PolyNovo Limited (PNV) Earnings Call Transcript & Summary

Well, good morning, everybody, and welcome to the PolyNovo webinar. The genesis of this was really our 9-month results and end of March results that we gave to the market. And at that time, we, as a Board, thought we need to just step up the comms a bit, the communications a bit, and I think we announced at the same time that we do a webinar to explain the results in sometime soon. Well, this is sometime soon. But since we did that, there's been a number of updates. There was a presentation made in Macquarie Bank last week, and that was put up onto the ASX and one to Bell Potter. I don't think that went up on the ASX, but it was pretty much the same, as it went up to Mac Bank and in our 9 months' results. So thinking about this from a shareholders' perspective, what we want to bring you more regularly, I think, is just an update on things that we think are key to the business, but things that we also see on social media that we know you think are key to the business, whether they're right or not. So I don't propose to use this to go through the results that are already on the screen from Mac Bank or our 9-month results. And Jan, who's on a screen, the CFO, has updated this morning a couple of slides that we chose not to use today, but we'll just take it as being read, but they replicate pretty much what was done last week, in any case. And they show what the 9 months' results showed, which we're still traveling along, powering along. The U.S. was up for the March, 90%, but year-to-date was up 30%-plus. The world -- the group was up 70% in March, March-on-March, and up again, over 30% for the rest of the year. So I'm always a bit amused by people who think it's so urgent to know how April is tracking because, if you look at the graphs, for example, that are in the release that we made this morning and the previous 2 releases, where we're sort of just reporting our monthly growth in the last 4 years, we've gone from $4 million a month in '22 to $11.9 million in this year already. So the growth is one way. So don't -- just as an advice to people, don't think every month is going to somehow have some surprise that show some sort of great downturn. We're powering along, and we're taking new accounts, and we're getting new research done, and we're increasing sales everywhere. And so just put that in context. So don't think also about this as a comprehensive view of the company. We're going to pick out a half a dozen things that we think are interesting or that people haven't understood to better understand the business. And I'll just go through what they are. I think I don't really want to talk too much about the financials so far. But the thing that seems to still have people a little bit worried is our capital adequacy and our cash. And partly, that's our fault because we let our -- well, we didn't let, we had somebody else doing our debtors, we let those debtors blow out. They've all come back in now and will continue to come in. But I just -- I'm going to get Jan in a moment just to talk about our capital adequacy, our cash, and not only what our cash was at March, but what it's going to be at the end of June as best he knows it. I think also we can't get away from the fact that the U.S. is still our engine room. We don't think it necessarily needs to be the biggest market in the world as we go on, and I'll say more about that later, but we're going to talk a little bit about the U.S. Robyn and I will discuss that. We had hoped to have our Head of the U.S. on, but he's flying at the moment. So Robyn and I will carry that. I've got Raghu on the phone who runs India. Welcome, Raghu. And I'm going to talk a little bit about India because I think people are interested in things like how can people pay for it in India? Who's paying for it in India? How are we winning tenders? And what does that, all that, really mean? So again, not a comprehensive view of India, but I just want to give you the key messages. And then finally, I think the elephant in the room is the beta cell presentation that was given in Copenhagen a couple of days ago, and I'm going to have Professor Toby Coates on the line from Europe. And because I think just reading social media, people have this incorrect view about how long this is going to take to come to market, we don't know exactly, but it's a lot quicker than most people think. And I think the other thing that people are not seeing is that this is likely to be a platform technology that would be of interest to all cell owners or wanting a delivery mechanism. And I had a -- we'll come to that anyway because I had a discussion about that recently with Novo Nordisk who have got Ozempic. And it's really very interesting. It's the elephant in the room as far as I'm concerned. So why don't we get started? Let's start assuming you've read the couple of pages that are up this morning, read them at your leisure. But if you've looked at the last 2 releases, there's nothing much new there. Jan is our CFO. And I just want to talk about cash because there's a view that we need to raise cash. So can you just give us a part of history about where we are, where we are in March, where we'd likely to be in June, more explanation about how we got to where we are and how the cash is going to adjust and, in that context also, how much we still got to spend on the factory, which will be finished very shortly?

No worries, David. So I'll just start off by -- I just want to make sure as well my message is received loud and clear because cash is fine. So debt collection in the U.S., it's improved dramatically as well as cash flow from operations in the U.S. and for the group, as I said it would when I presented the results back in February. So the U.S. debtor days outstanding has fallen significantly and continues to do so, David, at a really fast rate. Cash flow from operations for the group is positive for the second half, and we're working really hard towards achieving a positive result for the full year, which is likely. Our forecast cash on hand at 30 June '25 is actually $28.5 million. And this is after spending $17.2 million on the facility so far this year. So when we get to June '25, the remaining CapEx is only $8.5 million, so we're in a good spot there. So we're well funded, and we've explained that before, but the U.S. debt is a significant improvement. Our cash on hand is lifted. So I did a calculation back in March, in the March release, of adjusted cash flow, and I just want to run through that again and what that looks like. So if we subtract the remaining committed CapEx of $8.5 million that will be paid in FY '26 as the facility is completed leading up to Christmas and then add back any overdue debtors as of 30 June '25, our adjusted cash on hand would be $25.9 million. So I reported the same calculation back in March, where the adjusted cash was $21.8 million. So it's going up. So I just want to make myself clear, we do not need to raise capital for working capital or for CapEx requirements. We're fine. And the business is profitable, growing. Cash flow from operations has turned around in the second half. And we're looking forward to sort of closing out the year with a strong May and June. Historically, May and June are very strong months. And we've had some great results in April as well. We had record sales of $880,000 for MTX in the U.S. in April and well done...

