Well, welcome, everybody, to the Annual General Meeting. I was just saying to Swami that my son has 25 employees in India, and including some videographers, and one of the problems with the Indian videographers is they spend their whole time photographing weddings, which are three- and four-day events. So, you know, that was. Well, there was no bride and groom there, but it was, we got close to it. It's a fantastic story, though. We've got a few of these to do with India, and I thought we'd just do it as everybody opens up on the AGM itself, on their screens at home. We've got a quorum present, and I'll declare the meeting open. I'm David Williams, and I'm the Chairman of PolyNovo. Thank you. I'm David Williams, I'm the Chairman of PolyNovo.
I'm delighted to be able to extend a warm welcome to all of our shareholders here today. Unfortunately, it's about half of what it was last year, but still substantial, and I think that's because of the long weekend and Melbourne Cup. That's a function of Melbourne, unfortunately, but I expect we've got a very large audience, as we did last year on the phones and on the screen. Anybody who isn't here today, of course, can see this on a webcast, which is being recorded today, as you just heard, and we'll release it to the ASX as soon as we get it from Computershare, which probably won't be until Monday or Tuesday.
Let me start by introducing our Board of directors, and on my right, I've got Christine Emmanuel, and in the running sheet, it's actually Christine Emmanuel-Donnelly, and since she's got quite a few Board positions, she's become a bit posh, but we couldn't fit the second half of her name on the thing. Welcome, Christine, and she's gonna be up for re-election today, so you'll get to meet her in a little bit. And then we've got Leon Hoare, Andrew Lumsden, who's also Chairman of our Audit Committee, Robyn Elliott, also working at CSL, and Bruce Rathie.
Bruce Rathie is the memory of the Board because he was here, well, long before any of us were here anyway, so we rely on him as the sort of the grandfather of the group for memory, although he's getting to an age where his memory itself is getting a little bit dodgy. I'd also like to introduce on my left, Swami Raote, our CEO, and our CFO and company secretary, Jan Gielen. We've also got in attendance, Ashley Butler sitting here in the front, and Rick Armato, and some guy who's bringing ponytails back, who worked for them. And there are three of them from Ernst & Young.
In the audience, we've got Bart Oude-Vrielink, and somebody here from Minter Ellison, who kindly allowed us to have this space at no charge. Well, I think it's no charge, but we'll see. In addition, later in the meeting, and this is the important part, I think, I intend to introduce you to a number of our key staff. Coincidentally, we've got quite a number of our key international staff in town this week, and for the last three days, they've been having a strategy session out at the RACV Club in Healesville, and most of them are staying over for tonight and then back out tomorrow morning.
But we've got people here from the U.K., from India, from the U.S., as well as our much extended team in Melbourne, including some new hires, which I'll sort of touch on a bit later. I did it last year, and I don't want to make it-- I don't want this to be a circus, but I think I've sort of choreographed some interviews later in this meeting with four other people, one of them who's not here, which is Professor Marcus Wagstaff, who's operating on a very sick patient at the moment in Adelaide. But we'll call him in anyway on the screen. But the other, I'm gonna interview another four anyway, but I want you to get a feel for how the product actually works.
So I want to sort of try and take a bit of gee whiz out of it. I want to give you a sort of a feel for how the product is growing in terms of sales in North America and in India. There's other markets we could do, like U.K. is just tearing it up at the moment and fantastic, and we've got Andy Eakins here from the U.K., but I, I can only sort of fit four or five people in, so it's a bit more extended than what we did last year, but I think I'm hoping that you'll get a lot out of it. Starting, I started thinking about it as a waterfall. What do I wanna know? Well, I wanna know, have we got the capacity to keep growing?
Now, what have we done with our manufacturing capacity and so forth? And so I'm gonna have talk to our head of manufacturing, and we're gonna talk to Ed from the U.S., I'm gonna talk to Dr. Shastri from India, and so forth. And finally, I'll sort of top it off with Dave McQuillan, who's running our R&D section, and I just want to give you a sort of a pencil sketch about how we're extending the product in not only in terms of the product itself, but variations on the product and new applications and so forth. So it's. I'm only gonna give them about five minutes each.
I mean, there's an unwritten rule in the company, which is never get between me and a microphone, so they're not gonna get too much space, but I want you to just get a feel for it and then hopefully treat it more academically. 'Cause I don't want you. I think even me has a view of the product that's a bit gee whiz. You got a bit of phone, put it on a wound, and it fixes itself. Okay, but why? How? And I'm gonna just delve into that, and hopefully you'll be the wiser for it as I become myself. The notice of meeting was dispatched to shareholders in compliance. By the way, because of that, I've sort of changed the order. So I thought we might just get the business out of the way first.
Then Swami will say some things, I'll say some things, and then we'll go to the management presentations. And at any stage during this meeting, we'll come back to questions anyway. We have not that many online, but we do have some, and I know some of them are now going to be answered either by me or some of the management we're talking to. So we'll come to that in a moment in any case. But the notice of meeting was dispatched to shareholders in compliance with the company's constitution and is also available from our ASX announcement. I take the notice the meeting is read. Today's meeting is being held online via the Computershare meeting platform. This allows shareholders, proxies, and guests to attend the meeting virtually. All attendees can watch a live webcast of the meeting.
In addition, shareholders and proxies can ask questions and submit votes. Here's how you have to ask a question. Online attendees can submit questions at any time. To ask a question, select the Q&A icon, type your questions into the text box. Once you've finished typing, press, hit and send the button. Please note that while you can submit questions from now on, I won't address them until the relevant time in the meeting. Your questions could be moderated by Jan over here, our Company Secretary, CFO. And if we've got multiple questions, he'll use his discretion to amalgamate them. And if we run out of time, you can be assured that he or I or Swami will answer them by email or phone after the meeting.
To ask a verbal question, if you're in the room, put your hand up. Casting your vote. The voting is going to be conducted, as in all these meetings these days, by way of a poll on all items. If you have already voted, then you don't need to take any action. If you have already voted and want to change your vote, you can vote at any time until I declare the voting closed. And I'll do that after I've talked, Swami's talked, the management has talked, and I'll give you a fair warning for a couple of minutes before you do. The voting tab is available within the navigation bar. If you're eligible to vote, once voting opens, press the vote icon and all resolutions will be activated with voting options.
To cast your vote, simply select one of the options. There's no need to hit submit or enter button, as the vote is automatically recorded. You will receive a vote confirmation notification on your screen. The results will not be updated on the screen, but will be updated at the conclusion of the meeting and then released to the ASX. So you won't, unless you hang around long enough, you won't see those today, but they'll be up probably by the time you get on the train. Please note that any shareholders, proxy holders, or authorized shareholder representatives may vote. If you have any directed proxies that have been given to you by a shareholder, these will automatically be cast as directed when the poll is closed. When voting is closed, your undirected voting selection will be recorded.
For the people attending in the room, please mark the back of your voting cards as you see fit, and once the poll is declared, Computershare staff will collect these from you. I now declare the voting open, so for those of you, particularly online, you can vote from any time now if you like. I'm going to appoint Angela Lappas of Computershare Investor Services as the returning officer, and I can see her snuggled halfway up the back there, who also, I might say, I'm not sure if I'm allowed to say, if your employment, Angela, but is a shareholder herself. So moved was she by the inspiration of the chairman at the last meeting, and off she went and bought some shares. So thanks, Angela.
If you've got any difficulties, please call Computershare's helpline on 613-9415-4024. Financial statements and reports. Item one on the notice meeting is to receive and consider the annual financial statement for the 12 months ended 30 June for the company and its combined entities with the reports and directors' reports and auditors' reports. Are there any questions in respect to the financial report or the company's auditors from the audience here today? Jan, do you have any questions sent prior to the meeting or online?
Yes, one question, David, in regards to financial statements from Stephen May. On page 80 of the annual report under the substantial shareholders section, you list HSBC nominees as our biggest shareholder with 13.4%, JPMorgan nominees with the second-largest holding, 8.5%. Disclosure is meant to deal with beneficial holders, not custodians who hold shares on behalf of multiple shareholders. If we have no shareholders with more than 5%, please just say this rather than publishing the misleading suggestion that HSBC is our biggest shareholder. Will you fix this in next year's annual report?
Well, first of all, Stephen, thank you for that, and thank you for the question. But, Jan, what do you say? You're...
If that turns out to be an exact requirement, which I'll check, I can make that change.
Yeah. But, when we as a Board regularly, of course, look through the major shareholders, and so we've got a good-
We know there's no one over 5%.
And there are people with over 5%.
There isn't.
There is not?
No.
There's not even me?
No.
Not even Angela Lappas?
No. You'll get.
Good. Okay. All right. I now move to-- Sorry, if there's no other questions.
Question, David, sorry. I have a question o n the financial statements.
Yeah.
I understand that PNV is not required to provide quarterly reports, although I don't understand why. Regardless, can you please start providing quarterly reports? I do not think the cost of reporting can be considered material and used as a reason not to report quarterly.
Well, it's, look, it's something we talk about as a Board, nearly every meeting. And I think the difficulty we have-- Well, first of all, we're not required to, and I'm not here to, justify and argue the ASX or ASIC's opinion on why or, or why not. We don't have to do that. But we've got a more difficult problem, which is that even on a quarterly report basis, it's sometimes inappropriate, in my opinion, and I know in the opinion of the Board, to not say something even on a more regular basis. So we've got some shareholders, for example, in this last month, have come to us and said, "Why don't you report on a monthly basis?" Well, okay, you get to the stage where, you know, you do anything, you can do it on a daily basis.
And the thing that's determinant for me, I think, is, you know. And this is especially true of very high growth companies like ourselves, where you saw, for example, we made an announcement for what our trading was like in July and August. Well, we had the rest of the world, and I can't remember the numbers, but the rest of the world was growing at more than 100%. Australia was growing more than 100%. U.S. was at 60% or thereabouts. Don't quote me on it. And the growth is so, so strong that it seems wrong to allow the market to trade, to me, it seems wrong to allow the market to trade without having better information.
And so where we've got a clear trend, and everybody's seen the graphs in that last announcement, there's a clear trend in number of patients, number of hospitals, number of sales, et cetera, et cetera, and it's substantial. And if it that changes substantially, then I think it behooves us to let the market know more regularly than even every quarter. So I don't particularly want to be locked into any reporting regime, other than what's already there, which is half-yearly reports and yearly reports and so forth. But look, be assured it's in our mind. But I think in reporting, people say you're reporting in an ad hoc way as though that's a, as though that's a fault of the Board.
On the contrary, I think it's giving shareholders information a long time before they would get it, either on a quarterly basis sometimes, or even, and definitely on a half-yearly basis. Okay, if there's no other questions, or further discussion on this matter, I'll consider—
I don't know if it's the right time to ask the question, but last year, I couldn't make the AGM. I wrote to the company, and Jan responded. Concerned that the cash that the company had or what I saw as a want of cash for what its plans were, and the response I received was the company has no immediate plans for a capital raise. Within a month, it raised over AUD 53 million. That troubles me that, you know, such it changes so greatly in such a short time. But, I also note in that capital raise, the comment was made, "Management expects PolyNovo will be profitable in financial year 2024.
My question really is: How does management anticipate a profit in 2024 when in each of the last five years, the losses have been significant, and certainly in three of the last four years, it's been well over AUD 4 million, close to AUD 5 million in years past? And, I guess my sort of concerns about, you know, the knowledge or of within the company of what's happening, it bothers me. Saying there'll be no capital raise, there are no plans for a capital raise, and then a month later, you're doing it.
Hmm. All right. Well, look, there's a bit to unpack there, but let me start with the profitability, and as you quite rightly said, we said that we expect that we would be profitable in FY 2024. And I've also said independently, by the way, and separately on many occasions, I'm not really interested so much in profits. It's not that I'm not interested in profits, but I'm more interested in growth. And so if I had the choice between growing another 100% in Australia or 150% in Europe, I'll take it if it meant, even if it meant more costs and just deferring the profitability.
