Wound and burn treatment biotech PolyNovo was placed in a trading halt on Friday afternoon, pending an announcement regarding clearance by the US Food and Drug Administration for a “major new product” for the US market.
The business, which is one of the top 20 most shorted ASX stocks, is trading down almost 39 per cent in the past month, after investors were disappointed in its full-year earnings figures.
Biotech PolyNovo has created a foam-like sheet to help wounds heal. Chris Hopkins
The company has created a patented biodegradable polymer technology, which forms the basis of its NovoSorb products, which resemble a foam-like sheet and are used to treat severe wounds and burns, where the dermal layer of skin has been lost and requires a skin graft to close.
Traditionally surgeons would use biological scaffolds made from sheep, cows, shark fins or fish skins. BTM has very little risk of infection compared to these products and is also less prone to breakages, meaning patients can be active sooner.
Its primary product currently is the NovoSorb BTM, which is used on burns and wounds when skin has been lost.
But, as part of its results announcement, the company flagged that it had lodged a submission with the FDA at the start of August for approval to market its NovoSorb MTX product in the US as safe and effective.
The MTX product is also made of the same foam-like substance as the BTM, but it is designed for use on deeper wounds with complex structures involving bones and tendons. Use cases would include diabetic and venous ulcers, as well as smaller traumatic or post-surgical wounds.
PolyNovo estimated the product would have a total addressable market in the US worth $500 million.
The business is also working towards launching a third product in the US, NovoSorb SynPath, which could also be used for foot and leg ulcers, where if not treated quickly, amputation could be necessary. But, this product is not expected to launch in the market until late 2023, once reimbursement with insurers has been established.
In the year to June 30, revenue surged 42.8 per cent to $41.9 million, but its earnings before interest, tax, depreciation and amortisation came in below analyst consensus estimates at $800,000, compared to an expected $1.6 million.
It also narrowed its net loss after tax to $1.2 million, down from $4.61 million in the previous year, but this included the reversal of a $4.71 million share-based payment expense and an unrealised foreign exchange gain of $500,000.
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