You're taking Robyn's thunder, by the way.

Yes, I figured why not? And a couple of hundred grand in sales, record sales in India as well. Sorry, Raghu, stealing your thunder there, too. But we're in a really good spot. We've got over 700 customers signed up now in the U.S., and we reported the growth, the sales performance growth in the March update and again, at the Macquarie conference, and look forward to closing out the year with strong growth, positive cash flow from operations and increasing profitability. So we feel we're on track.

So Jan, to people who had been reading our accounts, there's an issue that might have been us self-inflicted, which is that we had outsourced our invoicing. And the people doing the outsourcing hadn't kept up to date with addresses and invoices and such. And so we had a blowout in our debtors, which, I might be crude about this, but I think from my looking at it, it went from 56 days outstanding to 92 days. We've now brought that back inside, right, and you're working on getting that back down. And what do you think your debtor days are now roughly?

Down to 70 days now. So they did peak at around 92 days around sort of Christmas and January period, so worked really hard at reducing that. We want to get back down around 55 by 30 June, where it's been in the past. The issue is we use a 3PL in all our markets to distribute our stock, store it and also invoice customers and collect payment. We bought the data collection part in-house from our 3PL in the U.S. because we weren't satisfied at the time. And then we soon discovered as well that the master data they were updating wasn't up to date. So invoices are going off into the abyss. So we quickly fixed that through some temporary resources at it, and we've sort of collected a lot of that cash. So I'm relaxed about it, and it's heading in the right direction. So it's just a temporary blip. It's unfortunate. But we're on top of it now and it won't happen again, which is good.

So when I say it was partly self-inflicted, we let that get out. But now a lot of the cash is coming back in that you think we'll be there at the end of June. It's already in the can, and we had a record collections month.

That's right. Yes.

One other question for you, which I think people need to appreciate is, just tell us what the level of bad debts we've had this year or any year for that matter.

We never have, except we have provided for one very small bad debt in the current year, just a small hospital in the U.S. It's insignificantly material, to be honest. But over the 7 years I've been here, we've never had to write off a bad debt. The hospitals always pay.

Yes. So I just want shareholders to appreciate that because, when you're selling to Harvard or Mayo or UCLA, these people pay. They might be -- we might want them to pay in 30 days and they pay 60, so what? We're dealing with the blue chips, but they're going to pay. I should say, Jan, I'd be interested in your -- I haven't talked about this, but as we broaden our base in the U.S., in small plastic surgeries and podiatrists, and things like that, I'm imagining that we're going to have to be a lot more careful with our data collection and credit.

Absolutely. So it's just a matter of utilizing the ERP system for all its functionality and also making sure that the master data is always up to date and have the relevant resources to collect on cash. So we've had some learnings, and we'll apply that to the business as the business grows and the customer base grows.

Yes, yes. Okay. Just as an aside from what you're talking about, the $8 million that we -- well, between now and the end of June, we're probably going to spend another $3 million or $4 million on the new factory, and then there's still $8 million to be done in the second half of the calendar year. But that's all on track, is it, as far as you're concerned?

Absolutely. The building is on track. There's been really no variations either. They've been fantastic builders. And in terms of the milestone payments, it's all in line with what we originally agreed to. It's been quite a seamless process, to be quite honest.

Yes, yes. And so just to remind shareholders, not that I necessarily wanted to go here, but that factory is going to be -- give us capacity for another $500 million worth of turnover. We've still got the other 2 plants next door in a separate building, so risk-adjusted for us, I think. But in the context of a company that's turning over, let's say, $140 million, we've got capacity coming out of our yin yang. So I think that's another thing just to remind shareholders about. Okay, enough. I'm getting -- I'm going off in a number of tangents here. Jan, thank you for that. And I would like to introduce -- I don't think anybody has met you before, Raghu because we had Shastri on last time. But we've got Raghu, who runs India. And I'm going to talk to him a little bit about what's happening there. Raghu, it's a happy day because you had a good month. Well, you had a record month last month. So just for shareholders, what was that record month?

Sure. So thank you, Mr. Williams, and good morning to everyone. My name is Raghu Shenoy. And as Mr. Williams mentioned, I head the India business. Yes, we did have a record sales month in April, which we had been chasing for the last 2 years. We achieved sales of AUD 201,000 in April. And this was possible primarily due to 3 big government tender orders that we received for which we had been working for almost 1.5 years. So they finally came into the bag. And the second thing is the run rate that we are looking at now, sales have actually doubled in the second half between Jan to April vis-a-vis H1, the first half. And we expect that the growth will continue in the same manner in the months to come. So looking forward to those sales as well, yes.

