Get Some Skin In The PolyNovo Game

By James Dunn | More Articles by James Dunn

PolyNovo came out of research done by the CSIRO in the 2000s, into new non-toxic polymers, and their possible uses in the human body. The result was NovoSorb, a biodegradable polyurethane foam that can be used to help the repair of bone fractures and damaged cartilage, and in skin grafts, particularly for treating wounds and burns.

Regenerative medical technology company PolyNovo Limited (PNV) has rocketed into the new year, rewarded for more than a decade of patience with its lead product, a wound-dressing device called the biodegradable temporising Matrix (BTM).

In late December, PolyNovo announced regulatory approval from the US Food & Drug Administration (FDA) for use of BTM in reconstructive and surgical wounds. FDA approval allows PolyNovo to sell BTM in the US surgical wound market, which is estimated at US$800 million a year.

Announcement of the FDA approval on December 29 ensured a very happy new year for PolyNovo shareholders, with the shares surging on the back of the announcement from 18 cents to 29 cents. The shares have settled back to 24.5 cents, enough to value the stock at $118 million, but if the consensus price target of the biotech analysts that follow PNV is to be believed, there is a lot more to come. According to Thomson Reuters, this consensus sees PNV at 55 cents.

PolyNovo came out of research done by the CSIRO in the 2000s, into new non-toxic polymers, and their possible uses in the human body. The result was NovoSorb, a biodegradable polyurethane foam that can be used to help the repair of bone fractures and damaged cartilage, and in skin grafts, particularly for treating wounds and burns.

PolyNovo was was incorporated in 2004 as a buyout from CSIRO, in a joint venture with Xceed Biotechnology to commercialise the NovoSorb technology. In 2008, 60 per cent of the company was bought by ASX-listed Metabolic Pharmaceuticals Limited, which was listed in 1998 to commercialise a modified peptide that was originally developed by Professor Frank Ng at Monash University in the 1990s. That drug, AOD-9604, was positioned as an anti-obesity drug, and $50 million was spent developing it, until a disastrous Phase 2 human clinical trial in February 2007 did not show a clinically meaningful weight loss outcome across the trial population. The anti-obesity program was abandoned.

Metabolic Pharmaceuticals subsequently changed its name to Calzada in 2009, before moving to full ownership of PolyNovo in 2010. In 2015 Calzada sold the Metabolic business, leaving PolyNovo as its sole asset. The company subsequently changed its name to PolyNovo Limited in December 2014.

It is history that AOD-9604 (also known as Lipotropin) subsequently went on to gain notoriety as one of the peptides that may have been taken by players of the Essendon Football Club in 2012, but it remains unclear what effect the club – or its sports scientists – felt they would achieve.

That history is irrelevant to PolyNovo shareholders, who have every right to be excited about BTM. It is a wound dressing intended for treatment of wounds and burns where the skin structure has been lost to trauma, or damaged requiring surgical removal: the product helps regenerate lost and damaged tissue.

The BTM device comprises PolyNovo’s biodegradable NovoSorb foam bonded to a non-biodegradable transparent sealing membrane: the laminated foam implant is placed in patients with deep surgical wounds, forming a temporary ‘dermal scaffold’, which fosters tissue regeneration and subsequent skin grafting. Because the product is purely synthetic, there is no risk of rejection: existing products in the marketplace products are usually sourced from animals or human cadavers, and have a high risk of rejection. And being biodegradable, the NovoSorb technology is designed and constructed to degrade into natural and non-toxic by-products that are either metabolised or cleared from the body.

Wound cover with BTM offers a reconstruction that is thicker, more durable and more aesthetic than immediate split-skin grafting. In major burns where there may not be enough donor skin available to reconstruct the whole defect in one stage, the BTM strategy allows the wounds to be temporarily covered while donor sites recover for the harvest of further skin grafts. The technology also has potential applications in burns, trauma wounds, ulcers, hernia repair and cosmetic surgery.

A five-person human clinical trial of BTM is being conducted at the Royal Adelaide Hospital. Data from the first four patients was enough for the Australian Therapeutic Goods Administration (TGA) to recognise the trial as a ‘proof of concept’ study. BTM was cleared for use by plastic surgeons at the Royal Adelaide Hospital: the TGA authorised the use under its ‘early access’ scheme, which allows Australian surgeons to use the product before it receives full marketing approval. No infections were observed, important in view of BTM’s intended use in burns patients and open wounds.

PolyNovo has also commenced clinical trials for CE certification at The Alfred Hospital in Melbourne and St Anne’s Hospital in Toulon, France. This trial is due to be completed by September 2017. A successful outcome from this trial will lead to CE certification, which will allow regulatory approval throughout Europe, Australia, New Zealand, India and south-east Asia.

In September 2015 PolyNovo signed a US$8.2 million (A$11.8 million) clinical trial contract for BTM with the Biomedical Advanced Research and Development Authority (BARDA), a US government health security agency. BARDA – which as part of its mission considers how products could be used in response to major disasters or terrorist attacks – was apparently impressed with the fact that PolyNovo has the capacity to produce a large supply in the event of a disaster situation where there is a high number of casualties.

PolyNovo’s second technology is negative pressure wound therapy (NPWT), using NovoPore. NovoPore is a topical negative-pressure foam dressing designed for use in vacuum-assisted closing of chronic wounds such as pressure sores. Using a suction pump, negative pressure removes excess fluid from chronic wounds and delivers a positive pressure to the wound bed. This stimulates blood flow, the development of new blood vessels (angiogenesis), stimulates new tissue to grow, reduces the risk of infection, provides a moist wound healing environment and pulls the edges of the wound together.

NovoPore was approved by the FDA in March 2014, and followed that in the same year with CE Mark certification, meaning NovoPore can be marketed in the US, Canada and Europe – which represent the majority of the addressable market for the product.

PolyNovo should be able to generate revenue in the US from BTM sales almost immediately. Sales in Europe will have to wait until the Alfred Hospital/Toulon trial is completed in 2017: regulatory approval for Australia, New Zealand and India will ensue from CE certification.

Although BTM will face competitors in the US – most notably the existing products Integra and Suprathel – the flipside of the established market is that reimbursement is an established process. FDA approval means PolyNovo now has access to the largest reimbursed dermal matrix market in the world.

The company says it will be negotiating a North American licence agreement with multinational wound companies for the US distribution rights with PolyNovo, so it can get rapid market access while retaining manufacturing of the finished product. PolyNovo believes the BTM is a disruptive advancement, which has significantly improved functional and cosmetic outcomes over existing products. BTM is a much bigger market opportunity than NovoPore, which is in a very competitive market: PolyNovo says product differentiation is not critical, and margins are lower than the BTM opportunity.

James Dunn

About James Dunn

James Dunn was founding editor of Shares magazine and has also written for Business Review Weekly, Personal Investor, The Age and Management Today. He was subsequently personal investment editor at The Australian and editor of financial website,

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