I read this post on HC:

https://hotcopper.com.au/threads/dermal-matrix-time-to-graft-of-btm-vs-new-product.8432030/page-31?post_id=77844344

Reproduced below.

My thoughts are:

• Intersting to hear from one of their customers.
• Thinks BTM/MTX is superior product for more use cases than other competitor products.
• They agree that there are lots of future uses on BTM/MTX
• It takes time for the adoption to happen.
• [ @mikebrisy what do you think of this point] He says that he doesn't understand the focus on sales reps. Says that if all the sales reps were gone, the doctors/hospitals already using it, would order more. And he then goes on to say, that it is the Dr to Dr knowledge transfer/reccomendations and journals, are key for growth.
• He doesn't give an explaination of why RoW growth appears to be slowing.
• @mikebrisy could we build a differrent growth model based on patients rather than sales reps? I need to have a think about this.

Here is what he wrote:

It appears that some posters here are still not seeing the bigger picture with Polynovo and it is unfortunate that some posters feel the need to cross promote and down-ramp a company that is steadily growing, improving outcomes and saving lives.

The beauty with PNV and BTM is that it is not a ‘burns-only’ product. Burns will be a tiny fraction of future sales. Any comparison with Avita is pretty much pointless. Avita may well have a strong sales force in some burns centres in the USA. I don’t dispute that, frankly I don’t know, and it doesn’t matter. Having a strong sales force and delivering a profit are two separate issues.

We know that if PNV pulled the entire sales-force in the USA then sales would still continue and it would even organically expand as existing surgeons that use the product will teach the new surgeons and their colleagues on how to use it. I don’t understand the obsession with sales force numbers in some of the posts above. Sales force numbers does not necessarily translate to a profitable product. What you want is a high margin product that sells itself and that surgeons find new indications for on a daily basis and that is exactly what PNV has with BTM.

Adoption in the medical world is typically slow. In fact, it is very slow. Surgeons typically rely on data from journals and on teaching via their colleagues or seniors to adopt a product into their routine use. Once a product is established (as BTM is) the surgeons will teach amongst themselves. Sales forces would then be pivoting to untapped markets (pivoting from plastic surgeons to vascular, general, orthopaedic and trauma surgeons for example).

One of the standouts of the recent announcements which didn’t get as much attention as some of the other headlines was the number of patients that were treated – growing at twice the rate of revenue growth. “It issatisfying to see our patient impact expanding at more than twice the rate ofour revenue growth, to stand at 62,000 plus patients globally since treatingour first patient”.

While some people may see this as a negative (less revenue per patient), you must keep in mind that surgeons are using smaller sizes of BTM/MTX for new indications and that we have entered territories where the product is sold at a cheaper price. Margins are still enormous. 62,000 patients to date (and growing) amounts to an enormous number of surgeons who are using the product and spreading awareness. This is not just in a few burns centres in the USA.

The important thing here is that there is enormous surgeon adoption and for every procedure that is successful, it will build confidence in the surgeons using it, those that are being trained alongside the primary operator, as well as amongst the allied health team (whether it is theatre nurses, occupational therapists, ward nurses, or physiotherapists) which are all exposed to the product.

This will lead to a snowball effect over time where adoption will keep on increasing simply through word of mouth and exposure, and where indications will keep on expanding organically.

Even if the plastic surgery market in the major hospitals in the USA is saturated with BTM for indications such as burns, trauma, and oncological procedures, imagine this effect in countries that aren’t yet entered and then imagine the adoption amongst other surgical specialties that have not yet heard of, or used the product – such as trauma, orthopaedic, vascular, head and neck or general surgeons.

For example, in every small peripheral hospital in Australia or New Zealand (I can only speak to what I know) there are general surgeons collectively performing hundreds of skin cancer operations every week. Most are easy excisions with easy closure. However quite often there is an area where wound closure is a bit of a problem and where cosmetic outcomes are hampered with wound breakdown from excisions that are closed too tight or there are poor cosmetic outcomes because you’re operating on the scalp or nose.

That is just one example where BTM/MTX can solve that issue and give a much improved cosmetic outcome with less risk for wound breakdown. There are hundreds of these procedures where BTM/MTX could be used every week across both countries. Yet most general surgeons that I have talked to in these two countries do not yet know about BTM. One of my few criticisms (voiced previously in a post) is that PNV could perhaps target other surgical subspecialties more aggressively. However I do also understand that are lower hanging fruit elsewhere currently which is where resources are being spent.