So am I too crude if I said you're doing AUD 200,000 in April, we're roughly at a run rate of AUD 2 million for the year?

That's right. So that's the target, what we have, and we are working towards that, and it's all heading in the right direction.

That's fantastic. Raghu, we all know that India is a merger -- is a tender economy. And in the past, we've given our shareholders some light and color on how many tenders there are. Just tell us how many tenders you're heading for at the moment, how many tenders there are? Let's do this waterfall. How many tenders are in India? How many tenders are we going for? And how many have we won?

Sure. Yes. So when I look at the burns market, the burns patients are primarily treated in all the public hospitals. And most of the public hospitals procure anything that they want for surgery through tenders, which have a validity of either 1 year, 2 years or 3 years. But the only challenge is that they take a lot of time because it's politically driven and funding comes from the government. That's the reason they take a lot of time to finalize. So we are talking about almost close to 200 tenders in India across the entire health care landscape. For PolyNovo, when we started in April 2023, and it's exactly 2 years now, and in these 2 years, we have been working on 62 major tenders across the whole country, the whole of India. And this is a mix of local purchase, annual tender and then the current government has got something called as the government e-marketplace, or GEM, as we call it. And GEM is like something like an Amazon for procurement of medical devices. So we have some tenders on GEM as well. So a mix of all this. And out of the 62 tenders that we've been pursuing for the last 2 years, we have 25 in the bag already. And the balance we are pursuing very hot, in the next 2 months, we should get some more. That's the whole idea, yes. Out of 62, we have won 25.

Just for my benefit, how did you dissect the market from 200 down to 62? Have you just ruled off a line on the biggest 62? Or are they only government? What roughly is your thinking?

Yes. So the 62 are mainly on those burn centers, whichever have those tenders. So we are pursuing the ones where there are a lot of burn surgeries happening. We are not going to the other specialties as of now. So as and when we keep on expanding, we will possibly go to the other tenders as well. But right now, these are the ones that matter the most as far as burns are concerned. That's why we are pursuing them.

And do you have to wait for these tenders to come up? Do they just come up periodically as they roll over?

Yes. So we really have a long waiting period. First and foremost is the allocation of funds, which come from either the central government or the state government as far as the tenders are concerned. So that's the biggest challenge because it all depends on the government funding. And then the second one is the process itself is so laborious because they ask you for roughly 200 to 250 documents that you have to furnish for each tender. And it's not only those of BTM that they are procuring, they are procuring everything from gauze, bandages, to dressings, to needles, syringes, sutures, everything. So there are about 1,000 items on that tender. And they have to scrutinize the paperwork for all the vendors or all the companies that are going for that. So that process itself takes about 6 to 8 months for them to scrutinize the paperwork. And after that is when you finally get...

Yes, yes. Well, so it seems from here...

So the process takes roughly between 1 to 1.5 years. That's the challenge.

Sorry, Raghu, I was talking over you because your screen is frozen to me. But it sounds like it's slow for us looking at India from afar. But having got 25 tenders, given how you've just described, the tendering process and then the review process and when the tenders actually come up is the biggest problem. But it sounds like you've done a great job getting 25. And do you want to hazard a guess how many by the end of December this year? Either, this question was too difficult and Raghu is frozen. Raghu, have I lost you? Well, it appears like I might have lost him, I think.

No, I can hear you. Can you just repeat the question?

Yes. Okay. So I was just saying, do you want to hazard a guess, to give us a sense of the momentum in India, by how many tenders you might have won by the end of December?

Yes. By the end of December, I think it should be in the vicinity of about 100. That's what we are aiming for by December 2025.

But I thought you said you were only going for 62.

No, no. The whole process that we -- it's a dynamic thing. So we'll be continuously applying for more tenders as well. So 62 will move to 100.

Okay. All right. So tell me the hospitals, how many hospitals in there are we servicing at the moment, do you think?

Yes. So in the last 2 years, we have been reaching out to almost 1,020 hospitals overall across the whole country. And right now, we are selling to 328 hospitals out of those 1,020.

Yes. 328, so they're obviously, even at your run rate, pretty small purchases at the start.

Yes. So that's what I said that, depending on when the tenders materialize, the results are all depending on that. So right now, the ticket sizes are a little smaller. But as the big tenders come into the bag, that will automatically go up.

Yes, yes. So when you described the difficulties of government, that seems to me to be a double-edged sword because I would have thought, if the government is paying, whether it's state or federal government, that that's good news for you and good news for us because we can price it maybe not at the U.S. level, but quite well. So roughly, if I've got a 10x10 that I often show people when I'm on the screen, which we sell in the U.S. for USD 1,200, in Australia for AUD 1,200, what price are you charging roughly in India?

Roughly, for a 10x10, we're charging AUD 1,000.

Wow, that's amazing. And that's why I say I think you can get away with that because government is paying. If you had to get other people to pay, they're not going to go there, I don't think. So I think that -- do you see that as good news?

Absolutely.

Yes. Okay. So tell us what you think the main challenges are then for you in the coming year or 2.