But, I'll say something a bit later about profitability for FY 2024, so I won't just say it right now, but be assured that the company has not come off of that view about us being profitable this year. But, you know, let's—we've got to temper it with all of the unknowns of, you know, what's happening in the world economy and, and not only just in terms of war zones and, and growth and different regulatory structures and pricing structures and remuneration. All these are the things we have to deal with on a day-to-day basis, and I'm gonna talk about some of those in a moment because some of them are relevant in terms of what we're doing now.
Things that couldn't have been anticipated even two weeks ago, for example, in the Ukraine or in Israel, for example, and I might touch on some of that in a moment because they could be quite significant for us. But I didn't know it two weeks ago, so if I announce something, don't come back to me next year and say, "Shit! You must have known that, that, you know, a month earlier." Well, I didn't, you know, and that sort of brings me to the timing question. I mean, the truth is, we didn't need to raise money when we did that last capital raising, in my opinion. And you can be assured that there was a very healthy debate at the Board about whether we did or didn't, and what the sort of dilution effects of that might be.
Of course, the share price was quite high. It was AUD 2.50 at the time, and as you know, the market, the market generally, forget about what's happened to our price. I'm gonna put up a slide at the end of today which shows our share price, Integra's, Avita's, Aroa's, the Biotech 200 index, and we've outperformed all of them over the medium term. But anyway, putting that aside, when we're sitting there arguing about, you know, do we need capital? The answer was, we don't. Okay, but only if everything goes to plan. And if things don't go to plan, then you know, and so, you know, there's a rightful argument. If things go to custard in the capital markets, and guess what? Now they have.
You know, the last time you would have seen an IPO, a real IPO, is in the distant, distant past. So, you know, there was a healthy debate. As I said, I personally might have erred on the side of not doing it, but I think wiser heads convinced the Board to do it, and we did. And it was done on the short notice. Well, that's, unfortunately, that's what happens in business, you know. So what is an appropriate period of time between, you know, saying, "I don't want to do something," and having it change? Is it, you know, if COVID came along again, if a war came along again, if logistical problems, so I couldn't get the product in the U.S. come again, I couldn't get into a hospital in the U.S. again.
You know, what's an appropriate time? I mean, time is irrelevant. You know, all we're trying to do is respond to the vagaries of what's really happening in the market. I'm gonna say something a bit more about profit in a moment, though, and also about some of the other things we're seeing in the market, which I think are in this case quite exciting for us. But, you know, we're living in a dynamic world, you know? Thank you. Okay, if there's no other questions, a discussion on the financial statements, I'll consider the financial report and directors and auditors' reports received and adopted. I'd now like to move to consideration of the formal resolutions.
As I said, we'll try and get this business out of the way first, and then we'll talk a little bit different perspectives from Swami, from me, and from our management team in terms of how we're going forward. So I'd like to consider the formal resolutions now, and we'll vote on all the resolutions by way of a poll, as I previously said. And I intend to vote any undirected proxy votes given to the chairman, given to me in favor of all resolutions. We'll now move to consider the first resolution. First resolution is item 3-A on the notice of meeting, and it is for the re-election of Dr Robyn Elliott, who's sitting there in the light blue dress. And I'd like to—
She's eligible, of course, and wants to stand for re-election, and I put the following resolution to the meeting as an ordinary resolution. That Dr Robyn Elliott, being a director of the company, who retires in accordance with Clause 59 of PolyNovo's Constitution and being eligible, is re-elected as a Director. Before I get you to vote on that motion or ask her any questions for that matter, I'd like, Robyn to say a few words about herself and what she brings to the Board and her experience in the Board. Robyn?
Thank you very much, and welcome, everyone. As a scientist, I've had the opportunity to spend the first 25 years of my career in small biotech companies. That's been fabulous because when you're in a small company, you have to learn all of the parts of the product life cycle. So for me, it was everything from product development to manufacturing to quality to business development to sales and marketing. And with that, I developed two lifelong passions. The first was really understanding the importance of ensuring that you get business value for every dollar that you spend. And in small companies, that's terribly important. The second was that I love regulatory compliance and quality compliance, and David will attest I'm one of the few people that love the regulatory audit.
I love preparing companies for audits, and I love the challenge of delivering flawlessly when it comes to those audits. The last 10 years of my career have been in completely different areas, in delivering multibillion-dollar projects for CSL around the world. I'm sure some of you in the room think that that must be very difficult, quite complex. If you can think about the number of decisions that have to be made to deliver a multibillion-dollar project around the world, it's true. It's incredibly complex, and I can assure you my children can't work out how I can do it, because I'm often asking them how to work out the mobile phone, right? So, but I've learned over the years that it comes down to really four fundamental things.
The first is having a clear vision, really understanding what the end game is, what value are you trying to deliver to the business? And then being able to articulate that so your team understands what it is that you need to deliver and that they are ultimately accountable for that. The second is in meticulous planning, upfront, ensuring that you have really covered all of the details that you need, and there's hundreds of thousands of them. The third is to be courageous, to really challenge yourself and to challenge your team members, to really constantly be saying, "How are we going to execute flawlessly?" And the fourth, interestingly enough, is that concept of the small company. Value every dollar. Make sure that you get real value for your business and for your stakeholders, for every dollar that you spend.
So for the last few years, I've had the pleasure of being part of the PolyNovo Board, and I've tried to bring those fundamentals every meeting that I attend, because the concepts are the same. PolyNovo's had a fabulous journey over the last few years, and certainly since I've joined, the revenues increased by a factor of four. The team's increased by a factor of three. The capacity's increased by a factor of two, and that's all during the challenging x of COVID. So I very much look forward to the next few years and bringing those fundamentals again, as we continue to look at this growth journey. We have exciting x of building new facilities, bringing on that additional capacity, ensuring our processes are efficient and effective as we further commercialize, and ensuring our regulatory and quality compliance is state-of-the-art.
I'm very grateful to have this opportunity. I'm very grateful to have worked with the Board as we continue on this journey of commercialization, and I thank the shareholders for their patience and hopefully for their support.
Thank you, Robyn. Any questions of Robyn? Pretty hard to ask a question after that, I think. But I said earlier in the meeting that in interviewing the management, I wanted to get a really quite in-depth view about the company itself. And you might wonder, for example, why Robyn went on for so long, given my memo, "Don't get between me and a microphone," got 260 million votes in favor. But when we go back four or five years and we had one small bit of a backyard manufacturing plant, if you like, foreseeing the growth, foreseeing the need for manufacturing, foreseeing international growth and therefore international audits of regulatory authorities, not just, you know, the FDA, but the Brits and the Germans and the Australians and so forth.
I've known Robyn for some time, and I knew when she was a CEO at IDT out in Bayswater, that she was fielding dozens of government regulators coming through every year, regulating that plant, auditing that plant. And that's one reason I know, she may not know, but why she got headhunted to CSL, because they themselves, even though our second biggest company in this country, they themselves had issues with their audits, and so Robyn was the one who solved that. And as she just said, she's delivered new manufacturing facilities, the latest one being that AUD 700 million plant that they've just built. And so what better person to have on the Board? Not to be management. We want a working Board that have got different skill bases.
They're not management, but they ought to be able to point to people to be introduced to, point to ways of thinking about things and so forth. And so, that's Robyn. So, if no further questions from her today, are there any questions for her online?
There is one question from Stephen May, which I'm obliged to read out. "Could Robyn comment as to whether she believes PolyNovo should move to a conventional governance model with an independent chair who is less aggressive and controversial? Isn't it time for more sober communications and conventional governance with less hustle and spruiking at the top?" Sorry, pass that out.
Yes. Robyn, please.
I'm happy to respond. I think, one of the reasons that I joined, the PolyNovo Board is because I actually find David inspirational. He is enormously qualified, I think, to be Chairman of the Board. He brings a lot of experience in how to grow organizations. He brings a wealth of knowledge, of course, on the financial side. Also he brings a sense of fun and pride in what the company's doing and an enormous passion for helping our patients. So, with that, I would like to leave the answer there. Thank you.
That's great. Thank you, Robyn. I won't draw my vote. Any other questions? Jan? Nothing. Okay, for the purposes of taking all proxies into account and ensuring that the votes are counted accurately, I direct that a poll be taken on this item. The vote is still open, of course, until we close it later in the meeting. Item 3- B on the notice meeting is the re-election of Ms. Christine Emmanuel-Donnelly. I'd like to read out the motion that she's eligible for re-election and that Ms. Christine Emmanuel-Donnelly, being a director of the company, who is in accordance with Clause 59 of the PolyNovo's Constitution, being eligible, is re-elected as a director. Before I open it up for questions, Christine, please.
Okay, thanks. Thanks, everyone. And, really, thanks for entrusting me with CSIRO, managed commercialization teams in that organization and then finally into their equity portfolios and managing their startups and, spin outs. So I've of which PolyNovo is one. I've a very clear idea of how IP can be managed and developed to deliver outcomes for a business at various stages of its cycle. All forms of IP, so not just patents, but trademarks, designs, copyright law, trade secrets, and know-how that can be used in balance with the registered, area in order to, really deliver on your strategy. So that's my specialty that I bring to the Board, as everyone here brings their own. I'm very proud and humbled, actually, by the breadth of experience that we have on the Board.
And I do assure you that the chair does bring deep discussion, that challenges, and brings real rigor to the company, to the CEO, and to the executive team. So, you know, with that, I'm really excited. I just had the pleasant experience of joining the executive team for this couple of strategy days, and it's I'm quite excited at the growth prospects and bringing profitability alongside that growth, for the organization into the future and the really exciting pipeline that we've started to develop as well. So thank you.
Thank you. Again, just an editorial comment. In the context of building a Board that's a working Board that can help management, you know, looking ahead, one of the things we're doing is extending the products, extending the application of the products, adding things to the products that make them better performers. And so straight away, you start to think about IP, registration of IP, protecting the company, and freshening up IP. So it seemed to make a lot of sense to have somebody who knew about corporate governance, of course, but somebody like Christine, who'd worked in private practice in Australia, in IP, private practice in the U.K., in IP, so international perspective, and then had been running the IP portfolio and some of their investments at CSIRO, which, as she just said, the original base technology came out of.
So what better qualifications to have sitting around the Board and, you know, engaging in the strategy session as she has done the last couple of days? Are there any questions from the audience here today about Christine? Nope. Jan?
No questions, David.
Nothing. All right. Well, you've said just nice things, so thank you for that. For the purpose of taking all proxies into account and ensuring that the votes are counted accurately, I direct that a poll be taken on the item. Voting is open, as I said, until it's closed. Remuneration report, item four on the notice of meeting. Corporations Act requires a remuneration report be included in the annual report. Shareholders will be asked to vote to approve this report. Please note that this vote is not binding on the company, but the result will be taken into account by the Remuneration Committee when reviewing director and executive packages. A voting exclusion applies to this resolution, meaning that the directors are restricted from voting, and is outlined in the notice of Annual General Meeting.
However, Directors recommend that shareholders vote in favor of this resolution, and I put the following resolution to the meeting: That for the purposes of Section 250R(2) of the Corporations Act, the remuneration report required by Section 300A of the Corporations Act is contained in the Directors' report for the year ending 30 June 2023 is adopted. I hereby move the motion, and I call on Andrew Lumsden, who's the Chairman, a shareholder as well, by the way, and the Chairman of the Audit Committee, to second the adoption of the remuneration report.
Thank you.
Are there any questions from the audience today? And Jan, online?
No questions, David.
Oh, my goodness! Okay. For the purpose of taking all proxies into account and ensuring that the votes are counted accurately, I direct that a poll be taken on this item. Voting is open until it's closed at the end of the meeting. Item five is the employee share option plan. On the notice of the meeting, voting exclusion applies to this resolution as well, and is outlined in the notice of the Annual General Meeting. However, the directors recommend shareholders vote in favor of this resolution.
