PolyNovo Limited

Thank you for standing by and welcome to the Polynovo First Half FY26 Results Webcast. All participants are in a listen-only mode. There'll be a presentation followed by a question and answer session. If you would like to ask a question, you'll need to press the star key followed by the number one on your telephone keypad. If you would like to ask a question from the webcast, please type it into the Ask a Question box and click Submit. I'd now like to hand the conference over to Mr. Leon Hall, Chairman. Please go ahead.

Welcome everyone to Polynovo's Half One Results I'm very pleased to introduce our new CEO. Bruce joined us in December, so it was about 10 weeks into the role. He joins us with a highly impressive background in many executive leadership roles across Australia, APAC and the USA. And he is now engaged in a whole team around the world, including a USA visit, and has met with many professionals and customers. Impressively, Bruce has rapidly built a strong understanding of the business and has identified several areas to enhance many opportunities here at SHU. The board are delighted to have Bruce leading the business. Polynovo is a company already generating strong results.

You will see the financial results.

Suffice to say, our momentum is very positive. We've completed our new factory and expanded our R&D capability, and we have a highly talented group of professionals driving our growth. Polynovo is focused on growth. We're broadening our global reach, We are adding to our clinical indications. We have a highly innovative Novazorb platform technology that we've only begun to leverage. We have a pipeline of opportunities and importantly our products and technology in clinicians hands provide excellent clinical outcomes. PolyNovo is at an exciting point in its journey and well positioned for strong growth going forward. I now have the pleasure of introducing our CEO, Bruce, over to you.