Yes. So from the beginning, what we have seen is the standard of care for burn treatment is pretty low. We are talking about hospitals using potato peels, banana leaves, allografts and all kinds of dressings. And that's the reason we are trying to create a new category called dermal substitutes. People have not heard of a category like dermal substitute, and that's what we've been doing. It's all about developing the market for dermal substitutes. And after that, it's all about getting this kind of an innovative technology like NovoSorb BTM after you have developed and educated surgeons to the benefits and value proposition of BTM to raise the standard of care. So the first is obviously the new technology of BTM that is being brought into the country for the very first time. Second thing is, in our experience, surgeons who have used NovoSorb BTM, right now, they're using it for the most complex cases where nothing else works. That's when they call for NovoSorb BTM. And even then, they are using it only to the most critical areas, like in Grade 3 burns, in joints, which are impacting mobility for the patients. So those kind of -- they're being very selective. They're putting these filters. But as we go forward, as they keep on using more and more BTM and their confidence grows with the positive clinical outcomes that we know that BTM gives them, we expect that the surgeons will continue to expand the utilization of NovoSorb BTM as we have seen in all other markets. So the same thing is going to happen here as well. So that's the second one. And the third one, as I mentioned, the challenge is all around the tendering process, which is a little complex, and it's taking longer than expected. But yes, now we have confidence. By having 25 of them, we are confident that we'll move quickly to the next 25.

Yes, yes. I mean shareholders might be interested to know that we've had one of our key opinion leaders, Professor Marcus Wagstaff, from Adelaide over in India a couple of times and recently just came back. And just for your info, as much as anybody else's, Raghu, he comes back and he said to me, "Look, believe it or not, I think India is going to be a bigger market than the U.S." And I think now that we understand what you're charging for the product, and how the tender system works, I can easily see that happening. The other thing I would say to you is that you just described how surgeons use the product to start with and they might transition to. So I wouldn't -- I'd like shareholders to know that that's not an India-specific problem. We saw that in America. We saw it in Australia, and we still see it. Some of the surgeons just go, "Look, for really complicated things, I need PolyNovo." And I think Marcus observes, and I observe when I look at the U.S., that a lot of those surgeons who use it in complex wounds, then say, "S***, it's so easy to use. I'll start using it." So Marcus is very optimistic about India as we have been about anywhere else because we can see this trajectory of case histories. And so I don't think that's an India problem. Just in terms of staffing, finally, Raghu, how many staff have you got on the road? And what are they actually doing? Are they going to these 1,000 hospitals you talked about?

Yes. So we have about 20 people in the sales team today, and their primary role is to create awareness about -- as I said, we are creating this category called dermal substitute, so their primary role is to enlighten our customers around dermal substitute and then talk about NovoSorb BTM and then do a lot of sampling in different complex cases, get into the OR, stand next to the surgeon and do the sampling exercise. So that's the primary role to drive consumption. That's what they do. So I can proudly say that in the last 2 years, what we have achieved is that every plastic surgeon in the country today knows about PolyNovo and also knows about NovoSorb BTM. That's what we have achieved. Now the second part of our journey is all about increasing the usage or utilization or expanding the indications. So having been very successful in plastic burns and recon, in the coming times, we are obviously going to move to the other departments like general surgery, where a lot of hospitals, general surgeons do the reconstructive work. Trauma is handled by the orthopedics division, so we could go to the orthopedic department as well. And then India, unfortunately, is the diabetes capital of the world. So we have a lot of diabetic foot ulcers. So we are also going to the vascular surgery department. So this is what the team is currently doing. They are moving to all these new specialties as well so that in the coming times, obviously, consumption of NovoSorb BTM at that particular hospital goes up substantially. That's what they do.

Yes, yes. I'm about to lose you and talk to Robyn about the U.S. part, of which we'll talk about MTX. But you know that we've just been approved in various sicknesses by the TGA and the FDA and which will be a product, the BTM product basically, without the laminate. Has that come across your desk yet? And what do you think the prospects for that are in India?

Absolutely. I mean the whole India team and all our customers are absolutely excited about MTX. We just got the license a couple of months back, and we are getting into a big sampling drive starting in the last week of May and then all through June because this is one thing where we've been looking for, in especially in tunnel wounds, or very, very deep dermal foot ulcers where the BTM, because of the lamination layer...

You've frozen on me again, Raghu. That's fine. I've got the answer I need. So just on behalf of our Board, but more particularly on behalf of our shareholders, thanks for the job you're doing in India. I hear reports from staff that you're spending a lot of time doing tenders and working all hours. So that makes me very happy. But Raghu, thanks for coming, and we'll talk to you again. We might get you on -- now that you've done a fantastic performance, we might get you on at the AGM as well. That was supposed to be a joke, by the way, Raghu. But anyway, that's another story. So Raghu, thank you very much. Okay. I'd like to just...

Thank you so much.

Sorry, Raghu, I've told the joke a minute ago and now you're laughing.

Yes, thank you.

Yes. Thanks, Raghu. And I should have said to the shareholders, it's 5:00 in India. So thank you again for coming on so early. Robyn, we thought we might have Ed Graubart on the line, but we don't. So I thought you and I might just have a brief chat about the U.S. And I thought we might just start with the number of people in the field and where Ed's taking the team in the next little while or where he would like to take the team anyway.

