing in vascular area in Australia and New Zealand. And we'll find a way to see how we could use all of this evidence across the world as we keep expanding and moving our acceptance and adoption into other areas beyond difficult burns. In terms of new products, we have filed already for MTX thick. We expect an answer from FDA in Q4 of fiscal 2024. We are also going to file for MTX fill, which is the particulate form of MTX by Q2 of fiscal 2026. And we are very pleased with the progress of NovoSorb SynTrel and SynTrix in the initial preclinical models and the benchtop testing models versus our standard of care. And we have now started the preclinical programs for both these meshes. We expect to file for NovoSorb SynTrel, the hernia mesh by quarter 3 full year 2026, and we expect to file for the plastic and reconstructive surgery mesh by quarter 4 2026. In terms of capacity expansion, we are thankful to the support provided by Victorian government, and we are already putting together the plans for innovation center at PolyNovo headquarter. This would help us free up capacity because we used to be constrained by manufacturing and R&D using the same facilities to try and bring up the pipeline. We hope to accelerate our pipeline development efforts going forward. Now simultaneously, our third manufacturing site in Port Melbourne will be up by December 2025. So we are pretty comfortable from a capacity perspective. Now to recap, we are pleased with our performance in the first half, and we are on track as far as executing our strategy is concerned. We continue to go slow to go fast, and scale, always being mindful of our people, our surgeons and making sure that we are building and nurturing the right fundamentals to keep driving growth and global impact. If you move to the last chart, Kelly. So I'll just end by reinforcing that we are already becoming a new standard of care. Clinicians have to adjust their algorithm of care on the basis of where they are, whether they are in developed market or developing market. And that's the fundamental journey that we are supporting clinicians with, with some surgeons who are extremely good at maneuvering NovoSorb BTM as well as MTX, and they are helping us spread our story across the world. We had talked about the fact that we are a platform technology. We are good with craftable products. You have seen what BTM could do, and we are at the beginning of our journey with MTX. We believe MTX will overtake BTM in the next 3 to 5 years' time. And we should be able to launch our implantable products for hernia and plastic and reconstructive surgery by fiscal 2026, provided we get all the right support from FDA. Lastly, we continue to be capital efficient in growth and scaling. For a company which is only 7.5 years old in terms of where we are in our journey, we believe in being responsible in our growth while being capital efficient. And what do I mean by responsible growth? We want to make sure that we've got the right sustainable model working together with our surgeons, making sure that we are able to educate them or use them to educate the entire community, making sure that we have the right reimbursement programs, which work, and then we will start scaling. We have a platform technology. We'll continue to be responsible in our growth and scaling. So I'll just end by saying that NovoSorb, PolyNovo, BTM, MTX, these are -- this is a multiyear growth story in the making. But we'll continue to be responsible in growth. We'll prioritize growth, but we'll do it responsibly. With that, I would like to hand over to David for his editorial comments before we move on to Jan for questions.

Thank you, Swami, and thank you, Jan. I don't want to say too much, but I get the impression as I move around not only institutional investors, but a lot of the smaller high net worth investors that people are getting the stitch listening to us talk about the number of patients we've had, number of hospitals we're supplying, the number of doctors that we're using, the number of pieces we're selling in MTX and BTM. But I just want to remind people that this is -- the numbers are extraordinary, number one, but this is our base. And this is the base we're going to grow off. And at the moment, I think what I wanted to talk about was the elephant in the room, which is this 28% growth that we've got in the first half. And there's a fair bit in social media and around the institutions about how that growth rate is disappointing because it's somehow not dissimilar to a lot of the competitors or -- well, people think are our competitors anyway in the market like Aroa, AVITA, Integra and TELA Bio and so forth. And that's probably true, give or take, 1% or 2%. And I think what we see though is the base we've built. And so how are we going to get that 28% up? How are we going to sustain the 28%, but how are we going to get it up? It's pretty easy. We're going to continue to take market share. And as Swami just said, in some markets, we've gone from nothing 5 years ago to #1 in the market. And in many markets where we're #2, that's #1 is coming down the track pretty quickly. So there's still a fair bit of work to be done in all markets, especially outside of the U.S., but even in the U.S., we're #1 in deep burns and so forth. But we've got new indications that are coming on. We're going deeper into the markets that we're in. So burns is one thing, but then into trauma and plastics and so on and so forth. So we're seeing still good growth out of places like the EU. Swami mentioned 50%. And we're also seeing patchy growth. So the U.K., which started off very slowly, is now firing on all cylinders. It started off really not in burns, but now is quite excitingly getting into that market as well. I think the other area we're going to build on that base because a lot of this is sold by reference, and it's the new markets that we're going into. Swami talked about China and Japan. Of course, is India, but we're now supplying 46 countries. So there's a lot of countries that we haven't talked about. We're talking about the big gorillas, but some of those smaller companies that are not on the radar of most Australians, such as Turkey, for example, might turn out -- and Italy, look like they might turn out to be quite good markets for us. So there's a lot of growth to be had in spreading that geographical base, but also just replicating what we've done in other geographies as well. It's surprising to me when I go around the world, how many surgeons are sitting in countries that have been working in hospitals in the U.S. or in hospitals, for example, in Australia. I was in Manila recently and ran into a couple of surgeons that have been working at the [ Austin ] for a couple of years using our product. So it's not -- we're not only selling by reference, but people are going home and wanting to use our product as well. So -- and finally, of course, we're going to build on that by new products as well. And Swami has talked about MTX. That's going very well in the U.S. But I've also had personally known a number of plastic surgeons in Melbourne and Australia where this is going to take on a new life as well, plus, of course, the normal things that we're talking about such as hernia and breast and so forth. So I find myself in an extraordinary position of trying to explain only a 28% growth rate, where in any other country, in any other company, you'll be pretty happy with that. And some of our biggest biotech companies like the Cochlear and CSLs and so on and so forth, double-digit growth of 10% is pretty good. So we shouldn't be embarrassed by 28%, but I also want people to understand that we truly -- we have truly built a base, not just a platform that Swami talks about. That's a different thing altogether, but we've built this huge base of hospitals, patients, surgeons, research, et cetera. And that base will be used to talk about the platform that Swami was talking about in terms of the platform technology that we're going to continue to build on. So it's all good news as far as I'm concerned, but we're also cognizant of the fact that the market is looking for more than 28%. So you can be sure that we're not resting on our laurels. And you can also be sure that we recognize that we're going to take these opportunities as quickly as we can. So just some editorial comments. I think the other thing that's still -- I mentioned it last time, but we are still seeing quite a bit of humanitarian demand for this product, a new patient in Serbia in the last couple of days, 14 years old, 95% burns with body in a train-surfing accident. Same as a kid we had over there a few months ago, 16 years old, 95% burns with body. We're seeing that sort of demand coming out of a number of jurisdictions. And it's no different than our commercial business in the sense that surgeons know about it, surgeons want it. And we've got to get a head around as a company, of course, what we want to supply from a humanitarian basis, but not so much whether we want to be generous or not generous, but there's all sorts of regulatory hurdles and other things that go with that. So we just need to play that quite carefully. At risk of just rabbiting on here, so what I think I might do is just open it up for questions and ask Jan to field them and aggregate them to the extent that they're duplicated.