The future growth potential is enormous and there is no other product that I have come across in my career that has been this revolutionary. Burns aside – what truly amazed me was how it made free flaps unnecessary.

For those non-medical readers; if you get a flesh eating bug (necrotizing fasciitis – of which the rates are increasing in the world), or you get a large chunk of your leg ripped off in a work-place accident or road traffic accident, then in the past if this defect was too deep and large to simply stitch up. You have no overlying dermis and epidermis so you would often have to get a “free-flap” which is where you cut out a piece of flesh (including skin, dermis, sometimes muscles) from elsewhere in the body (popular places are the anterolateral thigh) and you connect the specific arteries and veins of that ‘free flap’ into arteries and veins where the defect is. To do this you need a team of plastic surgeons who are trained in microsurgery (whereby a big microscope gets wheeled into the operating room). The free flap then needs meticulous attention and care on the wards to make sure that the arteries and veins don’t block off. If they do – it’s back to theatre to fix the issue. Often multiple times. Once the free flap slowly integrates you are then left with a big bulky flap that often requires multiple procedures down the track in the coming months or years to thin it out and make it look more cosmetically appealing. The site where the ‘free flap’ was harvested from is also a large wound which can suffer from issues such as infection or wound breakdown and cosmetic issues.

This entire ordeal is now in a lot of cases replaceable with a simple procedure to apply BTM, followed by a couple of weeks with a VAC (suction device to drain fluid) and then a procedure to skin graft over the top. Super simple.

You have now cut down an enormous surgery cost and decreased patient morbidity with this process whereby it saves thousands of dollars and improves outcomes. Most importantly you no longer need specialist plastic microsurgery for this process.

This means that these patients can be treated in smaller hospitals which don’t have a microscope and don’t need to be transferred to larger tertiary centres, again saving the healthcare system huge costs.

This bring me onto my next point. The outcomes are unbelievably good. I would like to direct you to this video (posted just 5 days ago – almost like they read my mind):

https://vimeo.com/1054654037

In this video you can see how supple the result of BTM is (what I alluded to in an earlier post). No other product comes close to this quality of regenerated dermis (particularly over difficult areas like joints, armpits, and neck regions to name a few).

I really struggle to see how biological products which claim to be graftable within 5 days will have outcomes anywhere close to BTM.

I’ve been to conferences where they have shown comparisons side by side (on the same patient) of BTM vs biological products for example, and the scarring with the biologicals was at times quite shocking and drastically worse than anything with BTM. It is night and day between synthetic BTM and biological “competitive” products – on the same patient!

The quality of the dermis far outcompetes any of the competitors. There are no other competitors that are non-biologics like PNV. This is what analysists fail to understand. They also fail to understand the enormous possible indications for the product, which is fair enough – they aren’t doctors.

It is night and day between a synthetic and a biologic in terms of tissue quality outcomes, let alone all the other advantages of synthetic over biologic, such as low cost to produce, higher margin, better storage, less infection risk and all patients will accept a synthetic product (many patients wont accept animal products, particularly pig products for ethical or cultural reasons). But that has all been discussed previously.

I just wanted to inject a clinical point of view as to why in my opinion, having used the product, I think it is extremely disruptive and has a bright future ahead with many more indications not yet fully explored (diabetic foot, hidradenitis suppurativa, pilonidal sinus excision, anterior abdominal wall defects post laparotomy, oncological surgeries such as skin cancer surgery on the scalp - where defects can be filled with BTM, or surgery on the nose for skin cancer – avoiding rotation flaps and disfiguration)…to name a few that I can think of, the possibilities are endless.

Other surgical sub-specialties are also areas of enormous future growth. This is why I haven’t been too fussed on not yet having advanced other products such as breast or hernia.

The growth ahead for just BTM/MTX is enormous enough and the fruit are still so low hanging that in my opinion it’s best to focus resources into market expansion for a product that has a proven track record of working and is simply best in class by a country mile.

Anything else that gets developed such as synpath, breast, or hernia would be the cherry on the cake.

I often joke to my wife that if I didn’t have a well-paying career in medicine already that I would love to work for PNV. Fantastic product.

Luckily, I can still be a part of the journey as a shareholder.

I’m no analyst but sometimes investing is simple, and with the majority of my career still ahead of me I am happy to accumulate at these prices.

“Invest in what you know” – Peter Lynch.