Medical device manufacturer PolyNovo Ltd (ASX: PNV) has had an impressive run recently, with its share price up nearly 30% in just two weeks.
A positive announcement yesterday gave Polynovo’s share price an additional 5% boost.
PolyNovo’s flagship product NovoSorb BTM is used for serious burns victims and helps regenerate human tissue where it has been severely damaged.
PNV share price
PolyNovo signs new purchasing agreement
It was revealed yesterday, PolyNovo has signed a group purchasing agreement with a US group purchasing organisation (GPO) called Premier Inc.
Under the agreement which is effective from April 1, PolyNovo will be able to access Premier member hospitals and their representatives who are responsible for introducing new technology to members.
PolyNovo’s marketing and consulting teams will provide training and support for the Premier team in order for them to effectively adopt the BTM product.
PolyNovo’s sales team can now enter hospitals that were previously restricted, with the procurement process also streamlined to enhance the adoption process.
Premier services has over 2,000 acute care hospitals including 100 designated trauma centres. It also has 63 children’s hospitals including 20 designated as trauma/burn centres.
Management commentary
Managing Director Paul Brennan said: “This signing with Premier, the second largest GPO in the US, is a major milestone. We have recently signed with Aptitude and First Choice. These GPO agreements put our disruptive BTM on a much larger list of hospitals than our sales team can get around in the short term.
We will continue expanding our sales team into new markets to support hospitals and surgeons but now also to match the geographical footprint of the GPOs. We look forward to demonstrating improved health economic benefits for Premier hospital members and their patients.”
Why have PolyNovo’s shares been rocketing recently?
If you look back to December last year, you might remember that PolyNovo’s shares took quite a steep dive after rallying hard for the prior four or so months.
The sentiment can change extremely quickly with companies like these and perhaps the market believed shares were oversold around the $2.50 mark.
An additional catalyst that coincided with this most recent rally was some insider buying action.
Chairman David Williams has bought two lots of shares in the past couple of weeks and has increased his holdings by 400,000 shares.
Are PolyNovo’s shares a buy?
PolyNovo’s HY21 results highlighted the company’s sales efforts were being affected by COVID-19 as they had limited access to hospitals and surgeons.
Management didn’t give any guidance due to the ongoing nature of COVID-19, but they did say they’re expecting lumpy sales in the second half of the year.
PolyNovo’s ongoing focus will be its pivotal trial of BTM, the development of a new pipeline of products, and the continued expansion into new geographic regions.
The company’s results were fairly underwhelming, and I think it highlights how long it can take for growth stories such as this to evolve. I’d like to be a shareholder of PolyNovo, but they’re a hold for the time being.
If you’re interested in other ASX growth shares, I’d recommend signing up for a free Rask account to get access to our stock reports.