No worries. Thanks, David. We're actually going to start off with questions from analysts that have dialed in. So Kelly, if you could pass them through and then we'll jump to the webcast questions.

[Operator Instructions] Your first phone question comes from Silvia Luo with JPMorgan.

I'd like to talk a little bit about the MTX sales. Could we walk through in detail what supported the sales momentum? And is it more led by patient/clinical demand or the clinical education programs, which you spoke of earlier? I'll start with that.

I'll just start off by saying that we have been able to connect the need of MTX as a volume fill solution. And then we worked with a spectrum of entire clinical surgeons as to where would we be the most differentiated. Now I'll hand over to Jan to give you the details of where we are with MTX in terms of number of hospitals that it's been accepted and how the trend is looking forward. But as I said, I believe that this would be our #1 platform in 3 years if we do a really outstanding job; and in 5 years, if we take more time or we are not able to secure registration as quickly across the world. So Jan.

Yes, sure, Swami. So with MTX sales, we launched in the U.S. in Q4 of last year, and since then, we've been selling into just over 107 hospitals. Most of the repeat orders, the ones that have just ordered will no doubt order again. And the top 11 customers have purchased over $100,000 worth already since they started using the product.

And then could I also talk about, in the opening remarks, Swami and David mentioned that you were taking share from some established incumbents. Were you able to detail who you're taking share from and what have been the drivers?

Yes, if I look at the developed markets, we are taking share away from biologics, and we are changing the treatment algorithm in the heads of plastic and reconstructive surgeons as well as burns surgeons in terms of how they were used to treating with biologics versus how simple and reliable a solution we are as a synthetic product. So that's largely share gain in very big mature markets like U.S. But if I were to think about Europe, which is, again, a mature market, but the biologics have not penetrated as much in Europe as they have in U.S. And this is where we are almost developing the market, so we are growing the market of skin substitutes because if we just rely on where we are with the current market, we will not be able to grow. So our entire European team is actually building out the, what I call as the, complete plastic and reconstructive surgery spectrum. But going beyond that to vascular surgeons, to trauma surgeons to share the story of BTM and getting some of the plastic and reconstructive surgeons to share the story of how to use BTM in a responsible way so that by the time a patient comes to them from a trauma, they don't need to open up and redo stuff. They are able to do things by themselves. So that's where we call is a market development story. Markets like Turkey and India will be complete -- will be a market development story of a completely different scale because we are trying to move the entire market up from dressings. And as I mentioned, depth to try and see if we could rescue many of those deep third-degree burn patients as well as trauma patients and give them a shot at life versus being scarred for their life. So those are the 3 different ends of the spectrum. The entire market is primarily sitting in U.S., almost 85% of the skin substitute market sits in U.S. So the market is growing at about mid-single digits, 5% or so. And we are growing against that market. And in many cases, we are expanding the market outside of U.S. I hope that answers your question.

Your next question comes from Lyanne Harrison with Bank of America. Pardon me. Your next question is from Shane Storey with Wilsons Advisory.

I'd like to go back to MTX, please, but just more from a clinical perspective. You made the comment that it wasn't cannibalizing NovoSorb in those indications beyond burn. So I guess my question is probably for Swami, if you could maybe give us a little bit more descriptive detail on the particular indications where you found that MTX is winning share, say, against the biologics, but just say, on an indication basis, just specifically where it's finding a good audience, please?

Yes. So if I were to redefine the jobs, which BTM and MTX do, BTM essentially provides a coverage or temporizing solution to wounds. If a patient has to be in the hospital or if the wound has to granulate over a period of time as the patient is recovering. But if the patient is otherwise healthy and if there is a traumatic injury, MTX is a terrific volume fill solution. So that's why we think that MTX would be terrific for volume fill roles. And surgeons use a Mepitel dressing or any other dressing on top of MTX, they use negative pressure or they just leave it open if the wound is small enough. So there are multiple algorithms that clinicians come up with when it comes to MTX. But if it is a difficult burn, then BTM is still the product of choice. For large TBSA burns in multiple parts of the wound, BTM is still the best possible solution, but traumatic wounds, limb salvage, oncological exigence, if they are very small in nature, MTX could do the role as effectively without needing BTM. Does that help, Shane?