I put the following resolution to the meeting as an ordinary resolution, quote, "That the issue of securities under the company's employee share option plan are approved for all purposes, including for the purposes of exception 13 in ASX Listing Rule 7.2, and as an exemption to ASX Listing Rule 7.1." Are there any questions from the audience here today? Jan?
No questions, David.
Yeah. Jesus, might as well stayed at home. For the purpose of taking all proxies into account and ensuring that the votes are counted accurately, I direct that a poll be taken on this item. I'd now like to-- I'm just conscious, Swami, I want to get Marcus Wagstaff on the line. So but I think what we'll do is, go to you. So I'd like to invite Swami, our Chief Executive Officer, to talk about FY 2023 and how he sees the year ahead. I was gonna say that I will then make some, my own observations, but I'm conscious that, Marcus Wagstaff's taking a break out of, out of the operating theater. So I think we'll get you to talk. Then I might get Marcus on, then I'll say something, and I'll bring the other management on.
Apologies if it sounds a bit, hit and miss. Swami, please.
Thank you, David, and good afternoon, everybody. 2023 marks 10 years since NovoSorb BTM was first implanted in a patient. Since then, over 33,000 patients have seen the benefit of our simple, elegant, yet very transformative technology. One of this is John Weeks, the first burn patient to receive NovoSorb BTM after an accident left him with burns to 75% of his body. With the persistence of his surgical team, John recovered, started a family, created a life with partner, Jake, and now works to support other burn survivors. In John's words, "I've gone from flatlining to living life flat out." Stories like John's and Faliha's, which was shared a moment ago, are fuel for PolyNovo's ambition. The people who have suffered trauma and wear the scars are the people who drive us.
NovoSorb BTM can improve form and function, but most importantly, returns the patient to live a life full of possibilities and reach their maximum potential. Our objective is to bring this life-saving technology to the world. Continued sales growth and geographic expansion reflect NovoSorb BTM's acceptance by surgeons as the next generation dermal substitute. NovoSorb BTM is fast becoming a standard of care in complex wound management across many countries. Surgeons are excited by the potential of NovoSorb technology, its simplicity, versatility, and ability to deliver transformative patient outcomes while reducing the pressure on health systems. We stay inspired to learn from our clinicians and provide solutions to their surgical problems. Thank you to all of you who have joined us in this journey.
Earlier this week, the senior leadership team of PolyNovo came together to reflect on the achievements of past twelve months as we gear up for full- year 2024, fiscal year 2024 and beyond. We are building on a solid foundation. We are outpacing the dermal implant category growth by a factor of 10 and winning market share across all geographies we operate and focus in. Additionally, insights and talent gathered over past twelve months have led us to a promising new product pipeline projects, helping us expand our impact beyond our original indications. Group sales continued to accelerate in FY 2023, with global NovoSorb BTM sales of AUD 59.6 million, up 58% versus prior year. The U.S. market continued its impressive performance, up 45% in Australian dollars.
The rest of world was up 134%, with Australia increasing sales by 84%, U.K., Ireland, increasing sales by 169%. The distributor performance has also been strong, with Germany growing by 193%. In addition to Australia and New Zealand, where NovoSorb BTM enjoys market leadership, we now enjoy market leadership in United Kingdom and Germany. These results demonstrate the disciplined effort and focus of our commercial teams, along with the ingenuity and enthusiasm of clinicians who are now contributing to innovation, new application, and education of their colleagues. We are extremely grateful for the continued support and partnership of our surgeons. Total FY 2023 revenue of AUD 66.5 million was up 58.8% on the prior year, which includes revenue from the BARDA pivotal trial.
With additional funding of $10 million announced in October 2023 and 76 enrolled patients, we are past the midpoint of in the trial, with recruitment expected to be completed in full year in FY 2024. BARDA has been a decade-long partner of PolyNovo, supporting and guiding our efforts with numerous regulatory agencies to accelerate PMA approval. NovoSorb MTX received 510(k) FDA clearance during the year and has already received strong support from our surgeons. Our limited market release in the U.S. and New Zealand will develop the clinical evidence to support a full commercial launch planned for FY 2024. The innovation pipeline is exciting, with the extension of NovoSorb MTX and BTM portfolio to include surgeon-led innovations planned in FY 2024. We continue to invest in building our capacity to drive revenue, with personnel growing from 152 to 218.
The majority of this expansion reflected increases in the headcount in the U.S. sales team, manufacturing, research and development, and clinical support teams. The capital raise has allowed us to accelerate these efforts with new manufacturing facility design in progress and scheduled for completion in CY 2026. Year-on-year sales momentum has continued, and in May, monthly sales exceeded AUD 7 million, with total revenue exceeding AUD 8 million for the first time. This trajectory has continued in the current financial year, with August revenue of AUD 7.7 million, up 119% versus August of prior year. I'll just talk about how we are planning to accelerate our global impact. Number one is geographic expansion. The title of our FY 2023 annual report was New Horizons, and true to that, we increased our footprint in U.S., entered Canada, Hong Kong, and India, and very recently, Spain and France.
Each region warrants excitement for different reasons. Hong Kong is a precursor to China entry, India to prove our market development credentials by satisfying economics of a large middle-income economy, together with its contribution to the BARDA trial, and Canada as an opportunity to leverage the success of U.S. We aim to achieve market leadership in these new geographies within 18-24 months. Launching in India, we are ensuring that our simple, transformative, and cost-effective technology is available to patients who need it most and were previously constrained by cost, availability, and professional education. We are working with Indian surgeon networks to build a dermal implant category underpinned by professional education programs and working closely with federal and state government on tenders. We'll continue to expand the dermal substitute category in Australia, U.K., Ireland, and Germany.
The team maintains a patient focus as they outperform the category to accelerate our growth. Our commitment to our communities is strong, and in the U.S. alone, approximately 63,400 sq cm of product was donated for charitable use. Our U.S. team is energized by NovoSorb MTX and a richer product suite to guide patient care. In full- year 2024, we plan to put more tools and products into their hands, and we expect to see a swift payoff in customer account value. Number two, I'll talk about indication expansion. Last year, I spoke of a strategy of going beyond burns in our mature markets. I'm pleased to report that use of NovoSorb BTM is increasingly the dermal substitute of choice in trauma and other complex reconstruction cases, where we can have significant impact for our patients, surgeons, and hospital systems.
In Australia and New Zealand, we maintain our leadership of deep dermal full thickness burns, with all burn centers using NovoSorb BTM. Revenue outside of burns is accelerating, with successful shift to trauma, plastic reconstruction, vascular pressure ulcers, limb salvage, and other indications, with the number of patients treated increasing by approximately 70% year-on-year. Third, I'll talk about innovation and product pipeline. We have redesigned our innovation process to capture the voice of multiple healthcare stakeholders. In addition to our established polymer chemistry expertise, we continue to build out a robust product development team with package engineering and preclinical sciences, which encompass animal models and implant evaluation. We are also glad to share that we have engaged with world leaders in textile engineering, hernia mesh development and manufacturing, as well as experts in breast reconstruction, who are contributing to our internal development programs.
In September 2022, NovoSorb MTX received FDA 510(k) clearance with broad applicability in burns, chronic and surgical wounds. NovoSorb MTX and NovoSorb BTM are complementary, and the addition of NovoSorb MTX to our product suite offers clinicians increased flexibility for situations where the sealing membrane is not required. By tapping into the voice of clinicians to get their insights on how and where NovoSorb technology can impact, we aim to accelerate rollout of our advanced wound care portfolio with additional 510(k) submissions. A submission for the NovoSorb MTX for extension of the NovoSorb MTX product range was recently submitted, with further submissions planned in 2024. We have focused our approach to hernia repair and are developing a targeted solution for ventral hernia and complex abdominal wall reconstruction.
This NovoSorb-based textile will expand the clinical application of the NovoSorb polymer technology, which would have substantive impact on treatment of type 1 diabetes and other cell-based therapeutics. The core NovoSorb technology can support other clinical needs, and we are open to partners to help co-develop, commercialize, or distribute innovative new products. We recognize that building successful partnerships is vital for PolyNovo to reach more patients faster, amplifying the impact of our technology. Lastly, about capacity expansion. We are investing in scaling our production facilities in Australia as we scale globally. In late FY 23, manufacturing capacity was doubled and efficiencies gained when our second facility, adjacent to the existing facility, became operational. The capital raising of AUD 53 million in November 2022 further amplifies these efforts, with a new co-located manufacturing facility currently being designed, estimated to be operational in CY 2026.
Employing state-of-the-art process and manufacturing capability, along with R&D labs, the new facility will produce around 500,000 devices, approximately 5x current production volumes. A new office space has been completed, supporting enabling functions for global growth, including IT, Legal, and HR. We will invest in digital and information technology to ensure that we stay connected and agile as we scale globally. The recent hire of Chief Information Officer has seen the rapid advancement of projects, including customer relationship management, website management, cyber security, and document management systems. Capital efficient and profitable growth. PolyNovo has a history of driving capital-light growth. Our path to profitability is clear, and we'll remain prudent and responsible in investing capital in areas providing the maximum impact for our customers and patients, and superior results for our shareholders.
Before I make my final comments and hand over to David, I would like to reflect upon Faliha and the transformative potential of NovoSorb technology. Burns can be devastating injuries, leaving scars long after the original trauma. What should be celebratory and joyful, a birthday, adding a few centimeters in height, can be accompanied by declining mobility, discomfort, and pain caused by scar contracture. Faliha's journey with NovoSorb BTM marked a turning point, relieving seven years of pain, discomfort, depression, and offering an improved quality of life. She has started playing with her friends again and began dreaming of becoming a doctor. With the highest rate of burn injury across the globe, we know there is much to do in India and in many parts of the world. PolyNovo has touched and healed over 33,000 patients since its inception. 13,000, including Faliha, in the last year alone.
As proud as we are of our efforts and results, we're not satisfied. All of us at PolyNovo know we need to reach more and heal many more. With that, I'll now hand back to David .
Thank you, Swami. Very nice. It's 1:55 P.M., so I think before me going on and starting to talk, we might drag in Marcus Wagstaff from Adelaide. I'm not sure whether me just saying that's gonna make it happen or you're gonna make it happen, James. Where is he? That's it. Ah, good. Marcus, thank you for taking a few minutes out of your busy schedule. I was hoping you'd be in your, you know, surgeon gear. I've sort of made a big, big deal out of the fact that you've walked out of the operating theater, and you look like you've just come from lunch.
Oh, you're right. No, I'm about to go in the surgeon gear, I'm all fine. It's got-- Yeah, it's all good.
So, Marcus, I don't want to take a lot of your time, but, you know, you're acting as our, you know, Chief Surgeon, KOL, if you like, and you're spending a lot of time around the world at conferences, and thank you for that. But also, I know myself, in the last couple of weeks, you and I spent a fair bit of time talking to surgeons in the Ukraine and Israel and elsewhere.
That's not my primary job, but I just would like you to reflect a little on what you're hearing out of the surgeons, you know, as this year's progressed, in terms of the acceptability of the product, the sort of innovation you're seeing, any other sort of reflections that are just, just off the top of your head coming out of the conferences and your interactions with surgeons.
Well, I mean, over the last year, my sort of interaction with the surgeons regarding BTM has sort of gone up considerably and is reflecting sort of a much wider penetration across the world. There's naturally a degree of pattern recognition after sort of eight years or so of questions from surgeons, which means that I've become more effective at getting the right support advice across. And although the questions remain the same, such as: How do I know when it's integrated? How do I secure or address BTM? The approach of the surgeons is changing. They're more confident in it. It's because they're basically trying a new device for them, but they're not seeing it as an unproven or controversial one. So they're accepting BTM as a standard practice, particularly in ANZ and the U.K. and North America.