Thanks Leon. Hello everyone. Thank you for joining us today for our first ARF results. My first as CEO, and I'm extremely proud to be leading this great Australian company. Over the past few months, I've been impressed by the resilience and professionalism of the PolyNovo team during the leadership transition, and I want to acknowledge their efforts, as well as the continued support of our shareholders. As PolyNovo moves into this next phase, you should expect to hear greater clarity, more consistent communication, and decisive execution, things that ultimately shape long-term value. I'll start with an update on the executive leadership team. I'm genuinely impressed by the depth of experience across our management team. The balanced mix of tenure and fresh perspective gives me great confidence in our collective strengths. We are delighted to welcome Amy Demerjuk as our new Company Secretary and General Counsel. She joins PolyNovo this week after a stellar career at CSL, including a recent experience in Philadelphia, USA, but is now returning to her hometown of Melbourne. Reinforcing PolyNovo's commitment to quality, I would like to highlight that Alison Myers was recently promoted to the role of Chief Quality and Regulatory Affairs Officer. Alison joined PolyNovo last year after nearly 30 years with GSK, both in Australia and the UK. Finally, we are progressing the recruitment of a Chief Scientific Officer for the organisation. It's a critical role for PolyNovo's future, to accelerate the pace of our core business expansion, pipeline productivity and strategic partnerships to fully unlock the value of the NovoSol platform. To that end, we are building a global slate of candidates with the technical capabilities and leadership experience required to drive this next phase of growth. In the first half, group sales grew strongly to $68.2 million, up 26% year-on-year. The US continues to be our key growth engine, delivering $51.7 million, an increase of 25.4%, reflecting strong execution and continued market penetration. The rest of the world delivered 28% growth. This is a good result and shows clear momentum across several markets, but I believe we have room to accelerate further. We see opportunities to strengthen execution, to expand adoption, and to better leverage our distribution footprint. Jan will walk through our profitability results shortly, including some timing-related and one-off items that we expect to normalise over the full year. Providing more colour to the regional performance, APAC delivered an excellent first half, with Australia executing well as we broadened adoption beyond traditional burn applications with both Novusor BTM and MTX. In India, while the team have faced a complex and slow-moving tender environment, The groundwork they've put in is beginning to pay off. We are seeing increased tender success and growing clinician adoption as more surgeons gain experience with Novus or products and share their results with their peers. Across North America, the US continues to perform strongly and Canada is contributing with solid growth too. EMEA grew a respectable 22.9% with the UK demonstrating the versatility of our portfolio across multiple specialties. With MTX launching later this year, we are well positioned to build on this momentum. Outside the UK, we've expanded our geographic footprint with several new distribution partners and our focus is now on accelerating adoption in these newer markets. I'm pleased to report that we are now in the final stages of our PMA submission for an on-label indication for Novosor BTN in full thickness burns. This has been a significant undertaking in partnership with BARDA, enabled by strong cross-functional collaboration across the organisations. Securing PMA approval will strengthen our position in the U.S. burns market and unlock access to other major markets such as Japan and China. The team remains on track to finalize the submission by financial year end, and we're working diligently to ensure we deliver a robust submission. So I'd like to provide a brief update on the CMS policy changes in the US outpatient market and what they mean for PoliNovo. First to note, the inpatient hospital market remains a strong growth engine for us and it is unaffected by these policy changes. It's important to clarify that we are committed to maintaining current momentum as we build a disciplined, strategic entry into the outpatient setting. Considering the reimbursement changes, we are prioritising specific outpatient procedures where the provider economics align naturally with the Novosor portfolio. In anticipation of the need, we developed a Novosor bilayer SynPath brand specifically for the outpatient environment. Sympath already has an existing HCPCS code, giving us the fastest pathway into the market, closely followed by NovoSorb Sympath monolayer matrix, once a code is received later this year. We are currently building inventory in new product sizes appropriate for these procedures, with availability expected within this half. and our US commercial team is well positioned to execute across both inpatient and outpatient settings. Often the same surgeons operate in both environments, which gives us strong continuity and leverage with the existing relationships. We are also progressing discussions with office based distributors and building the go to market model to accelerate entry into physician office settings as appropriate. To drive the strategy, we are strengthening market access capabilities. Already supported by an experienced consultant, recruitment is well advanced for a market access director and a senior product manager in the US, roles that will significantly enhance our competitiveness in the outpatient market. From a clinical evidence perspective, our evidence base is robust. We now have 348 peer-reviewed, real-world evidence studies supporting the Novisol platform, giving us a high level of confidence in its clinical performance across a wide range of applications. Importantly, 65 of these studies directly translate into outpatient use, reinforcing the platform's suitability across care settings. This includes five published studies in the diabetic limb cell region, an area where SynPath has strong potential. And we're expecting data from a randomized controlled trial in diabetic limb salvage out of Adelaide over the next six to 12 months, which will further strengthen our evidence base. Looking ahead, we do anticipate the need for a dedicated RCT to support CMS reimbursement in the office setting, particularly for diabetic foot ulcers and venous leg ulcers. We have a robust protocol developed to execute as the clinical evidence requirements become clearer. Our growth priorities are clear. We are focused on maximising the value of the Novosel platform and accelerating the momentum already visible in our core business. Novosel, BTM and MTX continue to deliver strong performance and we see substantial runway ahead, both in the US and internationally. In the US, our footprint now spans more than 800 hospitals, supported by a highly capable commercial team of over 80 representatives. Importantly, adoption is expanding well beyond burns, with clinicians increasingly using our products across a range of reconstructive applications. At the same time, we are progressing the key catalyst that will underpin the next phase of growth. Discipline execution in the outpatient opportunity, advancing the PMA submission, strengthening our presence in priority global markets, and adding velocity to our pipeline through the appointment of a chief scientific officer. Together, these initiatives will give us clear visibility into sustained growth, both in the second half and over the medium term, as we fully leverage the versatility of the Novosel platform. Today we're launching our upgraded online investor platform, designed to give shareholders clearer visibility of our strategy, performance and key milestones. This new hub centralises all ASX announcements, reports, video content and insights in one place, with the ability for investors to subscribe for regular updates. The platform enhances transparency, and improves the cadence of communication, making it easier for investors to follow our progress and engage directly with Polynovo. Over time, this will help us build stronger investor relationships, broaden reach, and ensure the market better understands our growth trajectory. You can scan the QR code on the screen or visit investors.polynovo.com to sign up. I will now hand over to Jan to present the financial results.