Yes. No, it does. It does very much so. And I guess my follow-on to that, you mentioned, I think, in '26, you might have a particulate form there. And when you develop that should we be thinking that would be like a fully implantable sort of device?

It's essentially the same matrix structure, but it's in a flowable form. And if you look at MicroMatrix and some of the particulate categories, that's a fast-growing segment in U.S., primarily for tunneling and undermining wounds. And today, we do not have the tunneling and undermining indication for MTX. We hope to get that additional indication for MTX soon. And when we have the flowable, I think we should be able to offer flowable at a very competitive price, but it should be able to do the same job far better than some of the particulate powders that we see in the market.

Right. My final question is just for Jan. Sorry, David.

No, I was just going to add to that. I might share this photo later, but I had recently had an operation on my nose, quite large, 25 stitches and the operation was a flap. So what the surgeon does is to essentially cut out the skin that he would like to fall back. He fall backs the skin, cuts out, let's say, the nose cancer or whatever it is you want, and then he puts the skin back over the top and stitches it up. So that's what I had 25 stitches. But -- so I sat in with these plastic surgeons in this practice and they said, well, we need something like an MTX. We don't want the plastic. We want the MTX to bulk up the hole. If I just put the flap back on, we've got a sort of small indent where the flash was or the cancer was or whatever it is. So that leads to a discussion about what you need to bulk up these sorts of various plastic surgeries. Now what that leads into then is a discussion about how much do you need to bulk it up. And so one of the things Swami mentioned was that we're now going to come out with various thicknesses. And so plastic surgeons like this one are taking our 2-millimeter MTX and go, well, I don't need 2 mm, I need 6 mms. So they'll put it on top of each other. And so the range we've got coming out now is various thicknesses for those sort of plastic surgery operations. Anyway, just adding, Shane.

No, that's great. My final question is really for Jan. Just if you look at the U.S. mix over the half and wanted to -- if I was to try and aggregate the centimeter squared sort of volume into that market between burns and trauma very broadly, how would I split that out? And how would that have compared to a year ago?

Look, in terms of square centimeters, I can tell you exactly, but in terms of devices sold in the market and what we're filling there with the larger units, about 60% -- 60% to 70% would be for full body thickness major burns. And then we still -- and then the rest would be trauma and plastics and so forth. But with MTX coming in, that's going to sort of expand that market where surgeons that may have had a wound like David just talked about, they would want to just stitch it up and moved you on. But if it's cosmetic and on your face and you've got an option to use MTX and get a bit of clinical outcome, there's a sale there that you otherwise would not have had. So that's going to really sort of add to what we're doing and sort of develop the market a little bit further. But the shift -- the shifting over time and in the long run, the burns will be the icing on the cake. The volume and everything else will be the angiogram of the business will be trauma and plastics and so forth on smaller units.

Broadly, Shane, we are kind of reducing the dependence on burns over a period of time. But as India starts firing up again, things will go a little bit topsy-turvy. So we will continue to be lumpy in our growth journey. Now let me go back to MTX and just complete the last one. Clinicians are now coming back to us, especially the hand surgeons for traumatic degloving or with very young patients, they're actually telling us that they don't even need split-thickness skin graft. It's just with MTX. If it's -- if the wound is small enough, it really vascularizes quite well and comes up with an impact, which is as good as the -- or I should qualify this, but which is really good. You don't need to do a split thickness skin graft on top. If you were to think about the flat surgery that David spoke about, you don't need to do de-bulking and a whole lot of other things. Now what we want to do is we want to invest in education because a surgeon needs to have all tools in his toolkit. So we are not against anything, but we are just trying to help them identify what is the solution, which is best for what patient? And how would you go through a treatment and decision-making algorithm so that you're able to have the right capacity in a hospital to treat all the patients that you have to treat, and you're not constrained by not having a trained microsurgeon in your hospital.

Your next question comes from David Nayagam with E&P.

Just a couple of questions from me. First of all, I'm curious, given all the chatter that's been going around lately about the tariffs that the Trump administration have been talking about and given the potential to move this into medical devices that's been flagged. Is that something that you've thought about? And could you just give us any consideration on that given your manufacturing here in Port Melbourne?

Just a quick top line, David. We already have close to 12 months plus inventory in U.S. So in the near term, this fiscal year and maybe a significant part of next fiscal, we will not be impacted by the tariff no matter what the tariff is. Now simultaneously, BARDA is also talking to us as a part of Project BioShield that we had signed up for, they are willing to fund an investment of manufacturing in the U.S. We are at a very early stage of that conversation, and we don't need that capacity right now. But that's a possibility that we would consider over a period of time.

That's great. Sorry, did you want to add anything?

I think, yes, a number of things. First of all, I had breakfast this morning with the recently retired Chief of Staff of the White House, and he has a view. He's very close to Trump. He has a view that Australia, generally speaking, won't be hit by these tariffs, and that is because we're running at trade surplus, and we've got a low dollar. And we haven't got that much that he's really interested in. He thinks if there is any tariffs, it's more likely going to be on things that affect China. So I think aluminum and steel, but the problem he has there is that one of the biggest users of our steel is the American defense companies. And so he doesn't think we're going to have much of a problem there. Having said all of that, you've got the new guy running the FDA, which is Kennedy. And by anybody's standards, he's very unpredictable. So anything could happen in other words. But I'm reasonably relaxed about it, to be honest. And I mean, the other thing is worse comes to worse, which I don't think it will, but there's a fair bit of distance between us and some of our competitors in terms of pricing anyway. So I'm not losing any sleep over it.