And I'm getting more and more inquiries from Hong Kong as well. And the other thing, Swami, is I'm talking to surgeons who are migrating from BTM using units into other units in other countries, and they're wanting to bring BTM with them to their new locations. And I've also had a request from other countries who've seen BTM being presented at meetings and want access to it. And in the meantime, we're seeing in the literature a much larger and larger series, and in the meetings, much larger and larger series from units all around the world with positive results. And they're all being published in peer-reviewed literature. So, you know, it's, it's just becoming, becoming-- It feels like it's becoming a standard, and certainly an accepted standard of care.
Excellent. Thank you for that. Yep.
In terms of the innovations and stuff, there's not specifically new innovations in the last year of the use of BTM, but it's basically becoming standard care, not just in burns, but also necrotizing fasciitis, trauma, as well as things like hidradenitis suppurativa study, which is where you feel very anxious using a biological because of the degree of colonization there. And also reconstructions after tumor surgery. So there's all sorts of developments going on in those areas, and modifications of use, such as different ways of securing it, managing it, dressing it, some of which I sort of bring back to my own practice.
MTX is also finding its place in surgical practice in the U.S. and is early in this evolution, but given the experience with BTM, I'm sure, you know, we're gonna see more innovation defining sort of further applications of its use.
Yeah. Marcus, you and I were talking the other night to the Chairman of the Minister for Health Committee on Burns and Trauma in Israel, and he had been to at least one American Burns Association conference, and I think more than one, and had met you during that. And what surprised me, I think, is that he was still a little scared, I think that's probably the right word, about using it for the first time. And that surprised me only because, having seen it myself, I've sort of perhaps trivialized it too much, and it looks a lot simpler than that to me. In that case where, for example, if I were to send you, or we were to send you to Israel, well, first of all, you wouldn't have any medical insurance, so you probably won't go.
Your wife rang me and said that, you know, "Has he got a will?" But, you know, you offered to guide the surgeon through the first operation. And is that a-- And right through to the process of recovery, but is that a difficult job, and would you think that one case would be enough for somebody to really feel a lot more confident about it, or is this a sort of a two or three operation journey?
No, I think, well, I think it's a two or three operation journey because there are nuances in its care, but if you've got a surgeon who is already familiar with using dermal substitutes, it's quite straightforward to apply to a BTM to that protocol. The issue is, obviously, taking on a new product in a very hot time, such as a conflict, obviously, this is, you know, you're gonna want to go with what you know. But, but in terms of supporting them through the adoption of BTM in the trauma scenario, it has clear advantages, so, and they're keen to take it. When I met the surgeon you're talking about, the ABA, back in May, he was already at that point wanting to get BTM into his unit.
So, it's not something that he hasn't anticipated before. But no, I think to answer your question, I think it's, if you've got somebody who's familiar to, with using dermal substitute, which he is, then, it's really about generating that confidence in him, which is clearly completely understandable given the situation they're in.
Yeah. In the last week, we've learned a lot about the use of BTM or potential use of BTM in war zones, in the Ukraine and in Israel and, and for that matter, into Gaza. But, do you see any complications? I mean, firstly, the first thing that shocked me, I think, is the number that I heard in the Ukraine, where there's 2,000, over 2,000 patients waiting for this sort of technology. The tissue banks are all gone. Do you see any particular complications in the use of the products in war zones? I mean, you know, chemical weapons, that sort of thing.
Well, not against, not really against the benefits. There are complications, complications of any device, any surgery, but in comparison to the potential benefits of bringing a synthetic dermal substitute in. I mean, when you take the Ukrainian situation, the BTM was actually brought into the Ukrainian trauma by U.K. surgeons working for an NGO. They brought it in voluntarily because they felt it was a good option. It wasn't brought in by PolyNovo per se. And the problem in the Ukraine is that the resources and the skills to perform complex microsurgical lower limb reconstruction, for example, just isn't there. You know, it's all mixed up. And they're getting inundated with high-energy shrapnel and blast injuries, particularly to the lower limbs.
The civilian and military casualty load in the Ukraine is in the tens of thousands at the moment, as we know already. The ongoing cost to society of amputees, you know, even after the conflict, is gonna be huge. Anything that can be, you know, introduced, that can, you know, take the place of complex microsurgical reconstruction, when you have exposed bone, exposed tendons, which is quick and simple and effective, you know, is clearly gives an advantage or a head start. It's because it is simple and because it's synthetic, then it adds obvious advantages to that scenario. You could put the BTM on in the hot scenario after a really adequate debridement, then the patient can be, you know, brought back behind, you know, for, whilst they integrate and then a simple skin graft.
And so, you know, it doesn't require the resources or the skills of, say, free flap surgery. And that's reflected in the Ukrainian surgeons themselves, because they're actually asking us for more supply. They're requesting it because they've seen the benefits for themselves in that scenario. And like anything we've talked about, you know, over the years, the surgeons themselves find the role of this product, and then they want to use it more, and that's exactly what's happened in the Ukraine. And, you know, Israel's too early to talk about, really, but it's... But certainly in the Ukraine, they're asking for more supply for obvious reasons.
Good. One final thing, Marcus, before I let you go. We've seen a lot of innovation in the last two years, you know, but you yourself even started using it for burns, and now it's widely used for trauma and oncology burns and limb salvage and necrotizing fasciitis and so forth. You know, when you lay in your bed looking at the ceiling at night, where do you think the-- where's the-- In five years' time, what's the big product, do you think? Do you think we're still gonna see it mainly burns and trauma? Where, where do you think there's a sleeper in terms of its application?
I think, well, maybe with MTX more than BTM, but I think the sleeper is in the clinic scenario for ulcers and foot ulcers and so on, in the diabetic area. I think when that gains traction, and I've seen it in cases here, in its simplicity and its ease of use, after, you know, it still requires conditions of good debridement and optimizing of the blood supply. But once that gains traction, I think from what I've seen, that's gonna be, that's gonna have considerable benefits for patients, lots of them.
Great. All right, listen, I know you've got a complex patient there, and we really appreciate you coming on, and not only that, more particularly, holding our hands throughout the year in particular. And, and we'll look forward to seeing you over here or over there.
Great.
By the way, Marcus is in Royal Adelaide today. Thanks, Marcus.
All right. Thanks, David. Cheers. Catch you soon.
Thank you. All right. I think I might stay on management, and the next person I'd like to introduce you to is Ahmed Hassan. There he is. Do we have a microphone for him?
Yeah, we do.
Okay. Come up, come up, Ahmed. As I said, as I said, you know, the purpose of this is just to give you a much more detailed understanding about where the company is, and that was partly for Marcus's sake as well. But Ahmed's been with us for six months?
18 months, yeah.
18 months. It was, goes very quickly, and, he didn't do anything for the first 12 months. I didn't notice him, but, And interestingly, Ahmed, just by way of background, came from Bega Cheese, which, I happen to be very close to, and, we took over the Lion business, and, Ahmed decided that there were too many people that love him. This is me talking about your career, by the way, without you knowing about it. But, and went off to Fonterra, and, it was about a minute after he got there that I announced that we might take over Fonterra for Bega. So I think he thought he was gonna go back to where he'd just left.
So I approached him and said, "How would you like to come and work for us?" I knew from Bega that he'd done their IQ test, and he had the highest score ever at Bega.
Thank you.
Which probably says more about the other people at Bega than you, by the way, but so don't lap it up too much. But, so he came really highly recommended by some people I respect at Bega Cheese. I went to him, and then cut a long story short, here he is running our manufacturing. Now, one of the things that often comes up when I'm around the town talking to fund managers and institutions is, with this tremendous growth you've got in sales, you know, how much capacity have you got? And even in the last year and a bit, we've gone from one little backyard operation factory in Port Melbourne to buying the building next door and building a second factory there.
And now we've gone to the stage where we're about to tender for a much bigger factory, in the building next door to us, where we are at the moment. So first things first, I mean, everybody's interested in how much capacity we've got, how sophisticated it is, how it can handle not only just capacity, but variations for breast or hernia and so forth. So first things first, what were we producing in terms of units, square meter pieces of BTM, if you like, a year ago when you came?
So first of all, thanks, David, for the introduction and my history of Bega and Fonterra. But last year, probably the same time last year, we were about 1,000 devices a month. Just finished the October production three days ago, and we produced 10,000 devices. So this is 10 x what we were able to produce last year. But I think the story behind this and how we got there is. I like to think about it in three different ways, and it's the first one was the unleashing the capacity in the existing facility. So we've done lots of process redesign or restructure, and also workforce reorganization to optimize our supply.
The second area was the second facility that we've commissioned May 2023, and this has basically gave us the duplication of capacity as well as the redundancy and then more of a risk mitigation policy if anything goes wrong. But the third one, which is very, very important as well, was not just manufacturing, but going through the end-to-end supply chain and unleashing and refining our inbounds and outbounds. So, these are the three areas that allowed us now to go from 1,000 devices per month to 10,000 devices per month.
Yeah. So we're a couple of years off the brand new factory. What capacity-- You've gone up to 10,000 units. Congratulations. Fantastic. But, what capacity have we got in the two factories we've got now while we're waiting for the new, the larger factory to come on?
So we've got up to 150,000-270,000 devices per year. This is all dependent o the SKU mix, so the sizes and also the number of production operators that we would have in the facility.
So, that is, let's say, 70% growth from where you are today in October. We've grown over 60% in the U.S. this year, so t hat question then is how quickly we run out of it. But my question to you is: Is that 170, is it based on two shifts or two, and is it based on Saturday and Sunday? I'm just trying to think where you could really push that.
So this is basically two shifts without, without running weekends. We still have the opportunity to actually have another shift.
So, in my mind, therefore, and a lot of the analysts are saying we're gonna turn over, put a circle around AUD 100 million this year. Listening to you now, with Saturday, Sunday, or three shifts, we can clearly get over AUD 200 million, without worrying about when the new factory comes up.
Absolutely.
Okay, now, with respect to the new factory which we're building, it's, what's the capacity of that going to be?
We are designing for at least 500,000 devices per annum, and this is again dependent on the SKU mix. What we've considered during the design is not only the scalability, the flexibility and modularity, that we can scale up part of the process without the... the need to impact all the downstream of the process. So with David's new product pipeline, we've taken this into consideration, and this is the main area that we're focusing on in the design.
Yeah. So you're doing at that 10,000 a month now, you could do 20 if you really pushed it and didn't go home. And the new factory will do at least 5 x that.
Yep.
So that, that could produce everything we need for America and, and be a very profitable and very large company.
Yep.
Tell me this, Swami made a point of it, and I've made it before, about us being a capital light company, and so I think people are interested in when you go to 5 x or 10 x what we're doing at the moment, what does that really cost in terms of a factory? If I come-- You may not know the answer to this, but if I came to you and said, "I want to build a new cheddar cheese plant," my guess is it'll cost you AUD 300 million-AUD 500 million. What, what do you reckon? Give us a ballpark in terms of what you might think a new factory would cost us.
It's dependent on how far, how automated we are going to go. So, the state-of-the-art manufacturing facility that we probably got everything automated.
Yeah, we don't want to know that one.
And we don't.
We want to know what's a good serviceable?
From this is a ballpark figure, but we think from AUD 20 million-AUD 25 million.
That AUD 25 million? For something that could be supporting us as being a AUD 500 million-AUD 1 billion turnover.
Absolutely.
AUD 500 million.
That's correct.
Okay, that's great. Now, in terms of the complexity of this manufacturing process, this is the last thing I want people to just focus on. I often say it's a bit like baking a cake. Is it more y ou've run dairy plants. They're very big, complex, and high-risk environments, you know, with pathogens and all that sort of stuff. What are-- Is this-- Do you look at this as a manufacturing guy who topped the IQ test, I should say. Do you reckon, look at this as being a complex process by comparison?
