Why the Polynovo share price surged to a record today

The golden run in the Polynovo Ltd (ASX: PNV) share price continues with the stock hitting a new record high and topping the S&P/ASX 200 (Index:^AXJO) (ASX:XJO) leader board this morning.

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The golden run in the Polynovo Ltd (ASX: PNV) share price continues with the stock hitting a new record high and topping the S&P/ASX 200 (Index:^AXJO) (ASX:XJO) leader board this morning.

The PNV share price jumped 6.3% to $2.71 and is the best performing ASX 200 stock. This means the artificial skin treatment developer's stock gained more than 300% over the past 12-months.

And if you are wondering what other stocks are making waves today, the WiseTech Global Ltd (ASX: WTC) share price is in second spot with a 3.4% rally to $24.68, while the Seven Group Holdings Ltd (ASX: SVW) is right behind with a 3.1% advance to $21.58.

First use of BTM

Coming back to Polynovo, the company announced this morning that it received its first orders of its NovoSorb BTM product from PMI.

BTM is a unique range of polymers that can be used to promote skin regrowth in burn victims or accelerate wound healing.

The products were shipped to hospitals in Germany, Austria and Switzerland. The first surgery using the innovation was undertaken in Germany last Sunday and management noted that other surgeons are planning on using BTM this week and in the coming fortnight.

"At the launch of BTM at the 38th Jahrestagung der Deutschsprachigen Arbeitsgemeinschaft für Verbrennungsbehandlung (DAV) Burns Conference in Austria last week, numerous surgeons made clear their intention to use the product in the near future," said Polynovo in a statement released to the ASX.

"That is now happening."

More upside for Polynovo?

This is a significant milestone for Polynovo, and despite the strong outperformance of the stock, there's arguably more room for the stock to climb if BTM becomes widely accepted among surgeons.

After all, the market cap of Polynovo stands at around $1.8 billion following today's share price jump. That's still modest given the potential size of the opportunity for BTM.

The healthcare sector is a star performer in 2019 and Polynovo is a contributor to this. Another in this space that have generated supersized returns for investors over the past year is blood products maker CSL Limited (ASX: CSL).

But credit also needs to be given to sleep disorder treatment company RESMED/IDR UNRESTR (ASX: RMD) and sterilisation device developer Nanosonics Ltd. (ASX: NAN). These stocks have put a big smile in investors' faces.

Foolish takeaway

But there are questions about whether this sector can continue to pull ahead of the broader market as valuations are looking stretched.

Those looking for stocks that might be better placed to generate strong total returns in 2020 should read this free report from the experts at the Motley Fool.

Follow the free link below to download a copy.

Brendon Lau has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of CSL Ltd. The Motley Fool Australia owns shares of and has recommended Nanosonics Limited. The Motley Fool Australia has recommended ResMed Inc. 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.

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