David Williams and Leon Hoare have both bought shares in the last few days, with Mr Williams getting a another quick buy in this morning before a "pause in trading"

Trading in the securities of the entity will be temporarily paused

pending a further announcement.

Trading in the securities of Polynovo Limited (‘PNV’) will be halted at the request of PNV, pending the release of an announcement by PNV.

Unless ASX decides otherwise, the securities will remain in trading halt until the earlier of:

• the commencement of normal trading on Wednesday, 3 September 2025; or

• the release of the announcement to the market.

 The halt in trading was requested by PNV to address press speculation, as written in The Australian on 31 August 2025 article titled “Aussie medtech’s unlikely boost from RFK health crackdown, of a positive change in U.S. reimbursement of outpatient wound care.

I asked ChatGPT for some insight into the RFK health crackdown and what it means for Polynovo. Here is the summary:

Summary: RFK Crackdown → Upside for PolyNovo?

• RFK Jr.’s crackdown: Aggressive regulatory and budget reforms in healthcare and food industries—reformulating reimbursement models and tightening FDA oversight.
• PolyNovo’s advantage: A lean, lower-cost product that may become more competitive under CMS’s flat-fee scheme, increasing its attractiveness to U.S. outpatient clinics.
• Current footnote: PolyNovo has paused trading pending a company response to media coverage.

How PolyNovo Fits In (and Potential Benefits)

• Medtech Opportunity: The U.S. Centers for Medicare & Medicaid Services (CMS) is proposing a shift in reimbursement for outpatient wound care—from percentage-based pricing to a flat fee of USD 806 per square inch starting January. That’s a move meant to cap expenses currently reaching up to USD 2000 per square inch.

PolyNovo’s Position:

• Its NovoSorb artificial skin costs are understood to be well below USD 806, even factoring in a possible 10% tariff on Australian-made products.

ASX Announcement

Very odd announcement, entitled a repsonse to an article in The Australian, rather than what it appears to be .... CEO Swami's intended resignation, at the request of the Board (DW?).

Very odd indeed.

The language makes it clear that agreement on the separation has not yet been reached. So is the announcement a device to force the end?

As some of us have speculated here, given the rapid fall in growth rate including the lack lustre progress in India, it was looking increasingly likely that Swami's incentives are likely out of the money, and that his retention was also a potential issue. Now it looks like that rather than jumping, he is being pushed.

Margin call gave a different lens on this issue, focusing on the behaviour of Chairman David Williams.

Whatever the reality and the truth, it appears all is not well with management and the Board at $PNV.

Disc: Not held

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.

So @mikebrisy gave some great analysis. And I wanted to do some checking of my own. It backs up everything mike said. But thought it might be useful for some here.

Upon first glance of the 1H FY2025 Trading Result (unaudited), I thought everything looked in order. I thought PNV was continuing to grow at about the expected rates. 

 But when I dug a little more, I noticed that the growth was not quite what it seemed. 

 From the 1H FY2025 Trading Result (unaudited):

 “Rest of World sales of A$12.9m up 28.6% on STLY A$10.0m including strong performances in UK/I, Spain, Germany, Turkey and Hong Kong. First sales were made in Malta, Portugal and Peru.”

 So 28% growth for RoW Sales compared to the Same Time as Last Year, on a small revenue base is quite underwhelming. And was not expected. 28% means $2.9m extra revenue compared to the H1 FY2024. If we assume each product is about (this is a guess $700 per patient), that means about 4,000 more patients. That feels underwhelming. We are talking about RoW sales for a product that has been widely adopted in the USA. 

 Lets compare with the previous year at the same time (1H FY2024 Trading Result (unaudited))

 “Rest of World sales of $A10.0m up 122.2% on STLY of A$4.5m including strong performances in ANZ, UKI, and the Middle East, also growing sales in India, Hong Kong, and Canada.”

 So we have gone from 122% to 28% in terms of RoW growth for the Same Time Last Year on what is really a small base. 

 To show it graphically:

To understand it better, we need to make some assumptions about what the FY2025 FULL will be, so you can see the concerns better:

I explain it here:

- Take the Blue line (USA Sales) – we see USA as a maturing market. Growth is expected to taper off. So approx. $84 million for the FY25 will be a reasonable result. 