It's a simple process, very scalable. The problem that we had was the inconsistency, because it's a very fairly manual process. But now we're managing this through the making sure that it's very consistent, very quality driven, but it's a very scalable process.
Yeah. Yeah. And another thing that often comes up for people who are a bit more softer than me is this issue about OH&S. And when I wander around lots of food plants, and I see people getting their arms cut off and their hands cut off and so forth. This environment sounds to me, compared with what you've come out of in the food industry, to be a relatively, relatively safe environment. How do you look at the OH&S issues you've got?
It's our top priority, so, but luckily, unfortunately, PolyNovo is a very safe manufacturing environment and with highly skilled operators and team. So it's e veryone has safety front and center.
Yeah. Okay, that's all I got for you.
Thanks, David.
Thanks for coming along. I'd now like to introduce Ed Graubart. Before I do, I just noticed sitting in the front row here, I'm not going to get you to speak today, Philip Scorgie. Maybe you just stand up for a second. Philip's only been on Board, I'm gonna say six months, but don't tell me it's eighteen. Okay, six months. I knew one of you had been here six months, and Philip's our new head of IT, and I-- We had a couple of questions which we know won't need to answer, but Philip's got really essentially two roles as far as I'm concerned.
One is in business, helping the business with CRM systems and getting America to talk to Australia and having that sort of consistency so we can share the load and share the knowledge and share the applications and so forth. But the second one, which we've got a couple of questions on, which we seem to get every year, is on cybersecurity and privacy data, which we don't have that much. But I just wanted to introduce Philip and just to say that he's been doing a lot of work on cybersecurity and on privacy. We've had a couple of outside agencies come in and give us a test to see whether they can get into our system, and that's come out looking pretty good for us so far.
But to emphasize, I think, where Philip's come from, and again, just to give you some comfort about this, he's come out of mainly the legal profession, working for one of the largest law firms in America, and then one of the largest law firms in Australia, even bigger than Minter Ellison, but even bigger. And so these guys are also in marketing. These guys are also, as you might imagine, very interested in privacy. So he's well-versed in all of that. I mean, Swami still can't work his laptop, by the way, but that's, he's concentrating on higher levels. So, anyway, welcome, Philip. Maybe you'll get into next year. But Ed, please come up.
Yes, sir.
So I think everybody-- Ed runs the U.S. We call him the President of Sales and Marketing. He changes his titles all the time, but the first question, I'm gonna ask you a question off script because it's come out from somebody on screen, but somebody, believe it or not, has asked a question to say that they believe the U.S. healthcare system is very corrupt. And what have we got to say about that? And I notice you've got a new jacket, so I'm just wondering how that got paid for. That's the first thing.
It was on sale.
But it's a serious question, by the way, so just... I mean, I've never heard it before.
No, listen, if you look deep enough, everything's got a little bit of fringe. Our goal is to stay compliant to what our true values are and to make sure that we're doing business with the people we want to do business with, and we just don't play in that space. If there's, you know, and I would say there's certain aspects of it that are corrupt, and there are certain aspects that are not, and the places that we really focus our business are not. I would not put in that corrupt space right now.
That'd be hospitals, for example?
No, I'm not gonna get specific for you, but-
Could you name them for us?
No, I'm not naming names.
No. Okay, that's great. That's a serious question, though, so I'll take that as an answer. But, I imagine that any corruption in any health service these days, the way I see it referred to, is what people are doing with the doctors themselves, not what they're doing with the institutions. But, in any case-- So we, Ed, you were here last year, so you don't need any introduction, but, we raised over AUD 50 million last year, as you just heard, and, that's no doubt given everybody a little bit more leeway to grow their businesses. And, what, if anything, has it meant to your business in terms of where you've gone from last year to where you are now?
Yeah, I think it's significant. And, Robyn, I appreciate what you say. U.S. has a large responsibility to this organization as far as the revenue goes and as far as profitability goes. So everything that we do has to be very measured and very thought out and value for every dollar because of that responsibility that we have. So everything that we did with the money that we were entrusted with was to invest in the commercial team. Anything that would push the business forward, either directly or indirectly. So obviously, we went and we hired a number of sales individuals, both management and associate level, as well as territory managers to build out the teams.
We invested in strategic accounts, so a lot of questions that we get about GPOs and IDNs and other contracts, how do we leverage those to get more out of what we currently have? And then, how do we go after the new ones so that we broaden our opportunity across them? We've built out some of the marketing team. As has been noted, there's new products coming, so how do we work with the upstream marketing? And then, how do we train our people? So we've hired some people on the sales training team. We have a sales analyst, so it's all about efficiency, really driving the effectiveness for every dollar that we spend. We have a responsibility to it, and we take it seriously.
Yeah. So do you look at yourself... We ended last year, and we said in our annual report, we ended last year with 56 sales staff in the U.S. You're probably now well over 70, but let's say it's 70. Do you see yourself as taking a breather for a little while and settling everything down, new trainers, new staff, and we, I mean, we, you must have 12 people that have been there less than a few months, so I imagine we're gonna see some sales come through.
Yeah. So we call this, we're calling this internally, the year of execution. You can keep building, keep building, keep building, but when do you actually take the time to get your feet, you know, get your feet back underneath you? So we're still gonna grow. We're still gonna add people where we need people. We're not gonna, we're not gonna skimp on that. If a market is growing, and there's the opportunity to put people in that market to continue that growth so that we don't flatten out, get stale, and then have to try to rise from that. If we're rising quickly there, we'll take a chance, and we'll hire in those markets quickly.
So a lot of the bigger cities where we've seen and we went with our new structure, or well, not new structure, but with our structure, we've been able to go get some extremely talented people that have turned the tables within a month of being here. So to me, that's, you know, that's a good investment. It's a good opportunity for us to get our-- Like I said, we hired 25 salespeople. Six-, seven- month tenure for a lot of those people at this point. So we're getting our feet underneath us, and we're starting to see based off the first quarter, going into October, now November, December, we're starting to see people really, you know, fit into the roles that they're supposed to be doing.
Got it. You, you'll know better than I, but my guess is that there's about 120 burn centers or thereabout in the U.S., and the last time I looked, I figured we're probably at about 110 of them, give or take. But, how much success are you having in-- And there's no doubt a couple of holdouts like there in the way there normally is, that you're wedded to another product or something. But how much success are you having in other hospitals outside of that?
So, we don't focus on burns. So let's be clear. You know, we're an organization that has all the indications except full-thickness burns which is why we're doing the BARDA trial. So the burn that we see is referral. It's from peer to peer. It's from the meetings. It's from surgeons hearing from surgeons about the clinical value that we bring, as well as the economic value. We're there to support them, but we don't actively go out and pursue trying to get their business. Our business comes from the trauma side, where we can go in and really demonstrate how we can p rovide a value to another group of surgeons within those same hospitals having access to the product. Yeah.
Last year, when we talked to Marcus, he'd just come out of the Canadian Burns Association meeting, and he reported to this meeting that there was a real excitement among surgeons, and they really wanted the product. And this was in December, that we were gonna go in formally. We'd already been selling into parts of Canada on a special access program, but have you still got responsibility for Canada?
Yep.
If so, what do you see that doing this year in terms of distribution? Because I think we're distributing in the West Coast, but not the East, or vice versa.
Yeah. So we had distribution from Toronto West. So we just recently extended that distribution into Quebec, so now we're gonna start entering into Quebec, and we put on a new sales agent in the east, up in the New Brunswick area. We're just starting to get that up and running.
New Brunswick. That's all, all you got salmon and seals up there?
That's, that's the other side, but, this is more of the lobster area.
The lobster, yeah, yeah. Yeah, that's great. But seriously, what's the difference, though, between what you've got there and what you've got in your team in California when you say, is it, is it, is it a direct employee or is it a—
It's a sales agent, so we still run the manufacturing, we run the facility. He's a commissioned salesperson b ut he is an independent, so we call him a sales agent versus a distributor, where you sell them the product, and then they will sell it to whoever they want. We still maintain control of the product till it gets to the end user. I like that because we, we get-- You know, we work very well together. They have a full resource of our marketing team and anybody else, and our clinical team through our medical affairs group. So they feel like part of the team. They come to our national sales meeting, they spend time with us, we spend time with them. But at the same time, they're independent.
Yeah. And so what, what's the time period to cover Canada? Have you-- Are you ready to put somebody on in the east of Toronto?
I'm full now. I just got to get them moving.
Okay, that's a good idea. I don't know why you're here.
Trained and moving.
Yeah. All right. Trends, do you see any trends that is worth sort of sharing with us?
Well, I think we're creating the trends, as Swami noted, you know, and we talk about where do we go next? I think when we start to talk about the trauma and the ability to really affect and Andy was here from the U.K. and was talking about 200 limbs are amputated every day. So really focus on that. And that's in the U.K., and I don't have the number for the U.S.
I probably should have looked at it before I came up. But that's a real opportunity because as has been mentioned earlier, that's a true cost to the society. And anybody who's ever known somebody that's been through that, that's an important factor. And if we can work with them through limb reconstruction surgeons and continue to build on our reputation. But w e have a clinical compendium, which you've seen, which outlines 172 articles. We're now up to 230 independent articles. And how do we use that data to go into a myriad of surgeons across one center to continue to build the business? I think our reputation is allowing us to do that.
Beautiful. All right. That's all I got for you. Thank you. Ed's available for coffee after this if you're interested. Now I'd like to introduce you to Anand Shastri. As Ed just said, we had Andy Eakins here, who's running the U.K., and I don't see-- Is he still in the room? Oh, he's right down the back. And we've got Raghu, who runs India, so he's down the back as well. So there's plenty of people to talk to after this. But I've asked Dr. Shastri to talk. He's our Chief Medical Officer in India, and as you can see, he's got a beautiful yellow thing, whereas I've got a BTM in mine here. Just to show sort of commitment, Dr. Shastri. That's what it's called.
And, anyway, the reason I asked Dr. Shastri up is that I was... I'd called into the strategy session two days ago, and you were talking, and he had a rather elegant way... Well, first of all, he gave a perspective on his long years in medicine, and what he thought of the product, which I'll come back to. And then he gave a rather elegant way of describing how BTM works. And I was ashamed to think in my own head that I still had a sort of gee whiz approach to it. You know, "Look at this. You put it on the arm, it works." And, and Dr. Shastri had a, he...
By way of an example on the screen, which he hasn't got now, but I wonder if you could just share with the people here today how you describe how it is that this is a game changer and how it works, you know, physically?
Thank you, sir. Good afternoon. I've been a surgeon for more than 35 years, and I've worked in the United Kingdom, Japan, Korea, and in India. And in these 35 years, I've seen only two transformative innovations. One was 30 years ago, and one was last year with BTM. And that's because of how it works. And I can demonstrate that just with this little 10 x 10 cm of paper. I wish I had BTM, but it's paper. There you are.
There you are, sir.
S o this little piece of technology has got about 20,000 little air cells in it that are connected to each other with micropores. And what that does is allow this wound to heal up in 20,000 little spaces, all independent of each other, but connected to each other just enough to allow nutrition, oxygen, and the cells that regenerate tissue together. And once it's, it completes its work, just like a sakura flower or cherry blossom, it silently floats away. Doesn't stay back. There is no animal protein in it. It's purely handcrafted with materials that medical scientists are very, very familiar with. They're entirely medically compatible and compatible to the human body. They're excreted through the breath, through the urine. They're not metabolized in the liver, they're not heavy on the liver, and they don't induce any reaction from the body.
Finally, because it's not made of animal protein, the risk of the device falling off or needing to be taken away because of an infection. They're never zero, but as close to zero as possible. To my mind, I saw a great transformative innovation 30 years ago. It was the ultrasonic technology for surgery, and I saw this on the 3rd of October, 2022.
Yeah. And, have you used it yourself so far?
Yes.
