$PNV AGM Recording is now available.

It's worth viewing to hear the updates from the Regional Sales and Marketing Directors.

AGM Recording

My AGM Notes

At almost 2 hours long, the majority of the AGM focused on a series of apparently unrehearsed interviews with staff including: Sales Heads of EMEA; Americas; and APAC; and the Head of HR and, importantly, Professor Marcus Wagstaff (long term $BTM key opinion leader, who seems to be increasingly acting as a global roving ambassador for $PNV, and who has a significant share-holding via his wife) . 

These are the notes of points significant to me. If you want more, check out the transcipt when it gets published in a day or two. In the detailed notes I call out some coments and further analysis.

I’ll not repeat remarks from DW and SR which you can read on the ASX release.

I’ll structure the topics as follows, with key messages:

1. EMEA – entering new territories with UKI growing strongly after pandemic-delayed start
2. North America – no significant new insights (I found this a bit fustrating)
3. APAC – developing plans to enter China and Japan, world's second and third largest markets for medical devices
4. Prof. Marcus Wagstaff – reports on support to conflict areas and India vist.
5. Revenue – “on budget” – no updates on sales/revenue for Q1
6. New products: no real update, vague positive noises - still sound years away
7. BARDA: concluded – 120 patients enrolled. Discussion with FDA on package submission requirements expect to conclude
8. Expanded production capacity – expected onstream Dec-25 taking number of devices from 110,000, new capacity will be almost 5x. (No further detailed notes provided, as this was covered in detail last year, and sounds on track.)

Overall: $PNV appears to be broadening and deepening global rollout, now supplying 42 country markets. A lot of runway ahead.

The one thing I wish I know more about: Trajectory and sense of runway ahead in the US.

Before adding the detail, I'd just comment that when asked would $PNV consider acquiring $AVH, DW confirmed the details of how $BTM works as were discussed in this forum over the weekend (https://strawman.com/member/forums/topic/10097) i.e., complementary to ReCell ($AVH) and/ or STSGs. In fact, DW said his email box had been inundated following the ABC report on engineered skin, and he confirmed that products focused on repairing the epidermis would be used together with BTM which focuses on dermal repair (Read: @Aaronfzr post on this if you want further detail.)

My overall takeway

Another great opportunity to learn about the products and the markets. However, on revenue growth in FY25, I am none-the-wiser beyond expecting that it's neither blow-away great (>40%) nor terrible (<20>

So my best guess is FY25 Revenue Growth in the region of 30%, which is above what my mid-range of valuations requires (25%). And that will have to be good enough - it probably is.

It is interesting to see how the market reacts over coming weeks. With a lot of seller orders lined up (presumably newsflow junkies who haven't had their hit), at best we'll see it drift sideways. And then the key point will be whenever there is a 1H Trading update.

From my perspecitve, I don't care what short term fair weather friends do. I heard nothing today that negavtively impacts my thesis, although giving the criticality of the US Market, I was disappointed not to learn more, and to have to await until February.

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DETAILED NOTES

1. EMEA (Andy Eakins): Continuing to expand distributorship to new countries. Coverage at 80% of European Market although still v. early days.

"We helped more patients in Europe than anywhere else last year."