-  Take the Orange line (Row Sales) – The RoW sales should be growing massively. Ie new markets with strong adoption in each of those countries. If we double the H1FY25 result we get about $26 million. As you can see, that would be a tapering off of growth. But we should be seeing increased growth….so around $40 million for RoW.

-  The Red, Light Blue and Green lines represent the Total Sales low growth, average growth and expected 'high' growth results. 

As you can see (I hope the above is clear, and please point out to me any mistakes you can see)….RoW is not on track with the previous USA growth. And I would have expected the RoW growth to be much more than the USA growth. 

This is a key concern that management must address at the next results meeting. 

In particular they need to answer the following:

-  Why has growth in RoW not followed a similar trajectory as the USA market? [There may be very good reasons. For instance, some countries may have very strong bureaucratic processes that slows initial adoption. Or a competitor product has a strong sales team and adoption in that country…but we have a strategy to gain traction in the X years. Or maybe the direct sales approach is not working? But we need to know the reason(s) and what is being done about it, and some guidance for future growth (yeah I know…that may be a stretch)]

-  India has been touted as a massive future market for PNV, but why no news in the update? [I think this was not a good look. It casts doubt on PNV in India. If things are taking longer, tell us why. This was the CEO’s (who I do really like) pet project. He needs to give us confidence in his professional judgement. And if things are not going to plan, tell us, and what the fixes are. What are the 25 plus team in India doing? ]

-  What is happening in the rest of the world RoW? [With all the new countries coming online, we would have expected the combined growth rate to be larger than the USA? To address this question, PNV needs to provide an update on progress in each country and any ‘road blocks’ or issues and what is being done to overcome them.]

I think another major issue is the PNV RoW growth rate when compared to PNV’s competitors (as @mikebrisy pointed out). 

Here is a quick 5-minute analysis of the growth rates of PNV’s competitors:

-      AVITA Medical – 29% growth

-      Vericel – 20-22% growth

-      Aroa Biosurgery – expected 17-22% growth on FY24

-      Integra – IDRT – struggled to find (sorry)

PNV’s RoW growth rate of 28.6% means they have fallen back into the same growth rates as thier competitors. 

Some key questions for management regarding PNV competitors:

-  Does PNV do competitor analysis, and if so, where does PNV think it ranks in terms of growth? Put another way, does PNV think it is still growing faster than it's competitors?

-  Many of PNV's competitors have a portfolio of products. This tends to lock in brands with surgeons and hospitals. How is PNV addressing this approach by PNV's competitors?

Looking at PNV’s growth to date with its current products, my modelling says that a fair value is represented by a SP of about $2.20-2.60. Based on this, I sold about 90% of my PNV holdings at $2.20 (it rose to $2.30 over the subsequent weeks and then dropped below $2.00). I have seen PNV bashed down below $1.00 so I got a bit nervous.

I still like PNV, it’s products and its management. But the above questions need addressing before I buy back in. 

Some triggers for me to buy back in:

-  It drops below $1.60

-  RoW growth is above 40% or an explanation why it has dropped and what they are going to do about it.

-  Significant progress on India (this is not just about the numbers, but it shows that the CEO and leadership team can make the right calls for the business). 

-  New products. We have a great sales team……let them sell other products. We need news on these new products. What are the issues holding them up?

So as you can see....@mikebrisy was spot on. But i'm glad i did the research to back it up. I had fallen away from the numbers, and it was a great chance to reaquaint myself.

Cheers

I thought we could work up a bunch of questions we would like to ask management/David Williams. Or if the timing works, even Andrew could use the questions with an inverview with DW.

So i'll kick off some potential questions. And as a group, lets amend/add/delete questions (and maybe even guess the answers).

1 - Does PNV do competititor analysis, and if so, where does PNV think it ranks in terms of growth? Put another way, does PNV think it is still growing faster than it's competitors?

2 - Many of PNV's competitors have a portfolio of products. This tends to lock in brands with surgeons and hospitals. How is PNV addressing this approach by PNV's competitors?

3 - Why have we not yet been informed of an substaintial sales in India? Can PNV provide some analysis of potential sales in India? Put another way, can you provide the analysis for the justification for going into the Indian market.

4 - It appears that RoW sales is not showing the same growth trajectory that the USA displayed over the past 4 years. Does PNV have an explaination why this is the case? Are there any reasons for a different adoption by RoW countries?

I'll add more as we go. And from time to time, I'll put them all in one post to make it easier.