Thanks, David. Look, today, we have over 80 sales team members in the field servicing, obviously, our patients, our surgeons and our hospitals. But we're constantly looking to grow that number. I think there's 5 or 6 positions that we're actively recruiting for today. And as we've gone through the budgeting process, we have a minimum of 16 positions that we'll be filling for the next financial year. And we expect all of those roles, of course, to be adding to our top line, and we're working hard to make sure that they're adding to our bottom line as well as we look at the year ahead.

Yes. And there's 2 things that shareholders are constantly asking about. And one of them is how long it takes to get a salesperson up to speed and to be paying for themselves. And this goes to the argument that I always use, which is, when we talk about putting more people on, if you're very focused, then for me, it's not an investment, it's working capital because if somebody can get themselves up to speed and pay for themselves very quickly, just keep employing. But what do you think is happening in the U.S. now in terms of that trajectory?

Firstly, I think -- and thanks to Ed and the team in the U.S., PolyNovo is really being seen as an employer of choice from a sales perspective. So that's really helping us recruit very talented sales team members and often with very good experience. So that really helps us bring those team members up to speed quickly and understanding our product because they already understand the market and the marketplace and have relationships with many of the surgeons and hospitals that we're looking to service. We say, on average, somewhere between 3 and 6 months depending on the experience of the person we recruit and the territory that they're going to be working in. But honestly, it's we are very happy with the quality of our sales team today and we're looking to continue to increase their skill sets and capabilities. We've got some amazing sales enablement training courses that we run across the U.S. and in fact, the globe, that really helps support those people as they move into PolyNovo and learn about our products so that they can share that with the surgeons going forward.

That's great. I mean I'm a man of rule of thumbs, and I encourage shareholders to think about it this way as well that I often say if every -- I expect that every salesperson should be able to generate AUD 1 million in sales. And the way I think about it is we're paying USD 100,000. We're paying -- there's a cost of the goods, there's a support staff and so forth. So we should see a lot of money dropping to the bottom line. But people used to say it takes 12 months to get people to pay for themselves. Well, I've never seen that, I saw it in 6 months. But Ed will say to me, he said, "Look, I employed somebody the other day who was from Integra in a certain area where they knew all the surgeons already and they pay for themselves in 1 month." So I think the more successful we're becoming, we're attracting people who already are in the industry and who already have a database and can even bring that down to, in that, what you described, as 3 to 6 months. So that's pretty impressive. So if Ed says he's going to put on 16 more people this calendar year, in my head, I'm thinking, okay, there's $16 million run rate after 6 months, not necessarily $16 million. So I think when people are looking at growth and how we're going to grow in the U.S., that's a nice rule of thumb to start with, in any case. I just said to Raghu, Robyn, talking about MTX, which as everybody knows is our product without the laminate, and for obvious reasons, should be of interest to plastic surgeons or anybody who wants to put it inside the body where you don't want the plastic to still be around. We've been approved, as I've just said, by the FDA and the TGA for size up to 6 millimeter. How are the sales going there? We've only been there 1 month. But just give us a feel for that.

MTX is an amazing product, and we're starting to see real excitement, particularly with the surgeon community about how they can use MTX. Surgeons are amazing in the sense that they have great curiosity and great innovation. And so they really drive forward where we can use some of these products. And MTX is really interesting in the sense that its properties are such that it's really fabulous for filling wounds that have a larger deficit, so a larger hole to fill. It really helps with wound closure, get amazing results for the patient, great cosmetic outcomes. And also, because of its great vascularization properties, it's very good for providing areas of robust tissue. So where we need something like tissue over an amputation, it's going to provide a great opportunity for the surgeons with a new way of dealing with these sorts of traumas. And as you say, for plastic surgery, it's a great way of filling areas where you want to have a great cosmetic outcome. So head and neck areas, particularly are of interest. And in the same as Raghu is saying, when you think about diabetic foot ulcers, which unfortunately are on the increase in the modern world, this provides a really interesting opportunity to get good closure of very difficult deep ulcer wounds.

Yes, yes. And sales for the first month?

Sales for the first month, we're looking -- well, put it this way, we're very excited about hitting our first $1 million month for MTX, but we've just started the journey with MTX. And so what we're seeing now is just the beginning of a very steady climb for this product as we find more indications and the surgeons find other ways that they can utilize this product. So it's just the beginning of the journey for MTX.

Yes, yes. I mean one of the things that I'm excited about that you just described is the use of MTX with BTM, not against BTM. Now I always was thinking about MTX for plastic surgeons only, for filling, do a flap -- I have a flap done on my nose recently. So take the skin off, hold it back, cut out some things, put some MTX in, put the flap back over, so bulking up that sort of thing. And the plastics are very excited about it in Australia. Even though we've been approved, we've still got -- people have been using a bit of it, been we've but -- they're now calling out for it, but I'll come back to that in a moment. But I think the interesting thing that you described is the use of it with BTM. So in a very deep wound where you might have BTM at 2 millimeters, but you need 6 millimeters, we can do MTX with BTM over it and so forth. So I don't look at it as cannibalizing BTM at all, and I look at it as opening up a new market.

