• Morgans releases its ASX wound care report seeing value in Aroa Biosurgery, Avita Medical and PolyNovo
  • Global wound care market is estimated to grow at a CAGR of 5.9% to reach US$28.6 billion by 2028
  • ASX wound care companies head towards profitability, show topline growth greater than 20% pa for next three years

Broker Morgans has released its wound care report and says it sees values in all three of the ASX companies it covers in the sector, forecasting each to grow revenue at >20% pa over the next three years and move into profitability.

The global wound care market was estimated to be worth US$21.5 billion in revenue in 2023 and forecast to reach US$28.6 billion by 2028 with a CAGR of 5.9%.

An increase in use of regenerative medicine for wound treatment, advancements in wound care management and growth in emerging markets is being attributed to the growth.

Furthermore, a growing elderly global population, rise in traumatic injuries, surgical procedures along with increasing prevalence of diabetes and obesity leading to diabetic ulcers and venous leg ulcers has been attributed to an increase in wounds in the past decade.

There are several large international pharmaceutical companies involved in wound care including 3M, Smith+Nephew, Mölnlycke, ConvaTec and Johnson & Johnson.

However, Morgans Healthcare analyst Scott Power told Stockhead wound care companies are also showing significant growth and potential.

“Wound care companies on the ASX are showing top-line growth greater than 20% pa for the next three years and are expected to be profitable which will attract more investor attention,” Power says

“To achieve this growth and build market share, significant R&D funding (>10% of revenue) is being pumped into innovative products which will further improve wound care outcomes for patients.

“Its an exciting subsector of the healthcare market to increase exposure to.”


Aroa Biosurgery (ASX:ARX)

ARX was founded in 2008 by veterinarian and now CEO Dr Brian Ward after he discovered extracellular matrix (ECM), a tissue scaffold found in the forestomach of sheep, closely resembled human tissue in structure and contained more than 150 essential proteins crucial for healing.

Listing on the ASX in July 2020, AROA ECM is ARX’s proprietary ECM biomaterial, containing a complex mix of biological molecules and form the building block for its range of soft tissue repair products.

The soft tissue repair company focuses on trauma, post cancer surgery and chronic complex wounds.

ARX has received US Food and Drug Administration (FDA) 510k approval for its Enivo pump and catheter, which are key components of its new Enivo Tissue Apposition Platform, designed for dead space management.

A peer-reviewed study published in the September issue of industry leading journal ePlasty outlined the clinical effectiveness of its Myriad Matrix and Myriad Morcells products in complex traumatic wound reconstruction procedures.

ARX reported its Q2 FY24 cashflow report in late October, which  Morgans notes in their wound care report was in line with expectations.

“Management reiterated guidance for FY24 of revenue growth of 25-30%, 85% gross margin and normalised EBITDA of NZ$1-2m, which suggests a strong finish to the H2 with earnings skewed ~40/60% H1/H2,” Morgans says.

“Of the three listed wound care companies under coverage, all have commented on their intentions of reaching profitability in the coming years.

“We view ARX as the most likely to reach profitability soonest, guiding to EBITDA of NZ$1-2m in current financial year.”


Avita Medical (ASX:AVH)

Listed on both ASX and NASDAQ and previously known as Clinical Cell Culture, AVH gained prominence as the developer of the skin repair technology used by former Australian of the Year and burns expert Professor Fiona Wood to treat victims of the Bali bombings.

AVH’s RECELL system technology platform has been approved by the US FDA for the treatment of thermal burn wounds and full-thickness skin defects and for repigmentation of stable depigmented vitiligo lesions.

RECELL is an autologous cell harvesting device harnesses the regenerative properties of a patient’s own skin to create Spray-On Skin cells.

AVH in October announced the FDA requested additional information regarding its marketing application for its latest RECELL GO, which will result in a delay of four to six months in processing its premarket approval (PMA) supplement application for the device.

The updated timeline suggests that the potential launch of RECELL GO, which is AVH’s introduction of an automated workflow to its manually operated RECELL device could occur between May 1 and July 1, 2024.

Furthermore, AVH on Tuesday announced a “slower-than-anticipated progression through the customer’s Value Analysis Committee (VAC) processes,” driven by the expanded label applications of its newest indication, full-thickness skin defects.

Consequently, AVH downgrading its full year 2023 commercial revenue guidance from the previously disclosed range of US$51 million to US$53 million to a new range of ~US$49.5 million to US$50.5 million.

“While only a modest downgrade (~4% at mid-point), the timing of the update shortly follows AVH’s 3Q cashflow report which reconfirmed guidance less than two weeks ago,” Morgans says.

“Regardless, the guidance still represents considerable sales growth of 45-48% for FY23 and we expect this to continue into FY24/25 with a much larger sales team and targeting more indications.”