DW has just circulated two analyst notes to everyone on his email list. Macquarie (who are maintaining their TP of $2.75 and Outperform) and Wilson (who are at $2.65 are Overweight). Neither are updating recommendations and I assume are awaiting the FY, with its forward looking statements.

My reason for this Straw is that the Wilson report contains some interesting insights, both on the US and also on PMI the distributor in Europe - who is running a full thickness burns trials. The commentary is rather encouraging and succinct, so I've extracted the relevant paragraphs.

From Wilson's Report

"Polynovo has pre-released its unaudited revenue results for FY24. US sales increased 49% to $104.8M; with ROW sales up 73% to $23.3M. US performance in 2H24 was 8% lower than we forecast; offset by a 10% beat from ROW businesses plus grant support from BARDA. We’re not allowing a $3.5M sales ‘miss’ in USA dissuade us from our O/W thesis on PNV. Burns still constitutes ~68% of product volume and is invariably lumpy. Anecdotally, PNV was winning up to 70% market share by surface area in key US centres over 4Q24, thanks to its competitor’s protracted difficulties (Integra’s recall). We assess that >30% of the absolute US growth dollars in FY24 has come from pricing, with more to come, as described in our recent upgrade. The ROW business stands to benefit in FY25e as well, with several jurisdictions set to re-tender business"

"The absence of Integra’s PriMatrix and SurgiMend in the marketplace created a $30-40M annualised revenue opportunity in burns, trauma and reconstructive surgery. Notwithstanding hefty price increases, BTM remains super-competitive on (per cm2 ) pricing and enjoys a broad clinical following. Feedback suggests BTM has usurped Integra now on a volume basis (at least in some major ABA accredited burns centres) and carries that incremental share tailwind into FY25e. Internationally, we understand that PMI’s markets (distributing into Germany, Austria, Switzerland), Spain and Turkey starred. BARDA revenue support was also higher than forecast, given how quickly Polynovo’s PMA-directed trial in full-thickness burns has enrolled."

"Forecasts under review. At this stage we see little change to revenue forecasts, expecting continued market share gains (both organically in burns and at Integra’s expense), incremental volume via extension into trauma indications and flagged pricing momentum. Thinking about costs leading into FY25e, we’re cognisant of a few (positive) areas where investments may be drawn forward (e.g. SKU expansion for MTX, building on early product traction in trauma; and an earlier PMA filing in relation to full-thickness burns)." 

Disc: Held in RL and SM

I'm not sure how much notice the market is paying to Broker/Analyst views for $PNV, however, I wanted to share some analysis which I know some of us will find interesting.

My valuation

First, I want to state that I won't be updating my own model until after the FY results are out. But for the record, my valuation is $2.37 (if I adjust my $2,25 from Feb-24 by a further manual adjustment of +5%)

My last full evaluation across a range of scenarios from almost a year ago was: $2.16 ($1.63 - $3.63), which if I roll forward by one year becomes $2.37 ($1.80 - $4.00). \

Now when I update the model in late August, I'll have to re-run the growth scenarios, have an updated cost structure and view on capex. So, it could end up looking quite different. My sense, however, is that the range will narrow, and that the low end of the range will come up.

For those of us who who might respond with "what good is a valuation with such a wide range?", my answer is that it represents unresolvable uncertainty. Remember, $PNV is still passing through the inflection point so, good luck justifying a tighter range.

Brokers Consensus

I use two sources when I look at brokers/analysts:

• Marketscreener.com: $2.18 ($1.00 - $2.75); n=8
• Tradingview.com: $2.46 ($2.00 - $2.75); n=5

I'm going to ditch the low value on marketscreener.com of $1.00, because I think it has no credibility. That moves the marketscreener.com average TP to $2.34 ... closer to Tradingview. (Note: on these services I can't see the individial datapoints)

Because of my concern in this case about the marketscreener.com dataset, I am going to focus the rest of the analysis on the analysts in tradingview.com.

So, based on today's close of $2.60, the market is now only about 6% ahead of the analysts.

Revenue Growth

The insight I wanted to share, is that over the next 6-9 months there is a chance for a material re-rating of $PNV.

I'll make the case by focusing on revenue growth - because it is still the dominant factor.