I think that's exactly right, David, because the number of ways that we can utilize MTX is vast and outside areas where we would typically use BTM. So we certainly see it as significantly additive to our product range and certainly will be very additive to our revenue. We don't see it as being a huge cannibalization of our BTM market.

Yes. I think one of the other things you mentioned, which we've never really given much attention to, and shareholders need to understand it, is the vascularization of BTM and -- or MTX, for that matter. And so when people contemplate why is it so successful, let's say, on diabetic foot ulcers, where, without it, you might get an amputation in 2 years because the blood is cut off because of diabetes. And one of the things that BTM does and MTX will do is it revascularizes the area, which enables the wound to heal. I want to sort of emphasize this because it's very important for things like diabetic foot ulcers to understand that. But it's also very important, more important to understand the next topic we're going to talk about, which is beta cell, which is putting a product under the skin. And the vascularization, even though you've got blood running anyway, but the additional input to vascularization is very important for pushing cells around the body. So that's good. The final thing I've noticed at the Board pack and our shareholders won't have seen this yet is that we're starting to get a few sales in places that I was surprised about. And I'm talking about Mexico, talking about parts of South America and so forth. How do you see that?

Again, the one thing about our product range is the surgeons are incredibly excited and supportive. And what happens is that surgeons from different countries around the world are going to burns conferences, whether it's in the U.S. or in the U.K. They're hearing about PolyNovo's products. The surgeons are sharing case studies. They're sharing amazing outcomes for patients. And of course, the surgeons are going back to their countries. We've seen it now in Peru and Mexico. They then are really wanting for us to bring the products into their countries so that they can get good outcomes for their patients as well. So we're seeing this driven very much by demand. We're there to do our best to keep up with that demand and get that product into the countries as quickly as possible and also provide the educational support that is needed as we bring our products into new markets. And so that's an exciting time for our teams globally as we are seeing that our products can go out and really support many more patients than we have today in some really exciting areas. And our surgeons are really, really very supportive to help us make that happen.

Yes. I mean on the same tangent, I think, Robyn, is that we are getting approached by quite a number of companies around the world where distributors want to take our product. And I give 2 recent examples. One, I was in Manila with the Australian government, and they introduced me to the best -- the biggest military hospital there. I was talking to the Chief Surgeon. And in that meeting, he had a guy from Melbourne who had been working at The Alfred Hospital for 2 years with Heather Cleland, who's the biggest user of our product in the state, so he knows it back to front. And there was a couple of other guys from Boston who've been using our product in Boston. So you're quite right. What happens is they either know a surgeon in the U.S. or they've trained in the U.S. or Australia or somewhere else, and they come home. And this is particularly true of India, by the way, where you're getting a lot of doctors coming out of Australia and a lot of doctors coming out of the U.K. So that's really exciting. I think the other thing, which also goes to India is who pays what. So we gave some free product to Serbia to a 16-year-old kid who was trained and serving, held on to the electricity, 95% burns to his body. He's in a coma for 3 months. And we got approached. We gave them out of our London office a product for the boy. He's now up and walking and rehabilitating. And the state insurance -- it's a poor country, Serbia. And all around it's poor, Romania, and so forth. And the state insurance companies has come out and said, "Look, we'll pay for any future product." So this issue about who pays for what is sort of quite interesting because what we're seeing, let's say, in the Ukraine, for example, where -- the Taiwanese government paid for our product. There's a whole lot of people who are paying for things that wouldn't necessarily -- you might have thought should exclude us from those markets. So nobody is going to pay for facial fillers to go into Serbia. But for trauma like us, we're not short of people who are interested in it. So all right. I think that's good, Robyn. I'm sorry, this is taking so long, but the final thing I just wanted to cover was this beta cell update. And I'd just talk to Professor Toby Coates. This is a product -- so [ Chester ], I'll get you to bring up the video of me talking to him. And this is a product that's being developed by Professor Toby Coates and by Professor John Greenwood, who are both at the Royal Adelaide Hospital. John is now retired, but still working on this project. And he, you will remember, was one of the people that helped us, was instrumental in BTM being finally approved and used, and he was a big user of himself. So he's a friend of the family as it were, and he loves us and he loves our product. And there's reasons for why they use our product. I mentioned vascularization before, but there's a number of other reasons, which hopefully will come out of this short interview with Toby Coates. [ Chester ], are you there?

Yes, we're ready.

Let's go. I'm here in Australia, and I appreciate the fact you've just come off a stage in Copenhagen talking about this very exciting study that you and John Greenwood and others have put together on using iPhone for diabetes cell implementation. It's a bit cumbersome. But before we even start, there's a number of things I think that shareholders might want to know, Toby, is a quick update. But just historically, where did this come from? Where did the idea come from?