Morgans remains confident AVH will reach its profitability target of CY25.

“AVH has recently secured a debt funding line of US$90m, drawn to US$40m, which management believe is sufficient to achieve profitability in CY25,” Morgans says in their report.


PolyNovo (ASX:PNV)

PNV specialises in the development and commercialisation of dermal regenerative solutions with its FDA approved Novosorb BTM (biodegradable temporising matrix) is used to temporarily close a wound and aid the body in generating new tissue.

NovoSorb BTM is a man-made synthetic polymer that does not contain any biologic materials, which the company says is important because traumatic wounds often contain bacteria that may cause infection.

PNV’s complementary NovoSorb MTX has received 510(k) FDA clearance. PNV says it uses the technology platform underpinning the clinical success of BTM, but without a sealing membrane.

It was developed to satisfy clinician demand for a product for use in indications where the sealing membrane is not required.

CEO Swami Raote said at the company’s AGM this month NovoSorb MTX has “already received strong support from surgeons”.

“Our limited market release in the US and NZ will develop the clinical evidence to support a full commercial launch, planned for FY24,” he says.

“The innovation pipeline is exciting, with the extension of the NovoSorb MTX and BTM portfolio, to include surgeon-led innovations, planned in FY24.”

PNV also provided a trading update for July and August 2023 at its AGM, with total sales up 83.9% year-on-year, with significant growth in the US, Australia and the UK.

“Although no formal guidance provided, profitability is in sight,” Morgans wrote in their report.


Tissue Repair (ASX:TRP)

While not included in the Morgans wound care report TRP listed on the ASX in November 2021  and is targeting  large addressable markets in multiple segments across advanced wound healing and aesthetic dermatology spaces.

It’s gel-based biologically active pharmaceutical ingredient (API) Glucoprime simulates a yeast infection, resulting in the body stimulating its own wound repair pathways to heal the wound.

The company’s core focus is entering Phase 3 clinical trials in chronic wounds for its lead drug candidate TR987, which incorporates Glucoprime. After clearance from the FDA first patient randomisation for TR987 is planned for early Q2 2024.

At its recent AGM TRP says TR987 has the promise of being the first drug approved for venous leg ulcers (VLUs) in 25 years, representing a significant market opportunity with unmet needs.

The company’s novel cosmeceutical product TR Pro+TM launched in June 2023 and improves skin quality following procedures where the skin may or may not be broken.

“Aesthetic and minor medical procedures represent a significant growing market estimated at AUD$1 billion market with no clear product leader,” the company reported at its recent AGM.

It says sales for TR Pro+TM have increased steadily by about 20% month-on-month.

“Orders from clinics (wholesale) account for 93% of the sales volume with the other 7% being retail (consumer/patient) orders,” the company reported in its recent quarterly update.

“The company is focussed on establishing a footprint of distribution in the early stages of the launch (as opposed to a focus on aggressive sales growth).”


Next Science (ASX:NXS)

While also not included in Morgans’ wound care report NXS is tackling post-surgery bacterial infections.  It is developing and commercialising its proprietary XBIO technology, which according to its website is eradicating both biofilm bacteria and planktonic bacteria.

NXS says biofilms are powerful communities of bacteria that function as a single entity that can lead to chronic and recurrent infections and pose a far-reaching threat to humans, animals and the environment.

“These bacteria are protected within a matrix, called the extracellular polymeric substance (EPS) that adheres to surfaces and form biofilms in the human body, hospital rooms, on medical devices, surgical instruments, and other healthcare tools, posing potential infection risks,” NXS says.

The US National Institutes of Health says biofilms account for more than 80% of microbial infections in the human body.

“The continuing rise in antimicrobial resistance necessitates effective diagnosis and management of biofilm-associated infections,” NXS says.

“Collectively, infections contribute to significant morbidity, mortality and increased healthcare expenditures.”

The company says XBIO disrupts the biofilm’s EPS and exposes the bacteria, once protected by the biofilm, leaving it more vulnerable to attack.

American orthopaedic surgeon Dr Robert M. Harris recently released the findings of a retrospective study which examined infection rates up to 90 days post primary joint arthroplasties across hip, knee and shoulder surgery.

The retrospective analysis found NXS’s XPERIENCE advanced surgical irrigation product to be efficacious and warranting further investigation as a sole anti-microbial irrigant for potential use in reducing the overall burden of periprosthetic joint infection (PJI) and improved patient outcomes.

The patient cohort of 423 exhibited 0% infection rate up to 90 days post-surgery, compares favourably with typical incidence rates.

NXS says the study findings are the first of a series of independent retrospective studies examining the impact of XPERIENCE to reduce surgical site infection rates.


The ARX, AVH, PNV, TRP, NXS Share price today:



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