Rumblings of discontent within the board of Melbourne-based biotech Polynovo (ASX: PNV) have been confirmed by the company with the announcement that US-based CEO Swami Raote has resigned.

While the reasons for Raote’s departure have not been disclosed, reports in The Australian this week have suggested that the former veteran Johnson & Johnson executive had levelled allegations of bullying against outspoken Polynovo chairman David Williams.

The Australian, in its Margin Call column, reported that the matter has been brewing for some time with Polynovo last October appointing barristers Philip Crutchfield KC and Katherine Brazenor to conduct an inquiry into the allegations.

Polynovo has not responded to these allegations which were raised this week with the announcement today of Raote’s resignation the only sign of trouble simmering on the burns-treatment company’s board.

“PNV confirms that on Friday last week there was a confidential discussion with the chief executive officer, Mr Swami Raote, requesting his agreement to cease his employment with PNV effective June 2025 at the end of his contractual notice period and to step down as chief executive officer effective from an earlier date,” the company says in a statement to the ASX.

“The discussion proposed terms for his separation if agreement was reached and revealed that non-executive director, Dr Robyn Elliott, would be stepping into the role as acting chief executive officer pending the appointment of a permanent replacement.”

News of the boardroom discontent has hit Polynovo shares hard this past week, with the shares trading 10c, or 7.2 per cent, lower today at $1.29 by 12.35pm (AEDT). The stock hit a recent high of $2.36 in late January and has been in decline ever since.

Raote’s departure has come as a shock after The Australian earlier this week revealed that Crutchfield and Brazenor, following their investigation, had recommended to the board that Williams step aside. This has not eventuated and Polynovo has yet to address the matter in a statement to the ASX.

Williams, who has been chairman of Polynovo for the past 11 years, is seen as a key driver of the business through deep connections across the industry and his forthright approach to promoting the business.

Raote’s appointment in 2022 marked the end of a nine-month search by Polynovo for a new CEO after the sudden departure of former managing director Paul Brennan at the end of 2021 due to “differences with the board”.

Raote at the time of his appointment described Polynovo as a "diamond in the rough" as he revealed a wish-list of emerging markets that he planned to target to grow the business globally.

The latest internal strife has come at a critical time for Polynovo, which after years of stellar sales growth finally saw this translate into profitability in FY24 and again in the first half of FY25.

Williams is known for making frank admissions during briefings to investors and analysts in a brash style that could be described in some quarters as larrikin.

Raote, who has a different style of leadership, spent 30 years with Johnson & Johnson, retiring as the global president of its Vision Care business at the end of 2020.

Raote brought with him 20 years’ experience in the Asia Pacific region, including stints in Indonesia, Singapore, South Korea and China, and he was pivotal in the company’s early push into India and other Asian markets.

Polynovo’s key product is NovoSorb, a biodegradable medical gauze that assists skin tissue repair from burns or serious wounds, with applications also used for common conditions such as hernias and diabetic foot ulcers.

The company posted a net profit of $3.3 million in the first half of FY25, up 22 per cent from a year earlier, as revenue lifted 22.8 per cent to $59.9 million.

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