• Shared story of evolution of $BTM sales in UK, explaining that after entry in 2019, pandemic essentially knocked them back for 2 years. “We couldn’t even get out to a medical meeting until late in 2021”. This was important for me because I never fully understood why UK got off to such a slow start. Recognise now that US and ANZ had many years head-start and, even though new accounts slowed in the pandemic, these latter three markets already had significant momentum. (My analysis: given the late start and noting that UKI has sales of $6.3m in 2024 (my estimate; high confidence), then it it likely that UKI is still growing rapidly, and will start to make a more meaningful contribution – potentially getting to around $10m in 2025.)
• FY24 UKI now generating the most publications on BTM applications. Just last weeks, 7 UK hospitals did “our first ever” meta-analysis of more than 1200 patients across 26 papers and came out with “some incredibly positive results about a whole range of range of different features of BTM". (Note: I haven’t found this yet, and DW wasn’t aware of it, so worth looking out for it.) “Lifeblood of what we do as marketers. A peer-to-peer thing … helps clinicians understand how to use it and to get the most out of the product.”
• Expecting to sign distributorships in the coming weeks with Portugal, Malta, Czech Republic and Slovakia (My note: combined populations about 28 million.) Launch of the first two driven by stock availability issues of competitor products. (My note: is this fallout from Integra recall?) Burns market relatively small (albeit significant and challenging) in UKI, so from outset the focus was on trauma and wounds “We see ourselves as a wound care company”
• France and Spain signed up (i.e. distributors) “just over a year ago”, going fantastic … first clinical papers being written … Marcu (Wagstaff) helped support surgeons
• 80% of European population now covered, want to cover the rest.
• Looking at key countries in Africa and Middles East
• New products coming through – becoming the “#1 dermal matrix company” in Europe

2, North America (Ed Grobart): Summary – we got no real insights into how US sales momentum is tracking!

• MTX achieved $1m milestone very quickly. “I think it’s got the potential someday to out-do BTM” … “ultimately I think it’s a bigger market”
• Canada started on West Coast, now going to East Coast. “We’ve disrupted them” Coming under scrutiny because hospitals spending money on things they weren’t spending before. "The good news is that with a lot of the clinical and economic data that are coming we’re able to sit down and present our data on a different level to them."
• Ecuador, Peru, Bolivia sales – controlled from Australia
• Staff: 120 total, 80 on the road
• Some discussion on how the sale force evolves as more product and indications are developed. Open questions no answer.

3. ACAP (David Morris) - Developing plans to enter China and Japan, worlds second and third largest markets

• Head of APAC just returned from Japan. Developing plans to enter – potential partner identified. Will need to gain Japanese regulatory approval which will take time, and will start with first formal meeting, end of November. However, since have approvals from FDA, TGA and EU CE Mark “helps a lot”. Once Japan approved, be believe uptake could be quite rapid.
• China: also looking at process to register in China. But selling already in Hong Kong, having extended beyond initial 2 burns hospitals to more. China also facilitates access to treatments already commercialised in Hong Kong, to be accessible in the Great Bay Area and Hainan Province. (Note: combined population is c. 90 million)

My Analysis: China and Japan are the 2^nd and 3^rd largest global markets for medical devices, with markets estimated to have been around $40-45bn each in 2023 and growing c. 7-9% p.a. This compares with c. US$250bn for the US, growing at 5-6% p.a.! Given regulatory approval timelines, we’re probably looking at 2-3 years until we start getting significant sales from these two market. However, the contribution potential long term is significant, and will help sustain sales growth to 2030.

4. Report from Prof. Marcus Wagstaff

• Reported on the global military market (just at a conference in Brisbane). Spoke of challenges of the austere conflict environments, e.g., Ukraine, (casualties going to Czech), Gaza and Israel
• Marcus surveyed surgeons working in those environments. "Amazing responses." People using BTM in Gaza, Israel (2 cities), Ukraine (3 cities) – responses and photographs amazing. Not just military people but civilians. Marcus amazed because BTM was preserving limbs in hospitals were he didn’t think it possible to use it.
• Spoke of a worrying time for geopolitical conflict and that civilian-military partnerships are looking for solutions. Challenge to offer support in these very difficult environments.
• In later remarks, DW indicated that $PNV was considering organsing to specifically support conflict zones via relationships with WHO and Gates Foundation
• India – visited for one week earlier this year. Physicians across public, private and military hospitals all keen to help patients and get better outcomes. MW has been consulting on Indian cases since returning. “Sheer numbers of patients is huge” … could be biggest market in the world in 5-years time … “but I’m no market analyst.” … referred to financial constraints. “Wherever you’ve gone with conviction, surgeons have adopted it.”