Okay. David, I appreciate that. Just another question while I got the chance. On the upside, we're also hearing a lot about these proposed CMS LCD changes. And I know that's been pushed back again, but there's a potential there to weed out some of the smaller competitors on the skin substitute side, not the more outpatient side. But is that something that also you'd like to reflect on at all?

Yes. In the near term, David, we are not looking at the outpatient from a CMS and LCD perspective. But as we start looking at reimbursement, we are looking at multiple options in which we could secure some of the outpatient reimbursement through NTAP or through CMS, through LCD, through the [indiscernible]. So we are working through all of that. But our first priority would be to get the right reimbursement for third-degree burns upon approval of PMA and then look at all the other options and all the other channels, which are available. So in the near term, that would not impact, but we are looking at reimbursement as a serious capability that we don't have in our business today.

And then just finally, just could you just give us a bit more detail on what a clinical development plan might look like for SynTrel and SynTrix given you're progressing through preclinical studies now? Like have you had any thoughts yet about what a registrational study might look like?

So we are already preparing for the registration study. That's the reason why we are able to give you a time line of when do we think we would be able to file. We are pretty happy with the early preclinical results. And given our history, we have been very slow and deliberate in terms of checking all the boxes before making a commitment. We have a degradation profile, which is pretty good compared to some of the key competitors, which are fastest-growing competitors in this space. And we believe the tissue quality will be good, but that is something, which needs to be observed over a period of time. And after 6 months, we should be able to file even as we keep the study going for another 12 months or 18 months as per the FDA rules. So we feel comfortable because some of the experts that we have with us are the people who had developed these leaders in the market, and they really believe in the degradation profile of NovoSorb polymer as well as the quality of the tissue, which seems to come up with NovoSorb. And secondly, to answer your question, as and when we launch post FDA approval, we will be investing in post-marketing studies and building up the database for 5, 6 years post launch in terms of recurrence because I think that would be a crucial evidence for many clinicians. And the more we start macerating in the market and over a period of time, that evidence should be able to drive the adoption.

Your next question comes from Andrew Paine with CLSA.

Just some of your peers have reported slower-than-expected hospital purchasing activity at the end of last year versus what was expected. Just be good to know if you were affected by this? And are you able to call out any market trends you're seeing at the start of the year?

I'll give a broad generalization, Andrew. We started seeing this trend with the hurricanes in September towards the mid- to end September, which went across Florida into Southern and Northern California. So -- and unfortunately, that hurricane also impacted Baxter's plant, which supported most of U.S. with the saline products. But that put pressure on the overall hospital economics. We bounced back much faster because we are primarily a trauma-based company. So our procedures get priority. Some of the more elective procedures were put on the back burner, but the hospitals went through a severe crunch, and that's where they really started pulling back on some of the payments and so on and so forth, which have just now started coming back on an even keel. So I would say we were not impacted as much as if we were a hernia company or more of an elective procedure company. When the hospitals were shut down and the ORs were shut down, we could not do anything, but we bounced back pretty quickly. And the next month, we could see the volumes almost go back to where they were.

Okay. So you're seeing normalized trends in purchasing at the end of the year and kind of start of this year?

That's right. That's right.

Yes. Great. And just also, it looks like you're able to deliver some savings in admin expenses, but the employee expenses increase as a percentage of revenue wasn't massive, but it picked up. Just would be good to get some insights as to what's driving this? And are there any launches that you're preparing for or focus of the ramp-up, which might require more sales members in these locations?

It's a mix of sales as well as educational efforts. So we are investing ahead of the curve in U.S., as we get into limb salvage and trauma and foot and ankle surgery and so on and so forth in trauma. So we're slightly ahead of the curve in terms of our investment for growth. Now similarly, in markets like Europe, we are investing into evidence and some extra sales focus as well as clinical support to try and drive that market adoption. And Jan can give a color about what that investment in growth looks like in terms of people as well as investment in evidence. And in fact, some of the investment in R&D won't even show up because of timing issues. But Jan would have the color on that.

Sure. I think with employee expenses, we have made some hires, some critical roles and making a really big impact that weren't in the books in the half last year. So that's our Chief Medical Officer, General Counsel, Head of APAC, Sales and Marketing, and Chief People Officer. So that's had an impact. But they're doing great things and really important roles to help propel this business forward, particularly as we expand globally. We've made other investments as well into the KOL network. That's really important. Marketing and trade shows, invested more there. You look at a country like the U.K., they held 60 events last year, a small team of about 7 people. So it just gives you an indication of the investment we make, and similar to the U.S. There's a huge amount of trade shows and events and KOL dinners and all sorts of things that we do that really are important because that peer-to-peer selling and education is crucial in a business like this and that's how it grows. So we'll continue investing in growth and put people on where they're needed, but we're also conscious of operational leverage and generating cash flows to pay our way. But investing for growth and equipping the business to handle the growth and be prepared for it. So that trip up remains a priority.

Yes, that's great color. And just -- so just to confirm, looking forward, are you looking at as a ratio of revenues and looking to keep that stable just in the near term as you invest for growth? Or do you think you can start to deliver leverage through that line?

I'll just kick off by saying that you would have heard David say in the past, our priority is to drive growth. Now if we are not able to scale that growth responsibly, then we will hold back. But our first priority is growth because we want PolyNovo to be a growth story. We don't want to hold back if we get the business model and the sustainability of that model right.

Your next question comes from Lyanne Harrison with Bank of America.

Can I come back to sales for a moment? And if we could focus on the United States, is there any bulk orders or stocking that you could call out that happened in '24 that might have led to, I guess, some of that sales slowing in first half '25? If you can focus on the U.S. as well.