Thanks, John. Great. Thanks, Bruce. And thanks again, everyone, for joining the webcast today. I'll start with our commercial sales performance. Novusor product sales were $68.2 million for the period, up 26%, which is an increase of $14.1 million. You can see from the graph presented in dollar terms, $14.1 million of growth achieved this half was greater than what was achieved the same time last year, being $11.9 million. This is a good indicator of momentum in the business as we head into the second half. We experienced continued strong growth in the US, achieving sales of $51.7 million, up 25.3% on the prior period. This growth was driven by strong account acquisition, adding 95 new hospital accounts during the period, and continued penetration of existing accounts. In regard to the rest-of-world results, we reported sales of $16.5 million, up 28.3%. This includes some exceptional results in a number of markets, some with growth rates of 50%, which I will highlight a bit later in the presentation. NovaSorb sales for the group was $6.2 million, up 195.2%, with the majority of sales being in the US. Moving on to additional highlights for the US, As mentioned, the US achieved 25.3% sales growth in a period. Novasorb MTX sales in the US were 6 million, up 193%. Surge in adoption of Novasorb MTX continues to grow and will accelerate across the customer base as more clinical evidence is generated and shared. Novasorb MTX is now being used in over 240 accounts in the US. We recorded strong sales growth in our contracted US networks, with GPO sales up 37.8%, IDM sales up 34.1%, and federal account sales up 87.2%. Contracted accounts represent 39.9% of total sales in the US, and these growth rates are an important indicator of the momentum in the US business. The US business is profitable and growing, generating strong cash flows, and we ended the period with over 800 customer accounts. Moving on to rest of world results, as mentioned, sales were up 28.3% on the prior period. We achieved some exceptional results with both relatively new and well-established markets. In particular, Australia, our home market that we entered several years ago, grew by 52%, which is an excellent result. Other well-established markets, such as Canada and Germany, grew by 50.8% and 28.3%, respectively. These results are a good indicator of the adoption by surgeons using Novisol BTM, not just in large burns, but across a range of indications. Turkey's strong growth continued, up 91.3% for the period In Turkey, they have reimbursement for Novastor BTM for treatment of burns, but BTM is being increasingly used outside of burns without government reimbursement. This demonstrates the rapid seeding of BTM when we start with reimbursement in a market. India performed well, recording 49.1% growth in what was always going to be a challenging market to develop, but we are making progress. The rest of the world's share of global sales now stands at 24%. We see significant opportunities for growth, particularly in Europe and the Middle East in the short term, and new market entries such as Japan and China in the medium term. Moving on to cash flow and the balance sheet, we ended the period with 29.2 million cash on hand. Cash flow from operations of 9 million improved significantly compared to the prior period where 12.5 million cash outflow from operations was recorded. We turned around the ageing debtor days issue in the US from over 90 days outstanding down to 56 days currently, which is a great result. The impact on cash flow is evident. We completed construction of the new manufacturing facility in Port Melbourne with CapEx payments of $10.8 million for the period. $2.2 million in CapEx remains outstanding for the new facility and will be paid during the second half. It's obvious from the graph presented, aside from the one-off CapEx spend, the business would have generated free cash flow for the period. With only $2.2 million in CapEx remaining to be paid for the new manufacturing facility, we will be generating free cash flow in the second half, which will be an important milestone achievement for the business. We enter the half period with a strong balance sheet and cash flow, which will enable us to focus further investment on driving revenue growth. Moving on to the P&L, I want to start off by highlighting the underlying EBITDA performance for the period. After adjusting EBITDA for significant items, being the impact of the R&D lab fire and unrealised Forex impact on translation of the balance sheet due to the strong Australian dollar, adjusted EBITDA was $4.7 million, up 82% on the prior period. There are a number of one-off items impacting the reported net profit after tax result, which I'll now explain. BARDA revenue is down on the prior period as expected. The Pivotal Burns trial is near completion as we move closer to submission for pre-market approval with the FDA. In connection with the BARDA Pivotal trial nearing completion, the trial costs have reduced, which explains the lower R&D expense for the period. Other income includes a $4.6 million interim insurance claim related to the R&D lab fire, This offsets the $4.4 million asset write-off recorded further below in the P&L. Employee-related costs were up 12.2%, which includes $700,000 for restructuring costs in Australia. Employee headcount at the same time last year was 254, which then increased to 301 in June 2025. Since then, headcount has remained steady. Currently, we have 302 employees. Corporate admin and overhead expenses were up only 4.7% after excluding the unrealised forex movement on translation of the balance sheet. Due to the Australian dollar appreciating during the period, an unrealised forex loss of $761k was recorded for the period compared to a $4.6 million unrealised gain in the prior period. During the period, with inventory at comfortable levels after building them up during FY25, we took the opportunity to bring forward attending to various tasks in our manufacturing facilities in preparation for the pre-market approval submission and FDA audit that will follow later this year. To do so, we temporarily reduced manufacturing output, which in turn reduces production recovery to cover manufacturing overhead costs, resulting in an unfavourable manufacturing variance for the period of $3.7 million and gross margin of 88.8% for the half. With these activities now complete, manufacturing output in January has already ramped up without interruption and will improve our production recovery result in the second half. This will increase our gross margin back up to above 90 plus percent for the full year, FY26. And looking forward, we expect to achieve a much improved profit result in the second half. Now we're going to turn to questions. We've got covering analysts dialing in to ask questions, and then we'll move to the web platform for written questions from all our shareholders. So, Operator, if you could please connect through the first caller. Thanks.

Thank you. If you would like to ask a question, you'll need to press the star key followed by the number one on your telephone keypad. If you would like to cancel your request, please press star two. If you're on a speakerphone, please pick up the handset to ask your question. If you would like to ask a question from the webcast, please type it into the ask a question box and click submit. First question today comes from Shane Story from Canaccord Genuity. Please go ahead.

