The PolyNovo Ltd (ASX: PNV) share price has been one of the best performers on the S&P/ASX 200 Index (ASX: XJO) over the last 12 months.
Since this time last year the medical device company's shares have climbed a massive 120%.
If we go even further back, the returns get even more impressive.
Three years ago, PolyNovo's shares were changing hands for 21 cents. Whereas today they are worth 12 times that at $2.60.
Why has the PolyNovo share price been on fire?
Investors have been buying the company's shares due to the potential of its NovoSorb product, which was developed by CSIRO.
NovoSorb is a dermal scaffold for the regeneration of the skin when lost through extensive surgery or burn.
While this itself is a lucrative ~$1.5 billion market, the company is looking to extend the use of NovoSorb into the hernia device and breast augmentation markets. Combined, these three markets have an addressable opportunity worth an estimated $7.5 billion per year.
If it can successfully penetrate these markets, then the sky could be the limit for its sales and ultimately its shares.
But that hasn't stopped one of its directors from cashing in some of his shares this week. On Wednesday Non-Executive Director Dr David McQuillan sold 441,687 shares on market for approximately $1.18 million.
The company advised that the sale was made to fund the purchase of property ahead of Dr McQuillan's move from the United States to Melbourne. Dr McQuillan still holds 770,317 PolyNovo shares.
Should you be selling shares?
While insider selling is rarely good news, the purpose of this sale seems more than reasonable. So, I wouldn't be panicking just yet.
Though, given that PolyNovo has a market capitalisation of $1.7 billion and first half sales of just $10.18 million, I also wouldn't be opposed to taking some profit off the table.
PolyNovo clearly has a massive market opportunity, but only time will tell whether it captures a sufficient slice that justifies its current valuation.