Yes. So as far as U.S. is concerned, we normally do not have any big stocking orders, neither do we have any consignment orders. We might give some free samples to start off with, but we normally generally supply on demand. Where we go a little bit up and down is in many of the hospitals, if there is a new product, which gets introduced, surgeons would prefer to trial that product out for cases that they feel comfortable and safe with. But if it's a difficult case, then they would always revert back to NovoSoft BTM. So that's how they do decision-making. Because if I think about the U.S. hospitals and their profitability, they're running on very low and thin margins. And even surgeons are very conscious of how best they can leverage their entire cost. That's the reason why we are investing so much in building our health economic story that when they use BTM, it's not just the cost of device, which is pretty cost effective and critical for them, but the entire resource utilization because now the value analysis committee has started looking at the resources across the entire procedure versus each individual device that goes into a procedure. And we want to make sure that we are able to give the right resource utilization story to clinicians as well as the people who are going to make those decisions on VACs or resource utilization committees as well as the procurement people. I hope that answers your question. It's not up and down from a stocking perspective, but there would be trials happening in different places, and we do not stop those trials because we believe surgeons are doing what's right for the patients.

Okay. And it's the trials that may lead to more or less purchases by any given hospital in any given period of time. Is that what you're saying?

That's right. That's right. So 1 year ago or 1.5 years ago, Kerecis was trialing massively in many of the burn centers. Now that period has lapsed and BTM has come back and taken its rightful share. So there will be some other player, which would start trialing aggressively, but it would never take away the difficult burn patients from us, but our adoption, which is coming down that entire difficult burn mountain, as I say, that would slow down for some time.

Okay. So then if I think about then the existing hospital or customer base, so excluding any ones that might be trialing it or newly -- or new customers, how should we think about or can you give us some guidance as to what the existing customer like-for-like growth was in first half '25?

It would be very hard to tease out the data, Lyanne. But -- because we are now moving not just -- we are moving from a burn center to the trauma ward to the other places within the hospital, so it's very hard to pull that data by different stocking points within the same hospital. But I would say that our share in difficult burns is roughly the same. It keeps moving for high total body surface area or the way surgeons define difficult burns. And eventually, we'll keep coming down as we get the specific reimbursement codes.

Okay. Good. So then can I move on to MTX. You mentioned you're selling to 109 hospitals at the moment. Can you talk about what your plans are? Because I think BTM is in, what, over 500 hospitals or something like that. What are your plans in terms of rolling that out across your entire hospital customer base?

Yes, I'll get Jan to give you a color of where we are with MTX. But eventually, MTX will go much wider than BTM. That would be the short answer to that story. But Jan can give you specifics about where we are and how much more we need to go with MTX.

Sure. I think I mentioned earlier, Lyanne, that we're selling into 107 hospitals at the moment, and that started from Q4 last year in the U.S. And as the top 10 customers have ordered well over $100,000 of product, 1 hospital itself close to 250. They're all reordering as well. And obviously, the plan is to use the product in areas that BTM hasn't been necessarily used where you don't need the temporizing film and you want to treat the patient quickly, just as David talked about with his example earlier and sort of get them out of the hospital as quickly as needed. In terms of growth as well, I just want to mention the hospital growth for the half in the U.S., we added 125 customers. So we've got 597 accounts there at the moment, a sales team of 85. So they're doing great things, but the idea is to -- even though we want to go deep within hospitals, we're still adding them, but the idea is to do it as a multipronged approach, which explains increased investment in marketing and KOLs and so forth in the U.S. and pretty much every market to be honest. But yes, the idea is eventually, MTX will be the bread and butter of the business.

Okay. Fabulous. If I can move on to India. You did say that things are progressing a little bit slower than you had expected. Can you give us an indication of maybe how many tenders have you submitted for and your success rates to date and what else is in the pipeline with respect to those tenders?

So we have the reimbursement price for 3 channels in India. One is for the central government hospitals. Second is for the pharmacies, which exist in many of the public hospitals. And the third would be the bottom of the pyramid insurance scheme. Now these are prices, which have been fixed. But with each individual hospital, we have to get into a rate contract and a negotiation, which is a pretty arduous process because each hospital's contract probably has 5,000 items starting from a suture and a needle all the way up to a helicopter if it is needed for that. And every time that tender comes up, if there is any issue with any of the supplier or the vendor, he has a chance to pull the plug and then the entire process stops. So we are still working our way through the rate contract process. But once we get the sustainable business flow going because our awareness is pretty high, the excitement is pretty high. We are now trying to see if we can focus on the top 10 hospitals where burns is a priority so that we can get a sustainable business going. And then we will start scaling it up across the country. In India, health is a state subject. So we also have to apply for individual state contracts, and there are close to 60 tenders in the pipeline. But right now we are focused on moving our attention from vascular and diabetic foot ulcers, et cetera, which we did before we had the reimbursement to burns where we can get a sustainable revenue going, considering the patient pool, which goes to some of those focused hospitals. And then we will start expanding all over again.

Okay. And just can you comment quickly on private pay? Because previously, that was a source of strength in India. Has that continued into this half?

Yes. That business is steady, but we have now started shifting the focus on getting a sustainable burn theater flow and an operation going all the way from procuring the product to making sure that it reaches the burn theater to making sure that it is used appropriately because we do spend time educating the surgeons on excisions and making sure that these are really deep excisions because there's always a difference between first degree and the third degree burn, and how do you use BTM appropriately. We've had Marcus go to India twice so far. And between his 2 visits, he has just noticed how much of a change is there in terms of awareness as well as understanding of BTM. Now it's more a question of getting them to try the product, evaluate the product and get used to it. And we are focused only on places where we have the reimbursement.