Hey, thank you, and good afternoon, everyone. I'm going to start with Jan, please. Jan, when I back-calculate and look at US BTM sales over the period, I can see that there's quite a bit of a reversion after a very strong Q1, and it looked a little bit softer in Q2, and I suppose surgeons are telling us that November was quite up. So the first question was, was that just your general observation, and then I guess looking ahead, how are you looking at sort of growth rates for BTM specifically over the next couple of years, please?

Thanks Shane. Good to hear from you. So look, the second quarter this year was a little bit softer in the US in November itself. Across a large number of accounts, we just didn't have as many large burn cases come through as we would on average. And it's also Thanksgiving, so generally we see lower activity in that month. It bounced back though in December and we had a solid result for the half as you can see. Looking forward, I think BTM growth will continue. We still have a lot of growth left in large burns in the US, and when we get the PMA approval, that will assist further with penetrating that market and grabbing more market share. And with that, Novastor MTX, the release of that is actually assisting sales. It's not cannibalising sales of BTM. It's enabling them to a large extent. We've got surgeons now using BTM with MTX, where before they wouldn't have used either because MTX wasn't available, and the type of wound that they need to heal that needed some packing, like two or three layers of MTX, they couldn't do that with BTM because it's got the temporizing film on it. So it's actually assisting our sales of BTM. So we're still bullish on sales of BTM in Burton. to an extent, but then we've seen great traction outside of Berne. And Bruce will talk a couple of examples of that where we've got some reps that are doing some outstanding sales results outside of Berne in their territories. But hopefully that answers your question, Shane.

Yeah, I mean, we were aware of that sort of adjunctive use of the two products together. I guess I'm pretty interested, though, outside of that, maybe early observation as to what use cases or indications, you know, do you think it's winning, say, in its own right?

Sure. And, Bruce, just as regards to MTX, you might want to jump in as well and add some colour to that, but just where the product is being used. So we are seeing it being used in cases where there are large deficits and you need to stack the device. The idea of MTX as well, without the temporising film, is it opens up wounds that can be treated in one step. So with BTM, with the temporising film, you need to go back into surgery after it's been applied to have the film removed, and that's why it's generally used in large burns, because it temporises the wound of the patient and gives the surgeons time to deal with other issues that the patient might have. With MTX, it opens up the opportunity to any type of wound. We know the product. can heal a wound where you're missing your dermis. So now, you know, from skin cancer excisions to, you know, you falling off a motorcycle or whatever it may be, where a surgeon just wants to treat the patient and get them in and out in one day or overnight and not have to go back into surgery to have the film removed, like with BTM, you don't have to do that with MTX. So it opens up a whole wide range of indications, basically anywhere where you've lost your dermis. We know our product works. MTX can be used.

I'll add a couple of words to that, Shane. The BTM in that burn space is already doing very well in terms of share and growing. But the opportunity, to Jan's point, is that plastic and reconstruction space. And we're broadening into that and the trauma space as well. We're broadening into that. but that's a much bigger lateral journey for the team and clearly it's not as significant in individual patient experiences because you get smaller square centimetre areas of repair required, but there's a much higher volume of patients versus an acute burn. So the team is broadening into that and doing that gradually to put adjunct into our growth rate over and above Major Burns. If that answers your question, thanks.

It does, thank you. That's very clear. My last question, though, just if you could please remind us where the new manufacturing facility takes the business to in terms of the annual revenue demand of the food service, please.

You dropped out there a little bit, Shane. Did you ask something about manual processes or in terms of the scale, Shane?

Yeah, the new manufacturing facility. Once that's embedded and operational, where does the whole business

I think it gives us somewhere around five times our previous capacity. You know, hopefully, Shane, we're using that over a journey at growing capacity. But it certainly allows us to scale our volume. That's correct, isn't it, Jan, about that sort of ratio?

Absolutely, and it just helps with the complexity as we bring in or release different types of devices, different sizes, different SKUs. The modular setup in the new facility gives us a lot of flexibility in how we run shifts and how we make products. So there's that added benefit as well.

And we should have that operational in a building mode in the second half of this calendar year.

Yeah. It's actually, yeah, it's complete. It's built. We're just going through validation and qualification activities. And, you know, in July onwards is when we're looking to start firing up the facility. Gentlemen, thank you so much. Thanks, Dan.

Thank you. Your next question comes from Leanne Harrison from Bank of America. Please go ahead.

Good afternoon, gentlemen. Bruce, I might start with you. I know you've only been in this seat for two and a bit months now. But, you know, can you comment on where your three key focus areas might be for the next 12 months?