Well, look, thanks very much again for the opportunity, David, to talk to the shareholders. So Beta Cell Technologies is a company that we formed a few years ago with John Greenwood and the idea, it was his idea, that having developed the material that treats wounds so effectively, the NovoSorb, he thought we'd be able to grow cells or have cells be supported by the same polymer structure. So beta cell exists to do that, to take a cell and see if we can make it survive in the skin. And of course, we know that this works because it works through the same mechanism that it works for skin grafting. The vessels that are created are functional, persist long term and therefore, when the foam disappears, capable of supporting other structures within the skin. So that was really the initial basis of it. And we decided because my interest, obviously, as a transplant specialist, long-term interest, has been Type 1 diabetes, huge market and also huge unmet need, that diabetes would be the right thing for us to start with. And so we took my expertise, which is islet cell transplantation and kidney transplantation, immunosuppression; and John's expertise, which is the PolyNovo, the burns material, and combine the 2 together with the vision that we might be able to do something in cell therapy for the benefit of Type 1 diabetes. And that's really how it started, and that's about 9 or 10 years ago now. So it's been a long journey, well supported along the way through the Juvenile Diabetes Research Foundation, which is now called Breakthrough T1D, multiple grants around the world to make that happen. And then obviously, these fantastic patients who agreed to be in this first-in-human study that I presented here in Copenhagen just yesterday.

So Toby, I often -- we often think about PolyNovo as being a platform technology for wound care. That's a bit too crude because we now know for hernia and inside the body, spina bifida, breast and so forth. To what extent do you think this is a platform for cell or medicine delivery?

100%, David. It's the vessels. It's the vasculature. This is the remarkable thing about this product that you have, the NovoSorb. So we actually see it exactly the same way at Beta Cell. We see it as a platform to delivering cell therapy for a variety of indications. Now Type 1 diabetes is obviously the one that is closest to my heart, but other things such as adrenal cell replacement, which can be done. We've shown that and published that as well in the Journal Endocrinology and also other endocrine cells that could potentially go in there, so parathyroid cells. And I wouldn't exclude really any cellular source that is secreting a hormone or secreting a product, potentially even neuronal cells that might secrete dopamine for Parkinson's, for example, could be delivered using this platform technology. So we see it very much as a platform and things that we could optimize other treatments and for other diseases that are as yet don't have a cellular therapy treatment.

Yes. So you haven't picked diabetes because it's the easiest one. It could have been anything.

Diabetes is actually the hardest one, to be honest, David. There are millions and millions of years of evolution to get those beautiful cells to do what they do. And so for us to be able to take them now and be able to put them in this material was always going to be the tough one. But the fact that we've got results that are as good as this that last out to 3 years, that's quite extraordinary in the skin for a cell to survive like that. So with optimization, we think this is going to be a very powerful delivery platform. So it is a platform technology, not just a one-trick pony at all.

So I think most of us know a lot about diabetes in recent times because of the proliferation of drugs like Mounjaro and Ozempic and so on. To what extent is this potentially a replacement for those because they're quite expensive and a lot of people have compliance issues in terms of injecting themselves every week. Is this complementary or an alternative? I mean it's probably too early to know, but what's your feeling?

Look, everything is complementary in my world. I think -- what we do is we pick the best treatment for the best patient. But there is absolutely no doubt that having a cell that regulates the production of insulin and also the other hormones that people don't think about, such as glucagon, the counter-regulatory hormone, you take away all of that variability when you actually replace the thing that's missing. And so insulin is terrific. Yes, it is. But it doesn't replace all of the other stuff that the islet cells actually do. And that's why a pancreas transplant or an islet cell transplant is actually a very, very good treatment for these for these diseases. But of course, we're limited by the number of cells, et cetera. As we're moving to a situation where we can have more cells as stem cell-based therapies coming online, then being able to replace what's missing, I think, will be a huge advantage. And people won't have to worry about injecting themselves or compliance with medications because you're replacing what's needed.

Yes, yes. And so what is it that's unique do you think about PolyNovo for use as a carrier? I mean, why not any other bit of foam or...

Well, it fundamentally comes down to the blood vessels, I've mentioned that before, the robust nature of the vasculature that's created, which persists for years. So you're creating a platform where if you can get something in there, it's got the supporting structure. It's got the highways to be able to deliver the product that you need to the body. That's the first thing. The second thing is that we've certainly got some data that suggests that the foam itself does not excite an extreme immune response. And this is what John developed originally, the fact that this does not produce a scarring effect. That's the big difference between PolyNovo's foam and other devices. It's also the big difference with encapsulation devices, which people have been looking at and universally haven't worked because they excite a scar reaction within the skin. We know that the NovoSorb doesn't do that. So it has the particular advantages, so then potentially an immunological privilege and the immune system doesn't see it quite the same way. The fact that the blood vessels persist for a long time is really what attracts me as a transplant person to using this as a platform for cell therapy.

Yes. That's great. One of the things that's come out of social media is, well, this is all very interesting. That's great. Everybody loves the idea. But yes, it's 10 years for another drug, treating it like any other drug for FDA approval. It seems to me when I think about it, some of these cells have already been approved. And certainly, we have approval at various regulatory authorities around the world for various things. And what do you say about the regulatory pathway here? I mean, I know it's not tested, but we ourselves have product where people are using it outside of indication. But I'm just thinking that if I were a cell -- if I was doing cell therapy, I'd be tempted -- and my cells were approved, they could be replicated and well designed and so forth. And I was using my phone, I might be able to use it without regulatory approval. I mean, I don't put that as a proposition. I'd just say, how do you think about it?