Okay. Just one final question from me. The California wildfires, which we saw, I guess, in January of this year, was there any material ordering of BTM during that period?

No, Lyanne. Most of them were inhalation injuries and then people perished, which were very few. So it was not really a massive spike in burns as people would assume immediately.

Your next question comes from Scott Power with Morgans Financial.

Just a couple of really quick questions for me. Just in terms of the BARDA program, can I just double check that the full thickness burn submissions in and you expect approval by the end of this calendar year. Is that timing still correct?

We will be submitting the clinical evaluation report by June and then will be dependent on how FDA responds to that. So the current time line is, we have shut down the database. We have cleansed the data. We are ready to drop the data into the standard templates and go through that with our principal investigators. The report should be available by June. And then we will put it together with our rest of the technical documentation and dossiers and submit to FDA by July. And then we would be at the mercy of FDA in terms of their resources. And if they have anything happening in Australia at the same time, it could happen pretty quickly. But normally, it's a 180-day turnaround.

Okay. Great. And just in terms of the less funding coming through from BARDA. You've got $5.8 million, I think, in the first half. What can we expect into the second half, if you're able to just provide a little bit of guidance on that front?

Jan, do you want to take a shot at that?

Yes, sure. Look, it will taper off, Scott. So it's -- as we work through putting together submission and all the ancillary questions that will come. But the reality is the 120 patients have either enrolled or left hospital or close to. And the bulk of the revenue is for reimbursement for those sorts of activities for hospital stay. So it will taper off in the second half, and we'll have a clear idea of what that will look like as opposed to year out.

Okay. Great. And just finally for me, just the capital expenditure on the new facility. Can you just remind me what that's going to expand your capacity to in that third facility?

Sure. Scott, that adds another $500 million in annual sales in terms of capacity to the existing $180 million we've got from our 2 facilities. We'll never run it at full capacity, but you probably get to 80% before you want to make sure you had something else lined up. But that gives us enormous capacity to fund -- sorry, to fuel the growth and meet the growth.

Yes. And as you said, timing end of this year, that's all on track?

Yes, it will be ready for validation at the end of this year, and there's a process that we go through to tick all the boxes, if you like, and for it to be completely operational. But it's on track at the moment. The steel structure is up, surprisingly, I can't hear anything today, but it's going well. The project is well on track.

Your next question comes from John Hester with Bell Potter.

Probably just a question for Jan. Jan, can you explain to us that discrepancy between the sales growth of 28% and the orders up 58%, unit growth 62%. Is it that's due to smaller order sizes or pricing adjustments or pretty straightforward, but if you can just add any due color.

Yes, sure. Look, it's really driven from exactly that, but from a more established markets like the U.S., Germany and Australian regions, U.K. to some extent, even though they started off not in burn, but they're now getting into burn and Australia. So where we're -- I guess we're in all the burn centers, even Turkey, we're in all 17 burn centers now in Turkey, that's why Turkey is doing so well. But as we sort of begin to overtake Integra, particularly in the U.S. market in square centimeters sold, there's more market share to take in burns, but it's that bell curve effect where we're sort of getting at the top, there's more to -- more to get, and we will get it. But as that's happening, we have been expanding out into other indications, and that's why MTX is important. The smaller sizes are used for -- again, I'll refer to the case David talked about earlier with his own procedure, and that's where the volume will come. And in the long run, the revenue we get now from burns, which is 67% of our revenue, that will just be the icing on the cake and it's exactly how Integra's business grew and where they're at today. So we're on that path and all the signs are really good. There's some really great leading indicators that that's occurring and occurring to plan.

I'm glad you brought up Integra. So what is the latest from those guys? Are they sort of showing any signs of getting back to market sooner than we had anticipated in calendar '26?

So John, Integra skin substitute is already back in the market. PriMatrix and SurgiMend will be in the market by 2026. That's the current status. They should be presenting their results by middle of this week. So all of us will get to hear more about how they have done. But if I look at the geography of the results, it's the new portfolio of ACell, which seems to be doing well, whereas the old portfolio of Integra and PriMatrix and SurgiMend, those should be declining because of the supply challenges or the fact that, that share is being taken away by other players.

We will now pass over to Jan for online questions.

Great. Thank you, Kelly. Quite a few. There's been a lot of questions on India and so forth, and I'll close them out because they have technically been answered, but we'll run through from the top. Just a question on IP. How long are your products protected by IP registration?

I'll take that question. I mean we are protected by IP, and we have a series of IPs, which run all the way up to 2037. But our strength lies in the fact that in trade secrets and how we put together the polymer and how we put together the matrix as well as the glue as well as the film. The other moat that we have, which I call as a competitive moat, is the clinical evidence that we have built behind NovoSorb BTM. That will be a very hard moat for any other player to get over. And lastly, I would say how PolyNovo comes across and engages with clinicians and truly works with clinicians to drive the best possible patient outcome for their patients. We do not push sales. We push for outcomes. We push for learning from them. And we are in this journey together because we need the clinicians to come in and help us and tell us where exactly this technology can go. And that's a relationship, which, again, I think is one of the strengths of PolyNovo. So yes, we have IP, which will take us all the way up to 2037, but there are other competitive moats that we are building around our business, which will be equally strong.

Great. Thanks, Swami. There's a question on BARDA now. What is the impact of the BARDA trial? And what will the long-term impact be on PMA -- sorry, PMA registration, what's the impact of that?