Okay. Yeah, thanks, Leanne. Great to be here. I think, you know, like you say, just new in the role, you know, clearly challenging. You know, working with the key stakeholders in the business, like I mentioned already or Leon mentioned, going to the U.S. was an important part of understanding the business with the majority of the revenue coming from there, but also making sure that, you know, building a high-performing executive leadership team is probably another focus area for me. I think there's definitely opportunities to sharpen our strategy. The strategy is working well. But as I mentioned, you know, previously, is that my focus really is on discipline execution of the strategy and making sure that we've got a very clear path forward for the team. So, you know, really early days, very positive signs for me and what I'm seeing in the organisation, but definitely some areas that we can tighten up and look forward to doing that.

OK. And with, I guess, the strategy, Outside of the United States, are you comfortable with the markets that Polynovo is in and growing, or is there any chance you might change or tweak that a little bit over the next 12 to 24 months?

Well, I think the team have done a good job expanding into markets. I think we're over 46 countries around the world now. Clearly, through my experience in Asia, I'm interested in what we can do in Asia, particularly discussions around Japan, and even China moving forward. I think exploring that opportunity is important for me. But again, for me, it's not really a measure of how many countries we're in. It's how we're performing in those countries. So particularly the work that we've done in EMEA to expand the footprint is about making sure we're executing in those markets and supporting our third-party partners to help them grow the business like we've done successfully in our direct markets.

Thank you. And Jan, you talked about, I guess, some of the softness in November of last year, but can you comment on trading to date in this half, in particular January, and what you're seeing in February?

It's in line with the year-to-date result at the half, so we're travelling well, but we're only early into the second half, as you know, but I guess that should give you a good indication.

Okay, great. And then if I could comment on just some of the rest of the world growth there. Australia in particular, you know, we saw some quite significant growth there and you've been in Australia for a number of years now. So what's really changed to get that sort of momentum and can we expect that to continue in the future?

I'll take that one. I think, you know, looking into the results in Australia, yes, very positive and I'm very say, encouraged by what's possible in a market that we've been in for some time. Part of it is, you know, it's a fluctuating type of business when you're in the burn space, of course, and, you know, that's, I think, well known. But clearly I'm very impressed with what the team have been able to do, expanding the footprint outside of burns. So into new indications, whether it's BTM or MTX, they've done an excellent job in that space.

Okay, thank you very much. I'll leave it there.

Thank you. Once again, if you would like to ask a question, please press star 1 on your telephone and wait for your name to be announced. The next question comes from Andrew Payne from CLSA. Please go ahead. Hi, Andrew. Your line is now live.

Sorry, I was on mute. Yeah, afternoon. Thanks for taking my questions. Just coming back to the growth you're seeing in new markets outside the US that you've listed in the presentation, can you work through the outlook for some of these regions that you see as the key drivers of medium-term growth and really wanting to understand what the investment is or the required investment to ramp up these opportunities?

Bruce, do you want to take that?

Yeah, I'll start with you and I'll come in. Yeah, no problem. Yes, Andrew, thanks for your question. Good to hear from you. Look, there is, I think, as I sort of outlined in one of the slides in the deck when we were covering the rest of the world, but, you know, in the short term, we still see a lot of opportunity in Europe, Middle East, to be quite honest. That's an area where, I know, Bruce, the chats we've been having since you've arrived, that we really want to dig into and focus on. There's a lot of opportunity left in that region. In the regions we're already in, like the US and markets like Australia, but particularly the US, and we've seen what we've done in the UK and Australia, there's so much more we can do outside of burn and we're already doing it and i'm going to steal bruce's thunder but we've got one rep in the us who um sold last year over two million dollars worth of product uh outside of burn he doesn't have a burn center in his territory so there's an example of real success uh expanding into indications outside of burn so there's a lot more depth and left in the US to go. Enormous amount. In the Europe, Middle East, there's a lot of that opportunity as well that we need to dig into with our distributor networks. And they're doing well, but there's more we can do. And then in the medium term, you know, Japan, followed by China, will be the two next big markets, but Japan particularly being one of the most advanced markets in terms of MedTech, you know, that's going to be really important for us. But, Bruce, do you want to add any colour to that?

No, that's... So, Jan, thanks. You know, the one thing I'd add to that is the example over the UK. You know, a majority of the revenue in the UK is outside of Boones, and the team has done a great job there as well, and it gives us really a best practice or a benchmark that we can work towards in the other markets. So, you know, for me, that gives us a lot of, not just potential, but examples of where it's a reality in markets that we're already in.

Okay, great. Thanks. And just, I guess, progressing that a little bit in terms of the investment required for those opportunities. Is there any insights you can give us there? Just trying to understand the profile going forward.