Well, the major strength -- whenever I give a presentation, the most important thing I say is FDA 510(k) approval about the NovoSorb. So that side of things is absolutely fine. And again, on the cellular side of things, if you have a cell that, at the moment, is proven or accepted to be therapeutically appropriate, there shouldn't be any issues with actually combining the 2 together, and that's what we did in this trial. So provided there's a regulatory pathway for the cell, it really -- the PolyNovo platform will be cell agnostic to what's actually happening. And we don't see, John Greenwood and I, that there will be any major issues on the regulatory side from that point of view at all.

Yes. And so if you thought about how do I supercharge this work that I've done -- first in human, very impressive, congratulations. But if I had to supercharge that, would you choose voluntarily to put another dozen patients on using diabetic cells? And could you or would you be inclined to do that with adrenal cells and 1 or 2 others at the same time?

Look, I think all of those are options and Beta Cell Technologies are open, fully funded at the moment and quite capable of moving further forward. But to supercharge, yes, it would be nice to have a partnership with any company that is interested in working with us. But I think with PolyNovo, particularly, we've got a good long-term relationship built up over many years. And we know the product works. I think we could supercharge this and do a variety of different cells that could be tried. But diabetes, I think when you look at it, there are 134,000 Australians living with Type 1 diabetes, and that's a long-term condition. It would be really ideal for the future to be addressing that issue first and moving -- using that as a proof of principle for other cell therapies. So it's an exciting time for Beta Cell Technologies with these preliminary results and our excellent relationship with PolyNovo.

Yes. Well, we had a very long relationship initially with John Greenwood and he got equity out of that and it's been to everybody's benefit. But one of the things on social media is, well, we've been supplying foam to you free of charge, I believe. And that's great, very happy to do that. But what I'm hearing you say is that you're very open, you as a team are very open to some sort of collaboration, I mean, in order to help you supercharge this.

Absolutely. I think it's important. We value our relationships with all of our collaborators, and we have an excellent relationship with PolyNovo. We could see that this would make a lot of sense for us to have a more structured relationship going further forward at whatever. We're open really to anything that includes collaboration or acquisition depending on what the terms are.

Yes. Toby, I probably got ahead of myself and then we're running out of time, but just for the layman like myself, just a very brief description about what you did with the patients, and in particular, one patient is now 3 and a bit years in. I just want to give people a sense of the simplicity of what you've done.

Absolutely. This is all done as an outpatient. That's the most important thing. That was John's original vision, and he actually wants this to become a general practice therapy. That's what he said all the way through from the very beginning that this shouldn't be something that's done in big complex hospitals. Essentially, the BTM foam, NovoSorb foam is implanted. It's implanted in the upper forearm over here. It could go anywhere in the body, but the upper forearm is the -- sorry, the upper arm here is the right place for it. It goes in. It has to create the blood vessels, the cells that -- for where the cells are going to be transplanted, which takes anywhere between 16 and probably 48, 50 days, something like that. So it's a nice broad window in the middle. So patients come in, have the cell implanted. They're wide awake. It's all done with a local anesthetic. They go home the same day. And then the next bit is waiting for the cells to be available. And in this particular case, these were deceased donor cells -- or human organ donors, that then implanted, site sealed off and that was done. And then we monitor them on a daily basis after that, and we can measure how the cells are working in the peripheral blood. So a very simple procedure.

Toby, we've got a webinar tomorrow that I thought would go for under an hour and it looks like you're going to chew up most of it. So I'm going to cut you off and welcome you back next Monday, and I look forward to talking with you and also hearing the outcome of the discussions that happened after the presentation. Thank you for your time. Congratulations to you and the team, and see you soon.

Thanks very much, David.

Okay. Well, as I said on the video, I thought we're going to have a 20-minute presentation. It's turned out to be exactly an hour. So for those of you who stayed on, I think we had 250 plus at the start of this. I'm not sure whether it's any more than just Jan and Robyn and I now, but I hope you got something out of that. We, as normal, will video this and put it up on the ASX, in any case. And for those of you who are on my database, then I'll send around the video separately in the next half an hour or so, in any case. I'm sorry to cut this off at an hour. Let's do this again soon and cover some of the same and some new products. I should just say with respect to Toby, there was quite a number of things that I dance around there because there's a number of collaborators in this, some of which are very, very, very large companies. And he hasn't got permission to use their name until he publishes his article. So he's given the paper. The article will be published in the next 2 weeks. And when it's published, there will be a lot more revealed about who's who and where this is going and so forth. But from my perspective, this is the way I look at it. We have a silo in our business, which is essentially wound care, but a bit wider than that, as you know, because we talk about hernia and breast and so forth. This is potentially a completely different silo and a silo that's for cell delivery or medical delivery. And I'd just say one thing. I had a chat to Novo Nordisk the other day, and they said to me, "Look, what we see in the next 2 years is that every cell company is going to need to have a delivery vehicle like you." So that's really heartening because it could be that we've got 2 different businesses here and 2 different platform businesses, which is the most exciting thing. Okay. I've got to go. I'm sure you have got to go as well. Robyn, thank you. Jan, thank you. And Raghu, I think, is gone. But if you're still there, Raghu, thank you very much. And good luck to everybody.

Thank you.