I should have said, by the way, we haven't announced this to the market, but we have now had our first sales, and quite substantial sales, as it turns out, into India. So, but I'd forgotten, and Jan had forgotten to announce that to the market, and that's been, I think, all in the private area. That, you know, we have some work we're doing at the moment on tenders for public hospitals, which will be very large sort of type orders. But we're off and running. So you, you've used it. What's your experience?
Yes. 80 patients. I've either assisted surgeons or done it myself, and the results are phenomenal. The quality of skin, the return of function, the return of mobility, that I've seen, 21 days is when you put the top layer of skin back. In three weeks after that, say, six weeks, patients are walking, moving, using their limbs, have much less need for scar management, much less need for rehabilitative physiotherapy. The patient can take their own time in getting final treatments done, and the surgeon has got a lot of time on their hands as well. So I've seen phenomenal results. I've put BTM on scalps that have been completely denuded with accidents. I've used BTM in areas where the bone has been exposed, where otherwise somebody would have had to have an amputation.
Microvascular surgery has got a very steep learning curve. It takes three or four years before a plastic surgeon can be trained to become a microvascular surgeon. This one has got a very short learning curve, and it's very flat. You can train a physician assistant. You can train a very experienced nurse. It possibly will be used in the outpatient clinic, and its application across specialties, not only burns, trauma, injury, loss of skin. It's really, really big. As far as you mentioned about tenders, in India, the peculiarity of government tenders, if I may take 30 seconds more, is that the tenders always go to the lowest bidder. We call it L1. When there are three or four companies that bid for it, t he lowest tender always wins, and BTM is lowest by far. It's less than half of one of the biological competitors, about two thirds in price of the second biological competitor.
Yeah. I, I want to come back to the operations you're doing, but just, before we go off the, the technology and how it works, I, I hope everybody understood it, but I just want to emphasize that when I was listening to you, I was thinking to myself: How is it that when I cut my arm with a knife, let's say, that it heals itself? Okay, I might, might not have a scar, but it heals itself. But how, how is it that if I have a wound that's, 2 in x 2 in, it doesn't heal itself? And the answer is: Well, when the skin's close together and maybe the epidermis isn't destroyed, you know, it can, it can-- The, the cells can come together again quite quickly, and on a big wound, that can't happen.
How is it that it does happen when you put BTM on? Because BTM is not a piece of foam, it's 100 pieces of foam where each little cell, 10,000- 20,000, or whatever. And I think that's really important for people to know about. You know, when we're trying to figure out how long is this gonna last, why is it different, what's the competitors like, and so forth. Can I just— Do you want to say something?
Yes. Just wanted to make a comment on that. The little piece has 20,000 little cells that are less than a millimeter in size. For those of you who've donated blood or have had blood taken out of your arm for blood tests, you'll find no scar there, because that wound is less than 1 mm. It regenerates. A bigger wound, like you said, 2 cm x 2 cm, heals by scarring. So what BTM does is replace scarring by regeneration, almost like a lizard grows its tail back.
Yeah, yeah. Great. One question which came out of that video we saw this morning, and one I saw the other day, a little boy that was done in India as well, is that in both cases, you've done an operation on somebody that's had a wound five, six, seven years before. And so you're trying to repair something that was badly done at the time. Are you doing that as an experiment, or are you doing it-- What, what, what is it that's driving? Because everybody else in the world is just waiting for the next burn patient to come in on us, but you're going back and getting people and, and is that to prove a point, or is it, is it a charitable thing? What, what's going through your mind when you—?
No, no, it's. We're using the appropriate indications for technology. So when you lose your skin in its entirety, that is the upper layer of skin as well as the foundation. The best method to replace it is to use a foundation, which is BTM. Strengthen it with a superficial layer of skin. Most of our burn patients go to government hospitals where BTM will come in through the tender process. So that's on its way, and hopefully in a month or two, at least by the end of the year, we should have them in the government hospitals, where the acute burns will be treated as well. That's going to be probably one third of our target.
Yeah. So that's good, and that gives people a sense of-- I don't think anybody here needs any convincing that India is a big market. And, you know, I think one of the things I observe is that burns in the West are diminishing, and the burns that are there are either from people trying to top themselves or more particularly, they're industrial burns, and they're mainly men. When I go to India, China, Indonesia, there's a lot of children and women who are burned because they've got fires in the home and so forth. But so we know how big the market is. It's probably 10 x as big as what America is in the burns. It's the same as in parts of Africa. But can we really make it work there? That's what I want to ask you.
Can we meet the market, do you think? And, you know, the market's there, but when they're choosing between snake skin or fish skin and us, you know , h ow are we gonna make that market? How optimistic are you, and why are you optimistic?
Yeah, very optimistic. There are two routes by which devices are available in government institutions, which treat about 80% of acute burns. One is through the tender process, where the lowest tender bid always wins. There's no competition for it, and we are non-biological. The second route for government hospitals is through our CSR or corporate responsibility, where our sales team actually is so focused on patient first, that they enable patients to connect directly with these organizations to get them in as well.
We've got a big sort of public insurance scheme, which covers about 400 million patients in India through these three hospitals. There's no doubt that burn patients will be treated with the latest standard of care wh ich is BTM.
But do you think those tenders are gonna be done on functional lines or on, characteristics? So, for example, will they be tendered to do wound care, and they don't care whether it's biological or not biological, or will they be tendered to do, non-biologicals, for example?
It doesn't matter, because biological, wound care products are much more expensive. S o i n either case, in one of the tenders that I saw, it specified biodegradable. It includes everything but i t basically is part of our name. BTM is biodegradable.
Yeah. That's great. Dr. Shastri, sorry, there's a question, for goodness' sake! This is good.
I'd like to ask a question about robotic surgery, which is done on limbs and other things, and do you see that as a future for the industry, and do you think PolyNovo would lead that if it came close?
Yes. I don't know, Swami, if I'm permitted to speak about the pipeline that you had mentioned.
Well, I think David will say something about it when he comes up, that it just might be just a general comment.
Yes. I think, yes, PolyNovo will. There are specific indications in which, this technology can be used through keyholes to be able to repair, defects that are inside the body, in comparison with what is being used currently to repair defects outside the body.
Yeah. Yeah. Thank Dr. Shastri for coming all the way from—from where? From Delhi, or... Shastri? Shastri, where... Dr. Shastri, where are you from?
I'm from Mumbai.
Mumbai. Thank you.
Thank you.
Yes. Good. Thanks for coming all the way. Give me that back. You can't be trusted. Beautiful. And finally, just to give you a sense, I think of where the pipelines are going to, I've asked David McQuillan to come along, who's now gonna come up. And those of you who know, he spoke last year, but he was also previously on the Board of Directors. And he's lived in both places, Melbourne and Pennsylvania, and probably other places, for all I know. But he's now been leading our R&D effort for the last more than six months anyway. 12, 12 months. And so David, first of all, what-- How big is your team now?
We started, we had two men and a dog about two years ago.
Now what have we got?
It was a very small team. I think, when I came on Board, September 1 of last year, we probably had four or five people. Don't quote me, but somewhere around that. We're now up to about, 14 folks.
Wow!
We're expanding the capabilities. So we were certainly very focused on polymer chemistry, which is our, our core technology. So that was appropriate, but as we expand into developing new products, we need product development engineers, we need packaging engineers, we need folks with expertise in developing new products, new prototypes, testing in animals before we go into the clinic. So i t's a work in progress.
Give us a sort of-- Think about our product range as being a waterfall. We start with BTM, come down to MTX, come down to whatever. Just how do you look at that waterfall yourself?
Yeah, all right. Waterfall wasn't the analogy I would use, but we, we think in terms of, well, I'd say two buckets. So where we play, and where Dr. Shastri talked about it is graftable applications. So anything on the surface of the body is sort of where we're playing commercially, and we're extending our reach and all sorts of graftable applications. And then the second bucket is implantable applications. And then when you talk about robotics, it's implanting materials inside the body. And the places that we've talked about and continuing to talk about is hernia, abdominal reconstruction, post- mastectomy, breast reconstruction, orthobiologics, repairing, reinforcing tendons and ligaments.
Rotator cuff.
Rotator cuff. Yes, rotator cuff. So the two buckets, and we're looking to develop products to address both of those opportunities.
Yeah. Yeah. So what do you see as your next registerable IP, do you think? I mean, or is this just a continuum work in progress? You know what I mean? Is there a big-- What would be the next thing that's gonna excite people, I think, that you will be registering?
Registering IP?
Yeah.
Or registering products. So, you know, we continue to play with the chemistry of the polymer. But, you know, as magic as the BTM is, and the foam is, and its performance in the body, no product is perfect, so we continue to explore what we can do to enhance its activity. And of course, long term, you can think about adding growth factors or stem cells. Shorter term, we look at coating materials. So we know that our material, particularly in implantable applications like hernia, for instance, will drive adhesion formation, for instance. So if we can coat that material, we can change the surface chemistry of that material to prevent adhesions, then that's obviously protectable and something that we're looking at very closely.
And also application of that material to a whole variety of different applications. Short of that, and that's sort of taking some significant leaps, we also remain very focused on extending the current portfolio of products, taking BTM and MTX and listening to what our surgeons need and making changes, line extensions to that. So different shapes, different clinical applications, wrapping around a finger, wrapping around an arm, wrapping around a torso, managing different contours in the body. You know, the dermis that we're replacing, it's a dermal replacement, varies in thickness across the body, anywhere from 1 mm up to 4 mm. At the moment, we have a 2 mm product, so we're gonna be producing thinner and thicker versions of the product. So that's short-term opportunities to address surgeon clinical needs, and then we go into implantable applications like hernia, breast reconstruction.
Yeah. So let's just dwell on hernia for a moment because it's probably the most common question that comes up in terms of promises we've made. Promise is probably too strong, but the indications we've made on the back of your advice, by the way, I might say, just to protect myself. But, you know, where, where do you see us, in our sort of hernia, apart from other implantables? You know, they're all different, I suppose, but, and all the same in another way, in the sense that we don't want the plastic on the top or the laminate on the top. But what, what do you say to somebody who says, "You know, two years ago, David, you said we're one year off hernia, and then 18 months ago, you said the same thing." I mean, where are you, David McQuillan?
You shouldn't have said it.
Yeah, sorry about it.
You know, research is fraught with risk and the occasional failure. You know, in my mind, the opportunity in hernia, and hernia is not just a single opportunity. There's simple hernia, there's ventral hernia, there's complex abdominal wall reconstruction. All require slightly different products. And I think as we've seen in the performance of BTM, the regeneration of BTM continues to convince us that we can play in those places to reinforce and regenerate abdominal wall fascia in hernia applications. So, you know, we've had a couple of missteps, but I'm pleased to say that we've made significant progress this year. I think when I answered a question last year at this time, I said we were developing a number of different prototypes, but didn't give much detail.
I can say now that we've taken our NovoSorb polymer, which is, quite a special resorbable polymer, we've turned that into a monofilament, under high tolerance. We've taken that monofilament, and we've now developed, knitted woven meshes, which will address, simple inguinal hernia, for instance. We can take that mesh and then use that to reinforce the NovoSorb foam material. And as Dr. Shastri very elegantly described, the magic of BTM is not just in the polymer itself, but it's also in the architecture of the foam. So we can take that foam, reinforce it with the knitted mesh, so now we have a material that meets the biomechanical demands of hernia, ventral wall repair, and we can put that foam on both sides of the mesh. We see a portfolio of products c oming up.
When you're talking about mesh and meeting the technical requirements, you're really talking about strength, right?
Yes.
Because with the laminate on top, that was gonna be great for strength, but we don't want the laminate to stay in the body, so what's the alternative?
Correct. So we're now-- The approach at the moment, among others, is to take the knitted mesh, use that to provide the strength and then take advantage of the regenerative capability or potential of the NovoSorb foam M aterial.
Great. And so just one final comment, a bit like what I asked Marcus, what you know, it's five years on, what do you sort of-- How do you see the company in terms of its, its hierarchy of products, if you like, if you, if you could guess?