Sorry, so early days, as we've, you know, lent on, distribution partners in a majority of the markets in Europe. Now it's the time to look at, you know, how do we support them with maybe some direct presence, not to necessarily go direct in the market, but to make sure we've got the right support for those our distribution partners to help grow into these other areas with a specific level of expertise. So, you know, early days, that's the initial thoughts. I'll be in Europe for the first time with this team next month, and that's where we start shaping the way forward.

And Andrew, in the medium term as Bruce mentioned, and Jan mentioned, we'll be looking at our investment requirements for our pathway to market in major countries like Japan. you know we we await our pma submission because that will be an important uh adjunct to how we sort of plan that journey and that will require significant investment um working out uh how we're going to actually enter that market longer term that will be china as well okay that's great um and just one other on fx uh can you just give us any insights of how that's moving at the moment and how that will affect the

coming, let's say, 12 months?

Well, obviously not helping us, but a lot of other Australian companies that export. Made a crystal ball, I can tell you, Andrew, but, you know, at this point with our forecast, we've factored in, you know, a conservative approach. We allocate resources based on that to make sure we optimise our result, particularly for the full year coming up. So, you know, we'll see how things pan out, but we certainly keep it, obviously, front of mind because we do have a result we need to manage and that's what we're focusing on.

Okay, that's great. Look, that's all I had. Thanks for your time. Thanks, Andrew.

Thank you. Your next question comes from David Nygan from ENP. Please go ahead.

I think you could please just follow up a little bit on some of the questions around the manufacturing variants that you talked about. Sure. The inventory fell 14.5 to 11.9 in the result. Are you comfortable with the current stock levels to support H2 demand, particularly given the growth trajectory? And is there any risk of a supply constraint whilst this new facility is being validated?

Thanks David for your question. So no risk of any supply constraint and it's all really well managed and we plan everything with the intent of how it ends up coming out the numbers. So what happened for the half is we slowed down manufacturing after building up inventory levels last year. You would have noticed inventory levels got to a higher level than where we'd normally keep them. But that was purposeful. We had to pause manufacturing and slow it down. We chose to do so in this half just to attend to some activities in preparation for PMA submission and the FDA audit will follow later in the year. So we decided to bring that forward. So what that means is we just have less output than planned for the half, and when you have less output, you have less production recovery and less manufacturing overhead costs getting capitalised into inventory. So we ended up with this $3.6 million unfavourable manufacturing variance for the half, but what happens in the second half? We've ramped up production again. So already in January, it's, you know, fired up again, and the results are going to look a lot different for the full year. So for the half, our gross margin was 88.8% as a result of that. But for the full year, we'll be up over 90%, you know, in line with our budget plan. So it was all premeditated. But it is just, I guess, a timing issue. If we weren't reporting at the half, you would just be looking at the year-end number, and the gross margin would be well over 90%. So hopefully that answers your question.

For no reason... Yeah, that's very helpful. Thank you. I might ask a couple more if it's all right. On the CMS output, outpatient opportunity, so I know you've submitted your clinical evidence package already and waiting a response. Just curious if, you know, any feedback from the FDA on the timing... Sorry, actually, from the CMS on the timing for the decision. And, you know, if there's any, you know, revenue contribution that you might have already assumed for your outpatient opportunity in your internal planning for, say, you know, H2 or for FY27.

So just on the response from the CMS, we're still waiting on that response. However, as I mentioned, we're moving forward quickly with the Sympath brand. into the outpatient space. And that's something that we have ready to go as far as the code is concerned. So now we're ramping up production of those specific sizes that you need for those smaller procedures that are linked to that outpatient setting. But Jan, you can speak to potentially the forecasting.

Sure, with forecasting for outpatient, that's all outside to what we've currently got in our plans. So, you know, there's a lot of opportunities, not just in DFU and so forth. There's a lot of opportunity for our product outside of the hospital arena and even outpatient within the hospital. But right now we're sort of working through with the sales team, the marketing team, to sort of shore up our plans and then what that means in terms of sales and production. But it's definitely an outside to our current forecast.

Okay, all trading is upside for now. Yep, got it. And then last one for me is just on the PMA submission. Do you have any expectations for the FDA review? Is it standard review cycle, PMA review cycle, or is there any indication that this could be expedited, you know, given BARDA's involvement?

We haven't had any indication that it'd be expedited. We're anticipating a standard review process.

Okay. Thank you very much. I'll hand it back to the operator.

Thank you. Your next question comes from John Hester from Bell Potter. Please go ahead.