The analyst "consensus" for revenues are as follows, with % growth yoy in parentheses:

FY24: $104.8m (+57.5%)

FY25: $133.5m (+27%)

FY26: $167.8m (+26%)

Of course, it is reasonable to expect revenue growth to start tailing off at some point, but if you consider the last 3 annual y-o-y growth rates of FY21 (32.0% - COVID access impact) FY22(42.8%) FY23(58.8%) FY24 (57.5%), something dramatic would have to happen in FY25.

However, we know that:

1. The category is expanding
2. BTM is taking market share
3. MTX is now also being rolled out
4. The global rollout is still firing on all cylinders

My Conclusions

I'm not a seller of any $PNV much below about $3.80.

Of course, it will continue to be volatile. But the risk of getting off the bus and then being unable to get back on with this one is just too great for me.

I believe this is going to get more focus from the market as we move through the inflection point - i.e. in FY25. Of course, I realise that - for a couple of years at least - some "talking heads" will shake their heads at eye-watering P/Es. But that is an irrelvant measure AT THIS STAGE.

I'm very interested to see what upgrades come through for FY25 and FY26 over the coming 6-9 months, and everything that entails.

If I wasn't at a full allocation, I'd still be a BUY today.

Finally, I said in another straw recently, that I would test all valuations in healthcare through an M&A lens. I have not yet done that for $PNV. I will in August.

Disc: Held in RL and SM

Especially for you @Rick !

Trading Update

Their Headlines:

• Total revenue including BARDA of A$104.8m up 57.5% on STLY of A$66.5m.

• FY24 sales of A$92.0m up 54.5% on STLY of A$59.6m.

• Strong growth in U.S. sales of A$68.7m up 49.0% on STLY of A$46.1m.

• ROW sales of A$23.3m up by 73.1% on STLY of A$13.5m including strong performances in developed markets like UKI, Germany and ANZ.

• Surgeon education and charitable contributions, widely used to support patients in conflict zones.

My analysis

Revenue is bang on where I expected. I had them coming in anywhere between $102m and $106m, which was easy to pick, given the absence of "record months" in the last few months.

All this should be good enough for them to hit their positive NPAT commitment for the FY.

I'm pleased revenue growth is holding up strongly. Analyst views have this starting to decline in % terms quite quickly over the next two years and, if they can hold it around +50%, then that's the opportunity for the next significantly leg up in SP, as that will drive a few years of very high EPS growth.

Conclusion.

On track. Holding for long term. My biggest RL position.

Although enjoying volatility is part and parcel of being a long term $PNV holders and, in that context, the price action of recent days is simply par for the course, I found the announcement below in a search of the news-wires. It came out last week.

It is not surprising that $PNV didn't make an announcement, as in my view it doesn't have a direct or material bearing on $PNV's sales, but it is good that $PNV is being sought out by innovators for collaborations.

Full text follows.

---------------------------------------

Spectral AI Announces Collaboration with Global Wound Care Company PolyNovo to Introduce DeepView System for Burn Indication to Australian Market

861 words

8 July 2024

12:00 GMT

GlobeNewswire

PZON

English

© Copyright 2024 GlobeNewswire, Inc. All Rights Reserved.

Spectral AI Announces Collaboration with Global Wound Care Company PolyNovo to Introduce DeepView System for Burn Indication to Australian Market

DALLAS, July 08, 2024 (GLOBE NEWSWIRE) -- Spectral AI, Inc. (Nasdaq: MDAI) ("Spectral AI" or the "Company"), an artificial intelligence (AI) company focused on medical diagnostics for faster and more accurate treatment decisions in wound care, today announced that it has signed a Memorandum of Understanding ("MOU") with global medical device company and burn wound therapy leader PolyNovo Limited ("PolyNovo") under which the companies will collaborate to assist Spectral AI in a potential limited deployment of its DeepView System for burn indication in Australia.

Under the MOU, PolyNovo will support Spectral AI's application to the Australian Special Access Scheme (SAS) with an ultimate goal of allowing Spectral AI to deploy up to two DeepView Systems at the Royal Adelaide Hospital and The Alfred Hospital in Melbourne to lay the groundwork for the Company's eventual commercial roll-out based on clinician evaluations and experiences.

The SAS was introduced by Australia's Therapeutics Goods Administration in recognition that there are circumstances where patients need access to certain medicines, medical devices, or biologics that are not already included in the Australian Register of Goods.