5. Revenue Growth: “On budget” – no updates on sales/revenue for Q1

To start, my hope for a 1Q update was not satisfied. On future reporting policy, DW was a little clearer than at FY Results. He reiterated that $PNV is growing so quickly, they will not give guidance (I agree). However, he also made it clear that he does not favour “bogging management down” with quarterly updates, particularly as there is no requirement for them to do this.

I’ve written in recent posts about my concern at lack of recent news flow. This was driven less by a desire for more regular reporting, and more that I was unable to interpret the lack of recent updates on revenue, given the historical situation. At least now I know, and in truth, I am happy with regular 6-month updates. What I didn’t like was the volatility induced by the “record month” style of reporting. In response to that DW said “Look, I think we’re probably getting a bit too mature to keep doing that, but we’ll think about it as we go.”

Now, of course, the suspicious among us might think that this apparent change is convenient to be happening now, and whether it is simply buying the time of 2Q to (hopefully) mask a (potentially) soft 1Q. Essentially, we may never know, but the one thing we can know is that in February, we’ll learn the 1H number! End of story.

So, what can we glean from comments at the AGM?

SR added key words in his speech that weren’t in the released statement as follows, in bold below.

"The U.S. remains the driving force for our company, growing by 49% over prior year. As we expand into other trauma, infection and active complex wounds, the number of patients healed is expanding at a stronger pace than revenue."

The two bold words are an important clarification, or rather they ensure ambiguity on FY25 1Q is maintained! First, it tells us nothing about 1Q. However, it does imply that revenue per device is reducing as the range of indications increases, adding a greater proportion of treatments coming at a lower per patient revenue. From my perspective, put simply, as the mix moves from burns to a broader range of trauma and other wound indications, these incremental new indications use smaller BTM surface areas, and hence a lower revenue per device.

When asked (and avoiding answering) the question on Q1 Revenue, DW did make two key statements:

1.     “If we had 50% growth in 2024, we’re hardly likely to have fallen off a cliff on 1 July.”

2.     “Budget is on track.”

My Assessment: Now, point 2 is important. I believe that in preparing their research notes, at least those analysts closer to $PNV (like Macquarie) would have had conversations along the lines of “We know you’re not giving guidance, but if in our model we were to have FY25 revenue growth of 30% (Macquarie’s number supporting a PT of $2.75), would that be consistent with your budgets?” So, I’m fairly confident that the Board wouldn’t have approved a budget that was significantly out of whack with consensus (+27% revenue growth). And of course, management are incentivised to beat that budget.

So where have I landed? there was no new information other than that after 1Q “we’re on budget.” So, I think that means on track for c. 30% + or - revenue growth for FY25, which is what my model and range of valuations requires.

You’ll not hear me whining about this anymore! We just get used to 6-monthly data, like many other companies.

6. New Product – Breast and Hernia

• Not much of an update
• SR said “on time and on track” (My note: SR’s time, not former CEO’s time!)
• “In fact, they are being advance a little bit as we speak”
• Expecting to start pre-clinical studies by the end of this year (i.e., still sounds years away. He was asked about clinical trials - so dodged it)
• DW – wider than Breast and Hernia,… e.g., spoke to plastic surgeon recently who thinks it might be useful for noses too.

7. BARDA

• Discussion with FDA on package submission requirements expect to conclude soon
• Recruited 120 patients – done
• Treated 120 patients – working on final patients
• Observe patients over 3 months
• Gather data – 60 done, 60 to do
• Analyse data and then submit package.

My Assessment on BARDA:

• Sounds like conclusion of all the work and submission to FDA will be a late-CY2025 thing. So, potential decision on FTB in CY 2026.
• Revenue contribution: I'm expecting little if any in FY25 - a contributor to the reduction in % revenue growth, given that FY25 was bumped up due to the push to finished enrolment.

Disc: Held in RL and SM

Market depth definitely agrees with you, sellers>buyers at ~8:1 on flat volumes and minimal change in price. Anyone hoping for direction did not get satisfaction today - and I cant believe they are keeping excellent news quiet.

Looking forward with interest to anything you can take out of the meeting @mikebrisy