Yeah, that's, that's tough. I think, NovoSorb BTM will be our flagship product g oing forward. We are looking at modifications to that, as I said, surface modifications to perhaps drive more rapid incorporation. We're looking to coat it with antimicrobials because infection is a clear issue in any surgical procedure, whether it's acute wounds or chronic wounds. S o it'll be a mix of BTM, similar, perhaps t o what we have today, and I think that will continue to be an exceptional product, but there'll be variations on that theme. And then I think again, five years, then I think we'll be having a significant impact in the hernia space and perhaps in breast reconstruction.
And do you think we're doing enough to protect ourselves from competitors with freshening up our IP, registering new IP, and do you have any interface with, say, Christine and others on this issue?
Short answer is yes. I think we are doing enough. I think it's IP, as Christine mentioned in her introduction, it's a mixture of patents and trade secrets. S o we're extraordinarily careful about not sharing too much about what we do and how we do it, and the downside of filing patents is if you don't get the broad claims that you would like, you've taken the risk of disclosing how you do what you do. So we have a significant portfolio of trade secrets, and we go to great efforts to protect that, and we're very careful about what patents we file. Take a very hard look at what claims we think will get issued, and if the claims aren't broad enough, then we'll withhold that, and we'll retain that as a trade secret. So that's the short answer, I'd say I think we have a broad intellectual property portfolio and w e continue to build on that.
Great. David, thanks for your service, as they say in America, and let me give that to Jan. Yeah, please. Thank you for that. Just some final words from me, instead of going through right up my presentation, I hope everybody got something out of that, and really want to concentrate on the detail about our capacity, the what the surgeons are thinking about us, how we're growing, and more particularly, what we're doing to give ourselves some blue sky and product development as we go along. FY 2023, we grew roughly by 60%, but when you scratch the surface of that, it was over 100%, and it was 100% in overseas.
I'd particularly call out Andy in the U.K., which I thought was going pretty slowly for a few years, and this just last year, and in particular, this last quarter, you know, they're really kicking some goals over there. So U.K., Ireland, Scotland, fantastic. Didn't do that well in the World Cup, but they're looking pretty good on the sales. So I think the other thing I'd say is the U.S. is profitable, it has been profitable, and it's still growing. And I'd like to apologize in advance about profit that we're in danger of making a profit for the first half. So I apologize for that because I'm not necessarily proud of it.
You know, if we've got growth opportunities, we want those growth opportunities, but we're growing so quickly and the margin is so good that, you know, there's every chance we will be profitable, without giving any guidance, by the way. You take that, and we'll come back and talk about it next year. But, I think, we ended the year with AUD 47 million on hand, so got plenty of cash, and we don't really need it anymore in any case. Although, you know, we've got Ahmed building a new factory, and we've got David, you know, sneaking 14 people under his wing, which I thought was six. So, you know, there's a lot. There's a bit gonna happen there.
The hospitals are going through the roof, so this time last year, we were servicing 470 hospitals. This year, at 30 June, and it's higher now, 638 hospitals around the world. Staff have gone from 152 to 225 in the last year. And you know, that's come largely from sales expansion, especially in the U.S., but more particularly Canada, Hong Kong, India now as well, and India, you know, could be a big sleeper, depending on how these public company contracts go on, and so forth. And we've still got up our sleeves China and Japan, and I, in my own personal sleeve, have Indonesia as well. So we've got lots of potential out there. And we've had--
We haven't announced India as having our first sales, but I think, and I'll probably get the countries wrong, but I think in the last couple of months, we've had our first sales into Iran, Turkey, and Finland or something. Anyway, some God just taking countries that are not in the World Cup of rugby. So, you know, we're getting expanded R&D team, we're getting new indications all the time. I've said it before, it's the most amazing business, really, because we're being surgeon-led.
There isn't a month goes by where some surgeon doesn't come up and say, "I've found a new use for it." And so we're sort of playing catch-up in the sense of saying, "That's great," and then we pass them across to David McQuillan going, "Is there anything in this, or is this just a one-off and leave them on their own, or do we make it into a product?" So it's really quite an exciting place to work for that reason. I think we're going great on our pivotal trial. We're up to 76 out of 120, as Swami said, which puts us on our way to PMA. I mean, one of the things that Ed's got with his hand behind his back is that he's really, he's not selling in, because we're not indicated in burns.
He's not selling into burns, even though the burn surgeons want it. So this will formalize a lot of that for us, and we've still got Canada, of course, Japan, China, and there's some things that are happening there. I think we've got a whole lot of new staff, so Phil Scorgie been great so far, but and by the way, I used to teach at university with his father, so I've got his, you know, I knew him from when he was a little baby, and he still looks pretty young, but he's a good unit. And we've got a new head of HR, who starts on December 11th, Susie. And she's come out of a couple of public companies as well, so it's great.
We've got great diversity, got our, great I&O engineers, got cybersecurity handled, all of those, what I'll call softer issues anyway, we've got well and truly under control, and, we've got very good support out of BARDA and FDA. So I couldn't wish for anything better at the moment. It's going as well as it could be, ever, everywhere, and, that's the, that's the short story. But I'd like to really thank, all of the shareholders because, many of you are rusted on, and, can I see that last slide? And, and I'd like to particularly thank our surgeons because, and, Marcus in particular, who spends all hours of the day and night, you know, talking to surgeons and educating them and bringing them on, and, and, so forth.
He and I have been, and Swami and a few others have been spending a lot of time on the Ukraine and, and Israel in the last just couple of weeks. We've been approached by the Ukraine government. I don't want to say too much about it, but there's quite good prospects for supporting them, and ditto into Israel. And I've got a feeling some of that's gonna come to a head in the next days or weeks, in any case. And, you know, I can't think of anything better to end the year than by helping, you know, people in desperate need for their lives, with war wounds and so forth, wherever the, whatever the side of the river to the sea they're on, and whatever side they are on in Eastern Europe.
We don't make any decisions about the politics. What we care about is making sure our product gets into those areas really quickly, and, and I think it's heartening, even if we want to cut our cloth in terms of how we charge for that, that there are people around the world who will, who will also contribute to that cost outside of the countries themselves, in their own diasporas. So that's really sort of quite exciting, I think, for us. So, going back to my point about profitability, we're on track to what we said last year, and, and, and I think it's, it's gonna be a great year for us in, in more ways than one. So, I'm gonna close the voting now. So, Angela, if you could pass around your cards.
I just did this this morning on my way into the office. Oh! But I just wanted to, because we're messing around comparing ourselves with a number of different companies. One's TELA Bio, Integra, of course, Aroa, of course, Avita, of course. And I just did this on the way down in the tram, but down below, you've got Aroa, you've got TELA Bio, you've got Integra, and you've got the ASX 200, and the two above, the blue is Avita, and the red is us. And we're right at the end there at the moment. So it was quite interesting for me because I thought Avita was sort of lagging the whole way along, and it just recently spiked up, which it has.
But, anyway, look, lies, lies, and damn statistics could be anything, but I just thought I'd leave that up while we go to the voting. You okay, Ed? Okay, great. While we're just waiting to close the meeting and for the voting to finish, are there any other questions that you'd like to ask? Yes.
David, this time last year, a gentleman got up at the meeting, and I think it talked about his experience, where he'd actually traded the stock five or si x and made a lot of money out of it. And your comment was, "Put it in the bottom drawer and leave it." Yeah, at the moment, it's sitting in the bottom drawer.
Yeah, that's right.
So, is your comment still the same? We leave it in the bottom drawer and watch it go up?
Well, I can answer that in a couple of ways, but I can answer it by telling you that that's what I've done with my own stock. And, and, I still-- You know, I mean, this is what's happening to the market. So, you know, if Integra, which was $7 billion, is now $2.5 billion, this is that, you know, this is who we would consider our main competitor. Avita, you know, we don't consider as a competitor, but complementary, but TELA Bio, Aroa, they're all-- They've gone nowhere, really. So I still think, it's put it in the bottom drawer, but I'm just looking just here for a second. So, you know, I like to look at my screen as I'm talking, to see whether it's going up or down, you know, whether anybody's listening to me.
But, you know, in the last week, the stock's gone from AUD 1.10 to AUD 2.29. Now, Sherry bought 30,000 shares just two days ago. It's just announced this morning that the stock has changed. So I imagine that people are going to see Robyn buying or me buying and, and say, "You know, yeah, there's, there's something coming." So I think you will see the story today is great, and we're probably underdone, but so are all our competitors. So my advice, long way around, of saying, put it in the bottom drawer. And, I know your son-in-law as well, so he would love you to have it in the bottom drawer. Okay, the voting is closed. Oh, sorry.
Just online questions when you [crosstalk]
Yeah, okay, go ahead.
But that's up to him to get through, so I'll stay far away. There are still a number of major GPOs to be signed in the U.S.A. Are we any closer to having an agreement with the remaining GPOs?
Well, I'll let Ed answer that.
So, like I said before, the goal is to maximize the relationship with the current GPOs. We're mid-cycle with three large GPOs in the U.S., meaning they sign you three-year contracts when somebody gets in there. People who sign those three-year contracts expect a commitment from the GPO and the hospitals within that GPO that that's their business, and when they let somebody new in mid-cycle, it usually throws it off a little bit and creates a lot of hassle. The good news is all three are up for RFP or I think what you all call tender here, for early to mid-next year. And we have already submitted one, and we have the other two that we're in the process of submitting to. So the goal is by the middle of next year, and this, and the G—
Working with the GPO does not restrict us from doing business with all of their hospitals. There's still... We still, we do a lot of business, significant amount of business, within the three GPOs that we don't have signed up. So there's always that risk a little bit, that we're going to take a step backwards to take a step forward. So it's got to be right, the deal that we work with them or the deal that they work with us, it's got to be mutually beneficial.
So the focus has got to be that it works for us, and it works for them. And so the deals that we're putting together, I feel, do meet that our strategic accounts team and someone who's got a lot of experience with this, that we just recently brought over from a competitor, she's absolutely fantastic. Her and her team are working on this. So I am expecting that by the middle of next year, if all the terms and everything meets, we will have the final 2-3 large GPOs on Board, and we are renegotiating the current one is coming up for renegotiation, and we've already stepped up on that one.
But Ed, you know, I've always had a view that people overstate the importance of these GPOs, and I noticed in the analyst reports yesterday on Aroa, they may, Aroa themselves are making a big deal out of, "Oh, we've got We've just signed Premier. We just signed this one." Yeah, but so what? I mean, it makes, it makes it easier to transact with the hospital. You've still got to get the account, though. And so how much are the GPOs really helping you sell as opposed to bringing up the rear, you know?
Yeah, the surgeons still have to want the product, number one. Number two, you still have to go through what's called the VAC process, which is the value analysis committee. So signing the GPO does not shorten that period of time. I can tell you that it might take three months to get through a GPO, or I'm sorry, through a VAC process. I will also tell you it took us two years to get through it, through one that we just got in last month, in October. So that still varies whether you're signed with that GPO or not. All the GPO does is assign pricing per tier level. So if you use X amount of product, you get this price. If you use this amount of product, you get Y price. That's really all it does.
And like I said, some hospitals do hold it a little bit more. Use that as a way to keep you out, but what we've learned is, if a surgeon wants something bad enough, and they can commit to the product, and they can convince their peers, they can go to the hospital, and we can work around the GPO. So it is a bit overstated. Would I like to have them? The answer is absolutely yes, because it is a license to go and hunt, but we still have to-- You still have to do the hard work.
Yep, got it. Thank you for that.
Another one for you, Ed. Were you there? On all metrics, it would appear BTM is a superior product when compared to its competitors. Why is it then that we compete so aggressively on price in the U.S., notwithstanding the fact that the price of BTM was raised earlier this year in the U.S.?