Good afternoon. This is for Leon and Bruce. So, gents, obviously the stock has significantly underperformed in the last 12 months or so. It's underperformed for ASX200 and you've just recorded the weakest period of revenue growth in recent history. So my question is, you know, you spent the last 20 minutes talking about the growth story, but it really hasn't delivered. And I'm just thinking, well, you know, what are you actually going to do to get that growth rate back above 30%, which sort of is required to justify the premium that this stock has historically been rated at?

Hi, John. Thanks for the question. Just from my perspective, you know, you're right. We're talking about the growth potential in the US, looking into new indications, whether it's within BTM or MTX. We've spoken about the outpatient opportunity as well. And then most importantly, the rest of the world, as I mentioned. Even though, you know, growing at 28% is good, we think that there is opportunity to grow more in that space through that focused execution and partnership with our distribution partners. So, you know, whether it is in those new indications and then expanding MTX into the market as well in other markets outside of Australia and the US, that's where we see the potential. But, you know, ultimately it's about execution and that's what we'll focus on.

And, John, I'd add to that, in the medium term, we see opportunities outside of purely BTM, MTX, SYNPATH that may or may not be in our hands. So we still see lots of platform and pipeline product development opportunities that will add to what Bruce has just described.

And I might add, Leon, to that, you know, for the half, we added $14.1 million in sales and growth in dollar terms. And sure, we're going off a lower base, but at the same time last year, it was $11.9 million. So there is a lot of momentum there. And last year was, you know, a challenging year. We've got a lot of focus in the business moving forward this year particularly. And there's some real, you know, good examples of success. And like we talked about that rep before, that selling product, you know, outside of burn, $2 million worth a year, one rep. So think about that and do the math. So the potential's there. We know what success looks like and we're just going to, you know, with Bruce's help, make sure that we're all executing as we should be to make sure that happens.

OK. No further call. Thank you. Thanks, John.

Thank you. There are no further phone questions at this time. I'll now hand back for any webcast questions to be addressed.

Great, thank you. We've got quite a few and I've marked a few as complete. We've answered quite a few questions during the discussion so far, but just bear with me while I scroll up. There's some questions around India and just the prospects and how we've gone to date and what the future looks like there in terms of performance.

Yeah, so as mentioned, with India, yes, we show a significant growth rate off a low base. From what I've seen so far, working with the India team or connecting with the leadership there, they're putting the building blocks in place. More than likely, it's taken longer than anticipated originally to get through that complex tender process. I'm very familiar with the Indian market. have been for many years and not that surprised that it's taking time to get through. The good news is we are starting to see more and more frequent approvals coming through from these tenders. So, as I mentioned, the groundwork has been done. It's a very solid and experienced leader that we've got in place there that's built a team ready to execute. We've actually got... the largest burn conference that's occurring next week. We've got the 33rd annual conference of the National Burns Academy. We were there last year with more and more, you could say, evidence being generated and shared on BTN last year. We're very enthusiastic to see how that has progressed over the course of a year. From what we know anecdotally and working with the team, we're seeing more and more cases where surgeons are working with BTM and sharing those results with their peers. So we're quite confident. On top of that, one of our KOLs out of Australia is there in the week leading up to the NABACON meeting. and Associate Professor Marcus Wagstaff is there. Also, we have NJ Kanderwal from the US, actually touring around the US and sharing their experiences with key surgeons around the country. So, you know, it's like early days, you know, we expect good things out of India, but in my experience, they will build over time, and from what I see, the building blocks are in place.

All right, thanks, Bruce. I've got another question here just regarding BetaCell and just the progress of our relationship with BetaCell.

Yes, again, as we mentioned before, we're very supportive of the work that's being done at BetaCell. I met the leaders of BetaCell last week in Adelaide and, again, reiterate that support, as we have done in the past, supplying product to help with the development of that you know, really novel technology. So, you know, we intend to continue that partnership as we have in the past.

I've got a question here around operating leverage, and I can take that one. If we look at the numbers themselves for the half, sales growth up 26%, corporate admin costs underlying up 4.7%. We removed that unrealised Forex movement, which gets lumped in that category in the stat accounts. and employees up only 12%. We did have some redundancy payouts and various things in the half, but headcount was steady at 302 employees. We had 301 employees at 30G. So the leverage is there, and it hasn't come through, I guess, in the net profit after tax result because of that manufacturing recovery. But, you know, the adjusted EBITDA was $4.7 million for the half. It was up 82%. So if you take that $4.7 million, and if we didn't purposefully slow down manufacturing, we had to then attend to certain things, You add on that 3.6 and all of a sudden it's over 8 million EBITDA for the half. So the second half is looking a lot more positive because of these one-offs that we don't have to deal with. But the operating leverage is there and I think we'll see that coming through in the second half and next year as well, as well as free cash flow, which would be an important achievement for the business. Just moving on, there's some question around the fire. We probably should address that just on what caused the fire and if we can comment. And if we can't, I think we can't. But maybe Bruce or Leo want to address that one.

