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PolyNovo share price down 10% on half year results release

The high-flying PolyNovo Ltd (ASX: PNV) share price has come under pressure following the release of its half year results.

At the time of writing the medical device company’s shares are down 10% to $2.71. Despite this, they are still up well over 250% since this time last year.

How did PolyNovo perform in the first half?

For the first half of FY 2020, PolyNovo delivered an 80% increase in revenue over the prior corresponding period to $10.2 million. This was driven by a 129% increase in NovoSorb BTM sales to $8.57 million during the half.

Positively, since the end of the first half, the company’s sales have accelerated. Management notes that NovoSorb BTM sales in January were more than three times the sales generated in January 2019.

On the bottom line the company reported a net loss after tax of $2.4 million. This compares to a loss of $1.9 million in the prior corresponding period. Management explained that the increased loss includes $0.88 million in share-based payments expense. Excluding this expense, the underlying loss would have narrowed, reflecting the significant growth in commercial sales of NovoSorb BTM locally and overseas.

What is NovoSorb BTM?

NovoSorb is a novel range of bio-resorbable polymers that can be produced in many formats including, film, fibre, foam, and coatings. Its unique properties provide excellent biocompatibility, control over physical properties, and programmable bio-resorption profile.

The NovoSorb BTM product is a dermal scaffold for the regeneration of the dermis when lost through extensive surgery or burn.

Outlook.

Whilst no concrete guidance was provided, management appears confident its strong form will continue in the second half. It advised that it “now expects that NovoSorb BTM sales for FY20 should comfortably double FY19.”

The company also advised that it intends to grow its salesforce in order to support its growth. PolyNovo’s Chairman, David Williams, explained: “It is obvious that our customers and our staff are growing quickly. We don’t want to lose momentum, but we want to step up our sales force, our new product development and the infrastructure needed to support them in a controlled way.”

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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.