The BARDA trial is one of the most complex trials that anyone could undertake, trying to manage and find out what is the best possible outcome in a full thickness burn patient with a standard of care, which ranges from allograft to biologics. It was a very hard trial to execute. And I don't think many companies would be able to invest $35 million or $50 million to try and get that trial going the way we have been able to execute that. This trial, when we start sharing the results, I think it will also give us tremendous purchase, not just with the burn surgeons, but also with the plastic and reconstructive surgeons because the plastic and reconstructive surgeons do use a lot of skin substitutes, but their usage has been colored by biologics, and they don't tend to use it as much because it's not necessarily absolutely vital to a procedure as they engage with trauma surgeons or with general surgeons. But with BTM being very simple, reliable solution, our name and fame is going way beyond the burn surgeons to the other plastic and reconstructive surgeons. And beyond that, we also see it going on to general surgeons who have to deal with a lot of these situations in some of the regional centers. And that's the reason why I say that strong Level 1 evidence will actually help us not just with registration in Japan and China, but that is a study, which will go across the world and drive the equity and reputation for NovoSorb BTM and all the NovoSorb family of products with multiple clinician communities.

Thanks, Swami. A question on AVITA and their product Cohealyx. AVITA is now directly competing with PolyNovo with its launch of Cohealyx, which will be priced lower than PolyNovo. How does PolyNovo intend to respond to AVITA changing from a collaborator to a competitor?

I think the more players come in, the better it would be. But if I were to look at Cohealyx, it's a biologic. And the work that we have done with some of the centers, it is another biologic, which will get used similar to multiple biologics, which are available in the market today. What we offer is a very different algorithm of care, different algorithm of resources to be utilized. And we will focus on what we do the best, and we rely on the surgeon to finally decide what is in the best interest of the patient. So our job is to make sure that the surgeons are very clear about the trade-offs that they can make with BTM and not just the clinical trade-offs and the patient outcome trade-offs, but also the health economic trade-offs. So we'll keep investing in helping clinicians understand how to work with NovoSorb BTM, but there would be multiple players coming in into this space, and we just have to be ready to accept that reality.

Thanks, Swami. Next question, is NovoSorb still capturing U.S. market share, growth rates appear to be pulling back. We talked about this a lot today, but it might be worth reinforcing.

Yes. If I were to look at the U.S. market, I would say that it's probably growing at 4% to 5% and Integra's results would confirm that result for all of us. Now versus that, we are growing at about 30% in U.S. in local currency, if I were correct, Jan. So we continue to grow many times what the current market is, which would indicate that we are taking shares across multiple clinical specialties, but it's a massive market. So if I were to look at just Integra's revenue, which would be about $420-odd million across multiple brands, and if I were to look at ALLODERM's revenue, which would be another $500 million in a very different space. U.S. alone is close to $1 billion of market in acute complex care. We are still a tiny part of that sliver. We really have a long runway for growth, and we will get there in a structured fashion.

Thanks, Swami. A couple of questions about the new facilities we're building. How do you expect the new innovation center, the R&D center to impact growth and revenue?

One of the areas -- I mean, one of the constraints that we had was we had 2 units, which were competing for capacity and driving -- supplying the demand. At the same time, we had to take trials using the same capacity. So there was always a constraint on what we could do at one point of time. Now with a separate innovation center and with all the support that Victorian government has given in terms of new instrumentation and we believe we could be unconstrained from opening up the portfolio and driving new products much faster than what we were able to do over the past couple of years.

Great, thanks. Question on new markets. In addition to India, other markets in subcontinent in Africa, the markets we would be interested in?

So for the moment, our entire focus is on PMA readiness to ensure that we are able to receive FDA in our Melbourne campus and get done with the PMA inspection, pre-PMA inspection with FDA. So that's the core focus area for us right now. So if some surgeons want to drive us into different markets, we'll find a way to see if we could support that. But right now that's a core priority for the business. And then we will start seeing how we could get into expansion into other areas. But right -- the key focus from a geography perspective would be Japan and China, which we have already started, and then we'll start looking at some of the other markets. There are many markets that we have put into the registration plan like Brazil, et cetera, which will take a couple of years, which is the normal lead time, including Europe for the EU MDR for MTX. So that will take time. And we'll continue to supply products as and when we get the registration in those markets.

Thanks, Swami. A couple of questions here now on India and Spain. PolyNovo is #2 in the market, who is #1? And how far behind is PolyNovo in terms of penetration?

In Spain, MatriDerm is the market leader, and we are very close #2. So we should be able to overtake MatriDerm and be the leader in Spain soon. Integra is #3, and it's going down very quickly.

Okay. A question now about U.S. headcount. What is the headcount required to maximize sales in the U.S.? Or does this require a much larger partner?

It depends on the channel. So as of now based on where we are going, we are investing a bit ahead of the curve to make sure that we are ready along with the evidence. But if we were to look at certain other areas like hernia or breast reconstruction or aesthetics, which are a bit more longer term in nature, we might need to reinvest in a pretty significant way or look at partners who already have many of those contracts tied down and where we could be of some value to them as a portfolio add. So we have not yet tied up that particular [ bow, ] but we are constantly looking at what would be the best ways in which we could launch these products. We believe BTM and MTX is within our wheelhouse. But when it comes to SynTrel and SynTrix, we might have to open up and see if there could be a faster and a quicker way of driving adoption.

A related question on hernia. Thoughts on TELA Bio as a competitor in hernia repair?

TELA Bio is a pretty strong competitor in hernia repair. And if I look at the entire hernia repair category, it's BD with the Bard portfolio followed by Medtronic, followed by Gore, followed by TELA Bio. So it's a very strong competitor, and they are doing quite well.

What is the primary use for MTX fill?

Thanks. It would be primarily used for tunneling and undermining of wounds, essentially a volume fill job for a surgeon for all the crooked and uncertain areas and crevices, MTX fill would be a good option for them.

Thanks, Swami. Another question, I think it does help to ask. In what areas of the wound care market do synthetic struggle compared to biologics? For our new investors.