Yeah. So we, so we didn't raise the price of BTM. What we did is we lessened the discount from the pro- than the discount that they had previously. We did not touch the list price of our product. We just went back and renegotiated the discounts with a majority of our hospitals, those that are not signed up for GPOs or on other contracts with us. So we work... The U.S. system's a little bit different. I don't want to get into it.
Yeah. It's all right.
Stand up here for an hour and explain, you know, how this works, but the hospitals don't get any more money dependent, regardless of the product they use. They get a set amount of money for surgery. It's our job to partner with that hospital to make sure that we provide the economic value, so they get clinical value. So this is a strategy that we employ. We did not employ a pricing strategy during COVID to be good partners. These hospitals were focused on a lot of other things other than dermal substitutes. So they were, they were, you know, treating COVID patients and all the things that came along with that. So we decided to be good partners. We held firm on our pricing. We came back, renegotiated discounts with the majority of the hospitals, where we go and as their contracts come up, we're renegotiating with them.
What we are finding is, as we sit down with them and have the discussion at the business review with them, they're actually opening up additional hospitals within our systems to us. So it's a great opportunity for us to partner with them through it, through the DRG system, which is that set amount of money, so that we do provide them a value. And we do have a strategy that we're employing over the next three years, you know, to make the most of those, to take advantage of the pricing and the value at the same time.
Yeah. Look, pricing is very sensitive, obviously, from a commercial point of view. Suffice to say, we're very much aware of where we sit in the market and how much fat we've got to play with. But as Ed implied then, I mean, the first things first, let's get the product in, let's get it used, let's prove the value, and then we'll talk more seriously about pricing around the world, not just in the U.S.. So I don't think we're playing the pricing game at the moment. We may be playing a bit of catch-up for ourselves, but we're not leading the market or matching the market because we don't need to.
Right. Thanks, David. When does PolyNovo envisage the production capacity will be at 100% at our current manufacturing facility in Port Melbourne?
We've already answered that.
We've already covered that. Okay.
Everything. So switch from email.
Just, yeah, come on in.
Probably the short answer to this question, so, short answer to this question is I've got no idea, but I've got my shares in the bottom drawer because look, unlike most of my investment, I looked at this one fundamentally, like, what, what are they actually trying to achieve and-- What's the goal, and how are they operationally getting there? I'm very happy with what you've done. The rest of my investments are all based on market, what the market is actually doing, and markets, it's driven by market sentiment. Market sentiment is completely illogical. It doesn't recognize the things that you value and the three great things you've done. When will they wake up? When do you think the market sentiment will turn and say, "Shit! Look what they... What? How much growth?
You know what? Look, it's not all market sentiment, and I'll just give you a couple of what-ifs. I mean, first of all, interest rates have gone up and will likely go up again next Tuesday, and that raises the cost of capital, which pulls down values. So that's the first thing. Second thing is, because the markets have been tanking, a lot of the smaller fund managers, who are our, some of our shareholders, are getting their funds withdrawn. So I'm sitting there as a small fund manager with AUD 500 million, and I've made negative returns. So the Myer family rings me up and goes, "Give me that AUD 50 billion back because you've lost me 10%, 10%." So they're losing their funds, which, what does that mean when they lose their funds? They've got to sell shares, replay.
So there's a couple of fundamentals that are happening that are not really to do with market sentiment, and it's very easy for these things to get oversold and to come back pretty quickly. So today, the stock's traded at, you know, AUD 1.30. Okay, it's hardly much when it comes up from AUD 1.10 to AUD 1.30, but it's heading in the right direction. And all we can do, I mean, look, you know, I don't have to apologize for where we are, but all you can do is just keep putting one step in front of the other, one baby step in front. Keep doing the right things, we will be profitable, where our sales are going through the roof. And, but I think the fundamentals in terms of our competitive position are amazing.
But the thing that people should, I think, also take into account, which affects me, is to say, "You know what? If you get burned today, I don't care how bad the recession is, you're getting fixed." And so it's a defensive stock, you know, in many ways. Whereas I can tell you, the people say, "Oh, you've always got to eat food." Well, I can tell you just from Coles' own data, that in the last, say, six to seven weeks, the branded sales of nearly every product are off about 15%. Because people get woken up, and they got AUD 500 bucks in their mortgage. So they don't buy brand product, they buy their home brand product, and they buy a lot of fresh stuff, and they cook at home, and then they don't have as much waste.
So the whole market is being sort of dragged back. But we're defensive. You know, you don't you can get away without having to eat beef or cheese, for example. You can't get away without having to eat Vegemite. You've got to eat that. But apart from that, you know, you know, we're defensive. You get burned, you're getting fixed. And I can't think of a better stock to be in, you know, that's competitive in the price already, but defensive. It's fantastic, you know?
Thanks, David. Why is Australia and U.K. not declared as profitable, given they are more mature in terms of being standard of care compared to the U.S.?
Well, first of all, you can tell me whether it is profitable or not, because I'm imagining that U.K. must be pretty close to it now.
They are. U.K. and Australia are.
Are profitable. Yeah. So, but you know, it's to do with the cost allocations as well. And so, you know, Ed's, you know, we, he's, he complains a lot, so we can't get him too much overhead cost or he'll just make my life a misery, you know? But seriously, it's a cost allocation game around the world, but with the current sales rates, Australia and the U.K. should, because they're both turning over, well, similar amounts, actually. But they're both getting, they both should be pretty profitable. Certainly at the contribution line, they'd definitely be profitable.
Yep. Thanks, David. Next question: What has happened to the appointment of the head of legal mentioned during the annual report or annual report recording season?
Yeah, it hasn't been settled yet. We've got, you know, we've interviewed a couple of candidates. We just haven't quite found the right fit. We missed a couple because we were a bit slow, and it'll happen. We're, I mean, there's a lot of people coming on, and as you can see by Philip, I mean, we're not taking second class. We want the top of the tree.
Very good. In regards to India, can we share the sales to date?
Uh, no.
No. Very good.
Moving on from that, why do we continue to investigate partnership or investigate partnership opportunities when, in my opinion, the past partnerships seem to stagnate with little news on advancements?
Well, I don't know what that's referring to, but so I don't agree with it necessarily. But, you know, we've got an open mind about how much we can do ourselves and how much we, and how quickly we can do it with others. PMI, let's take PMI as a good example, right? Which is our distributor in Germany, Austria, Belgium, et cetera. You know, we went there in partnership, and within, you know, a month or so, we had our first order, and a big order, because they were talking to surgeons, the same sort of surgeons we're talking to. So it was an easy sugar hit. You get two years down the track, and you think, "Shit, could I do it better direct?" Well, maybe, you know, and, and the, these things are a work in progress for us all the time.
We're happy with PMI at the moment, but, you know, it could be that if it doesn't suit us, we take that agreement away, and we go direct. You know, we've got-- We know the surgeons and so forth. But I, I think the partnerships can definitely work, and they can work on a number of levels. Because I think in the PMI case, we've got a partnership that allows us to distribute in countries before we would have got there ourselves. Now, if somebody comes to me and says, "Can I be your distributor in the Ukraine?" Bad example, but we might go, "You know what?
We were never gonna go to the Ukraine in the next 10 years, so what have we got to lose?" But the other partnerships that we'd be open to are people who bring some sort of technology that enhances our product, enhances the products we've got in our bag, you know, that we're going to the same surgeons for. So there's all sorts of ways to cut that, but I don't think they've been a failure in the past. They're always... You know, they're always hard work for anybody in any sort of partnership, but we've got an open mind.
Great. Thanks, David. Can someone comment on the revenue value of the donated 65,000 sq cm of BTM? I can tell you that's about AUD 600,000 worth of product that were donated.
Do you want to?
I'll just answer the question.
You've answered it.
Yeah.
AUD 600,000? That's it.
At least, yeah.
That's cost.
Retail value.
Retail value?
Yeah.
Which retail value?
Australia or U.S. Australia, it's the lowest price per square centimeter.
Okay. So maybe $1 million worth of product.
Well, in U.S. dollars, yeah, slightly higher.
Yep.
I've just taken my 65,000 sq cm m ultiplied it by the Aussie dollar, lowest price, though.
Yeah, true.
Great value in the U.S., no doubt.
Yeah.
Absolutely.
Yep. Okay.
Very good. Manufacturing question: As you progress to expand the manufacturing facilities to support AUD 500 million in annual sales, how is the Board considering the concentration risk of having all production in one location?
Well, it is something we've thought about and, but not something we've done anything about except to buy the factory next door. So if one burns down, we're hoping the other one doesn't burn down. But, Robyn's the expert on concentration, given she just built something for AUD 700 million. So what do you say, Robyn?
I think it's always have mitigation plans. So as we build our facilities, we build them in a way that we-- So we build these factories in a way that we build them on the same street.
I would say, you know, we've discussed it very lightly over the years, and you know, we will get to a stage in our growth where we might decide to put a plant up somewhere else in the world. Where that will be will be a bit dependent on how the markets have developed, but it could be in Ireland, it could be in Germany, it could be in Pennsylvania, you know, not sure. Anyone?
Last one, David, oh, yeah. Is there one thing keeping management up at night where the company is heading? What would that be? Is there something management sees as a headwind?
Well, let's just test that. Philip, you don't have a microphone, but what keeps you up at night on the IT side?
Security always.
Security. That's common, but you're doing a lot of things to mitigate it.
We are, yes.
Yeah.
Capacity as well. It's very important we can accommodate the extra capacity.
Mm-hmm. That's good. And he's using a lot of outside help. In fact, I was a bit surprised at the strategic planning session when, you know, we never used to have an IT person. Now we've got an IT person, and I heard you say, "I think we should keep outsourcing all these things." And I thought, "Why do we, why did we actually hire you then, for Christ's sake?" Anyway, security is his name. David, what keeps you up at night?
I think we have obligations to think about obsolete BTM.
Yeah.
Be aware of the competition every day more than that.
So, yeah, from R&D's perspective, it's about being prepared to obsolete if we need to, but in the context of competitors and keep, as you said before, keep building new products and new variations. Ed, what keeps you up at night?
Our people. Just making sure we keep the people that we want here happy, keep them functioning.
Yeah.
Minimize turnover.
So this is Ed. He wants to keep his people and minimize turnover and keep them happy. And this is coming out of the mouth of a man who, four years ago, probably had 10 people or 12 people and now got 97?
97.
97 people.
Close to 100 now.
And close to 100. Ahmed,
I think with everything happening around us, we were, what keeps me awake at night, another COVID, another pandemic, another war, supply chain disruptions.
Yeah. Yeah. Okay. Jan?
I think just the execution of all our projects, just making sure that we get-- We do deliver on time, and, you know, everything's in place to make sure that happens on a daily basis.
Yeah. Yeah. Dr. Shastri, I should have asked you first in India.
Creation of the category and awareness in India, as far as India is concerned, that is what keeps me awake.
Yeah, but you know you're doing okay.
Oh, we know we can do it.
Yeah. Yeah. Okay, Swami, finally.
What keeps me awake is the opportunity to reach, you know, maybe 100,000, 500,000, or 1 million patients, because I know the patients are waiting. How do we manage our short term and long term to get there without really burning our people down? Because I think we... I see significant upside in growth. I agree with you that we are a defensive stock. It's an extremely disruptive technology. How do we grow, and how do we also carry the people along with us, including surgeons and everyone? So I see upside.
All right. Ladies and gentlemen, I'm sorry that took a long time. It's 3.25, 2.25 hours, but I hope it worked for you. I'm a bit nervous about this, turning this into a circus with all these people talking, but I'm hoping you'll go away with a much deeper knowledge of the company and what we're doing and a much harder conviction on that we're heading in the right direction. But thank you all for coming. Thank you to our surgeons. Thank you to our staff in particular, not just the fat cats who are sitting here, but the people who are doing the real work. And thank you to my Board, and I close the meeting. You okay, Angela? Oh, okay, great. All right, done. The meeting is closed.