Spectral AI's DeepView(TM) System is a predictive device that offers clinicians an immediate and objective assessment of a burn wound's healing potential prior to treatment or other medical intervention. The image processing algorithm employed by the DeepView(TM) System utilizes multispectral imaging that is trained and tested against a proprietary database of more than 340 billion clinically validated data points. The DeepView(TM) System is non-invasive and cart-based, allowing for exceptional mobility within the healthcare setting.

PolyNovo develops and sells patented, bioabsorbable, synthetic, polymer technology used to reconstruct complex wounds, including deep dermal and full--thickness burns, and aid the body in generating new tissue. PolyNovo's FDA-approved NovoSorb(R) BTM (Biodegradable Temporising Matrix) and NovoSorb(R) MTX product portfolio is available in 37 countries around the world.

"PolyNovo's innovative therapies have proven to be life changing and it is one of the world's most respected providers of burn treatment solutions," said Peter M. Carslon, Chief Executive Officer of Spectral AI. "Understanding when it is appropriate to apply these therapies is paramount to realizing improved patient outcomes. We believe that the Day One wound healing assessment provided by the DeepView(TM) System empowers clinicians with the knowledge to make an informed and rapid diagnosis when time is of the essence. We are honored to work with an established market leader as we take these initial steps to familiarize clinicians in Australia with Spectral AI's technology, support their life-saving work, and help to elevate the level of patient care."

About Spectral AI

Spectral AI, Inc. is a Dallas-based predictive AI company focused on medical diagnostics for faster and more accurate treatment decisions in wound care, with initial applications involving patients with burns and diabetic foot ulcers. The Company is working to revolutionize the management of wound care by "Seeing the Unknown(R) " with its DeepView System. The DeepView System is a predictive device that offers clinicians an objective and immediate assessment of a wound's healing potential prior to treatment or other medical intervention. With algorithm-driven results and a goal to change the current standard of care, the DeepView System is expected to provide faster and more accurate treatment insight towards value care by improving patient outcomes and reducing healthcare costs. For more information about the DeepView System, visit www.spectral-ai.com.

Forward Looking Statements

Certain statements made in this release are "forward looking statements" within the meaning of the "safe harbor" provisions of the United States Private Securities Litigation Reform Act of 1995, including statements regarding the Company's strategy, plans, objectives, initiatives and financial outlook. When used in this press release, the words "estimates, " "projected," "expects," "anticipates," "forecasts," "plans," "intends, " "believes," "seeks," "may," "will," "should," "future," "propose" and variations of these words or similar expressions (or the negative versions of such words or expressions) are intended to identify forward-looking statements.

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Investors should carefully consider the foregoing factors and the other risks and uncertainties described in the "Risk Factors" sections of the Company's filings with the SEC, including the Registration Statement and the other documents filed by the Company. These filings identify and address other important risks and uncertainties that could cause actual events and results to differ materially from those contained in the forward-looking statements.

Investors:

The Equity Group

Devin Sullivan

Managing Director

[email protected]

Conor Rodriguez

Analyst

[email protected]

NovoSorb ® MTX First Sales and March 2023 $6m Revenue

Their headlines

• Monthly Revenue (unaudited) including BARDA of A$6.4m in March, up 48.2% pcp, including record BTM sales of A$5,45m.
• Sales Revenue (unaudited) for 9 months to 31 March 2023 of A$41.1M up 49.8% pcp.
• Total Revenue (unaudited) for 9 months to 31 March of $A45.2m, up 47.8% on pcp $30.6m

My Observations

Continued good progress, even if tracking well below my model which has SP target of $2.46, vs. $1.63 opening today.

3rd Q revenue was ($45.2-$30.6)=$14.6m, which means if March was $6.4m, then Jan and Feb averaged $4.1m, which gives an indication of the month to month variability. "Lumpy" as DW comments.

In my previous straw I noted the recent results of $ARX and $IART (NASDAQ) and it is clear that - assuming most of the growth continues to be in USA - that $PNV is growing more strongly than both, and much more strongly than $IART, the incumbent.

So even if the rate of growth is moderating (from >60% to c. 50%) it is clear that $PNV is taking a larger share of the market - a good sign.

No real details on India, other than by omission if new hospitals have been added in USA, Canada and HK, then no new hospitals have been added in India, or elsewhere for that matter.

Initial market SP response a modest rise.

My Key Takeaway

An OK result, but in the absence or further news before the FY, I don't think it is strong enough to significantly reverse the SP decline we've seen in recent weeks, but it should be enough to stabilise it.

Disc: Held IRL and SM