Yeah, so I think at this stage investigations are ongoing. I'm not in a position to comment on the actual cause of the fire at this point, but I think that's all we've got to say on the topic unless you want to add some more, Leon.

Well, I mean, we're unhappy that it occurred. Clearly the team and our insurers have done a thorough investigation. The teams are working through the rebuild project of what was the new R&D lab. The actual technical elements, we know where the focus was, but there are some technical investigations still ongoing by our insurers. On the other side, just to reinforce the point, we haven't compromised our R&D capability. All our projects are ongoing. We had our old lab that we hadn't done anything differently with and so our team has been highly productive in the journey. We're a little frustrated that our brand new R&D lab is now awaiting a minor rebuild But that's where we're at. The good news is we're completely covered for those rebuild costs.

Great, thanks. Thanks, Leon. Some questions just around the R&D pipeline and what we've got planned, what's sort of on the horizon?

Yeah, so it's early days. As I mentioned, I think there's a potential to accelerate our output from the R&D function. And clearly... You know, the search for the chief scientific officer and putting that critical role in place is going to help to that end. You know, we've got a significant, I think we've shared it before, you know, the output from that R&D pipeline is there. We just need to get it, say, get some more velocity into that pipeline and get that out into the market, whether it is through our commercial execution ourselves, or through strategic partnerships. And that's another key decision to make, to make sure that we're really maximising the value we can extract from this wonderful NovoSword platform.

Great. Thanks, Bruce. Some questions here around the outpatient market in the US and the requirement for an RCT, whether that's needed for DFU or not. And is that only just for DFU, or can we sell the product, SYNPATH, for other indications right now?

Yeah, so we can sell SYNPATH for other indications right now. Actually, this year we can sell it for DFU as well. The need for an RCT, we say, is anticipated, although we're still working to clarify the exact clinical evidence requirements with the CMS. At this stage, we're anticipating it. Like I said, we've got a protocol that we've worked on to make that possible. And, you know, as we move forward, looking at how we can accelerate that as well. But right now, we can sell SYNPATH because we have the code into all of those care settings in the outpatient piece.

The important part, just if I can add to that before we close on that point, as Bruce mentioned in his presentation, we're working through the hospital outpatient element of that market opportunity, if you like, and that likely would be in our team's hands. But Bruce and the US team are working through that. And the outside of hospital element, we're in probably the easiest description would be investigation mode. We're likely looking at partnerships to get SYNPath to market there. CMS is still very much in flux in terms of the industry's understanding of all the outcomes and we're learning that as we do more discovery. Great.

Thanks, Lionel. Just two more questions. We're coming up on the hour, so just run to the next one here. So a question on BARDA and just our relationship with BARDA and how that's going in light of the trial coming to an end and the support that we're getting from BARDA.

Well, excellent support from BARDA. I've appreciated meeting the leadership there as well. We're on regular meetings with them as we go through the process to finalise this submission. they've been a wonderful partner and they continue to be. So, yeah, it's all very positive.

Thanks, Bruce. We'll make this our last question, given the timing. Just a question on guidance. This comes up quite often, but we're happy to answer it again. We don't provide guidance in the past, but do we intend to in the near future?

I'll take that. I mean, at this stage, we're still very much a company on a rapid growth phase. As Bruce has said, we've got many opportunities in our growth going forward. We see very strong growth momentum. We see strong pipeline opportunities. We see strong market sector opportunities like CMS as one example. Medium term, we see other geographies like Japan. But near term, we're still also heavily exposed to the burn segment, and that's highly variable. So as we build a more predictable longer-term growth rate, and we'll consider guidance, but in the nearer term, we're not going to formally provide guidance for the period going forward.

Thanks, Leon. Before I hand back to Bruce, just to call out to Rachel Harwood from Macquarie. She's based in Dallas and it's quite late, but the four questions I've got we've answered quite well, but I appreciate you sending the questions, Rachel. So with that, I'll hand back to Bruce to close.

Thanks, John, and thank you all for joining us today and for your continued support of Polynovo. As you've heard, we are entering the second half of Strong Momentum, a clear strategy... and a deep commitment to execution. Our focus remains on delivering meaningful clinical impact while scaling globally and unlocking the full value of the Novasol platform. I'm incredibly proud of what the team has achieved and confident in the opportunities ahead. We look forward to updating you on our progress and appreciate your engagement today. Thanks, everyone.

Thank you. Thank you.