I'm not a clinician, but I think many clinicians are surprised to see how quickly synthetics are becoming a standard of care. So what I'm repeating might be a little bit biased because I'm hearing what I'm hearing from clinicians. But I see synthetics taking a bigger chunk of the overall market, which was once upon a time a prime property for biologics. And what I'm surprised by is how clinicians are coming up and telling us to innovate in areas all the way from allograft, which is considered as a gold standard in plastic surgery to skin substitutes and coming up with different thicknesses for different parts of the body to coming up with a particulate form, to also sharing with us that we could be a great tool in their toolkit for replacing flap surgeries where appropriate. And at times, depending upon the patient, we probably don't even need a split-thickness skin graft. We can just allow the product to do its job with some supporting material through secondary intention. And the skin which grows is far better than trying to close it with a skin graft. So clinicians are telling things which are helping us. And that's why I always call them as they're a part of our family, and they are helping us learn and they are helping us drive innovation into the market.

Thanks, Swami. Just a financial question now. I have an answer. Could you please elaborate on the unrealized ForEx gain and what this relates to? So we did have a $4.6 million unrealized gain in the period, predominantly due to movement of the Aussie dollar and the U.S. dollar. We sell our product that we manufacture here to our subsidiaries, and we sell a lot of product to our American subsidiaries in U.S. dollars. So it creates a U.S. loan account in U.S. dollars, and that's just an impact on translation at the end of the period. So it can swing back the other way with movement in the dollar. Hope that answer your question. Just moving on. In terms of sales growth, so there's a question here. It says, I note some of the growth has actually been generated by FX gains from a lower Aussie dollar. And that's true, it's about $2.7 million for the half. It's contributed to the AUD sales figure. Can you please advise the market of the sales growth rate, which PNV believes it can comfortably achieve moving forward?

I can take that question. I personally believe that 25% compounded annual growth rate, up and down here and there, is something that we can keep expecting from PolyNovo. Now if there are any disruptive moves, which are available, then that would change the dynamic. But that's the reason why I call PolyNovo is a multiyear growth story. And of the $1 billion that I see in the acute complex area, we are still at the beginning. We're just about starting our journey. And for a 7.5-year-old company, I think we have come a long way, but there is a lot that we need to do.

Great. Thanks, Swami. There's a few more to go, which I think are worth asking. So this one here, when is your plan to increase prices since you're already much cheaper than competitors? What is your plan?

Again, I'll answer that question. We want to focus on driving adoption, and we will take reasonable responsible price increases. So in markets like India, there is a 10% price, which is available every year, so that is something that we will take. But driving adoption will be the key criteria for us because as far as cost of goods sold is concerned, our manufacturing team is doing a phenomenal job of raising our yields and finding different ways to distribute our product. And manufacturing and R&D together are coming up with ways in which we don't even need to use cold storage, et cetera, et cetera. So there are ways in which we are making our total offering much more economical for our customers. The key question for us is how do we drive adoption across multiple specialties, multiple indications and become a complete standard of care. And that I call as a generational opportunity in front of PolyNovo. So I would take price wherever reasonable and sensible, but I would not rely on price as a primary lever. It would be growth and adoption.

Thanks, Swami. Another related question is the mix between growth and volume and what's contributed the most to revenue? So I've got that information, Andy. So 4% of the incremental revenue is attributable to price for the period. 88% is attributable to the volume mix and 8% new products for the half. So that answers that question. Just moving on. There's a question around the facility. Do we have plans to set up a manufacturing facility in the U.S. at any time in the future?

I think that's an option which is open to us from BARDA, and they have indicated an openness to support us should we think of setting up a manufacturing facility in the U.S. We will take that option seriously. But as of now it's just an option that is open to us. And U.S. will continue to be one of our largest markets over the next decade. So we will look at making our supply chain more resilient, but we have not firmed up our thoughts as yet.

Great. A question here just on the operating cash flow being negative for the half and the improvements to date that have been made, if we can elaborate? I can answer that one. So there was a negative outflow for the period due to a number of reasons. We had in the U.S., the U.S. hurricanes that did impact some of our regions and with customers being able to pay with what they went through. We also added close to 125 customers for the half. So there's been quite an increase or uptick and that's not necessarily contributed. But I guess, the size of our customer base and the data collection process in place need a little bit more effort, and that's what we've also done and invested in that. So we did have a positive cash flow from operations in December. The start of every quarter is generally negative because we have past payments, various quarter commitments and true-ups that we pay. But we're working very hard to turn that around for the full financial year and really good indications to date this quarter. So I'm relaxed about it.

Jan, I just want to be sensitive to everyone's time. We are almost on the top of the hour. And we would be around to answer many questions that would be there for various investors. So I'd just like to close off. Before I hand over to David, I just want to reemphasize that PolyNovo and NovoSorb are a multiyear growth story, but we will always be a responsible growth story. And as Jan said, we will be treating your capital as well as our people and our surgeons' time as precious assets. And these assets are something that we want to sweat for a long period of time. It will always be a responsible growth story. So I'm not too worried about growth for PolyNovo going forward. As long as we stay focused on where can we truly impact versus trying to chase everything under the sun. And that is something that we'll always be focused on. Now with that, I just want to thank all of you for participating in our call, and I want to turn over to Chair, Williams, for his final words.

I've got not much to say. There was nothing important we missed. Was it Jan? Nothing out of...

No, I think we're okay. There's 2 or 3 questions left, and I can answer them separately via e-mail, but that's fine.

Okay. I've got nothing else to add. Thank you, everybody, for coming. We're an open book, if you want to send questions through, and look forward to seeing you at the end of the year.

Thank you, all.

Thank you.