Mediwound Ltd (MDWD) 2016 Q1 法說會逐字稿

Good day ladies and gentlemen and welcome to the Mediwound first-quarter 2016 financial results conference call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will follow at that time. (Operator Instructions). As a reminder, this call is being recorded.

I would now like to turn the call over to Anne Marie Fields, Senior Vice President of LHA. You may begin.

Thank you. Good morning. This is Anne Marie Fields with LHA. Thank you all for participating in today's call. Joining me from Mediwound are Gal Cohen, Chief Executive Officer, and Sharon Malka, Chief Financial Officer.

Before the opening of the US stock market today, Mediwound announced financial results for the first quarter ended March 31, 2016. If you have not received this news release or if you would like to be added to the Company's distribution list, please call LHA in New York at 212-838-3777 and speak with Carolyn Curran.

Before we begin, I would like to caution that comments made during this conference call by management will contain forward-looking statements that involve risks and uncertainties regarding the operations and future results of Mediwound. I encourage you to review the Company's filings with the Securities and Exchange Commission, including without limitation the Company's Form 20-F and 6-K, which identify specific factors that may cause actual results or events to differ materially from those described in the forward-looking statements.

Furthermore, the contents of this conference call contain time sensitive information that is accurate only as of the date of live broadcast, April 21, 2016. Mediwound undertakes no obligation to revise or update any statements to reflect events or circumstances after the date of this conference call.

With that said, I would like to turn the call over to Gal Cohen. Gal?

Thank you Anne Marie, and thank you all for your interest in Mediwound and for participating in today's call.

The first quarter has been a very exciting and busy time at Mediwound highlighted by considerable progress in both our commercial and clinical plans. Hundreds of patients with severe burns continue to be treated with NexoBrid at a growing number of burn centers across Europe. We see positive momentum with more centers treating patients, established centers treating more patients, and new centers beginning to order NexoBrid.

Importantly, we have advanced our efforts to receive reimbursement for NexoBrid in several European countries, and believe that these efforts are likely to generate positive results in the coming months. At the same time, we have made progress bringing NexoBrid to other global markets, and continue our efforts to further expand NexoBrid to important new territories.

The positive data from our Phase II clinical study with EscharEx for the debridement of chronic wounds and hard to heal wounds encourages us to advance this very promising product in diabetic foot ulcers and venous ulcers, which represent a tremendous market opportunity. In tandem, we are advancing our US development program for NexoBrid in collaboration with BARDA as well as advancing our R&D programs for pediatric use and for developing an injectable form of our technology for connective tissue disorders. These achievements put us in a strong position to reach a number of important milestones in 2016, all of which I will discuss in greater detail later in the call.

Now let me begin with a review of our ongoing commercial progress with NexoBrid in Europe. We continue to work with burn teams to accelerate the treatment of burn patients with NexoBrid. As I mentioned, we see more centers treating patients -- we see centers that are using NexoBrid treating more patients and we see more centers ordering NexoBrid. We see a clear increase in the number of new treating centers in Austria, in Spain, in the Netherlands, in Denmark, in Poland and in other countries. These centers were previously sitting on the fence, and now they have started to treat patients with NexoBrid. To date, in 2016, we have already treated more than half of the patients that were treated in all 2015. Centers like Milan that just started to treat late last year have already treated over 30 patients in the last few months alone. We see orders starting to come from Spain, from the Netherlands and even from Switzerland via special permits as Switzerland is not even part of the European Union, nor the EMEA approval. We have made good progress creating interest in NexoBrid, educating burn specialists, and integrating NexoBrid into various burn centers' workflows.

The next key inflection point for adoption and converting the growth, the growing mix of usage to revenues, is obtaining reimbursement and formula inclusion in the applicable markets. We believe that NexoBrid has both the clinical merit and is cost effective. We have made considerable progress working with the local market access experts to provide information to facilitate the review process needed for decisions in applicable markets. I can update you if you have obtained reimbursement coverage in Belgium, in the requested price. We believe that our efforts are likely to generate additional positive feedback in the coming months, and we look forward to keeping you apprised of our progress.

Our commercial efforts are aided by the significant presence we have at international and regional medical conferences for burn specialists. Burn specialists across Europe continue to generate strong clinical support for NexoBrid as evidenced by the number and quality of papers presented -- presenting NexoBrid's benefit.

In 2015, more than 90 clinical papers were presented by experts from dozens of countries before an audience of burn care specialists and won important prizes and recognition. We've even seen our articles in the general press by KOLs in Sweden, in Belgium, in Italy, in Germany, and in other countries.

We are looking forward to the upcoming American Burn Association Annual Meeting taking place on May 3 to 6 in Las Vegas, where more than a dozen papers highlighting the merits of NexoBrid have been accepted for presentation. We expect European carriers to attend the conference and believe they will share the buzz in Europe around NexoBrid with their peers and the other conference attendees.

Throughout 2016, we will continue to support the advancement of burn care by sponsoring European national and regional burn conferences. We'll continue to invest in user meetings, in peer discussions, and sampling programs as well as in market access initiatives that would favor reimbursement with accelerate market adoption and enable us to translate the positive momentum into sales.

During the first quarter and recent weeks, we've made considerable progress leveraging our EMEA marketing authorization to expand NexoBrid into important global markets. Our focus for that effort remains on Latin America, Asia-Pacific and CIS region.

This quarter, we expanded global access to NexoBrid through distribution agreements in Colombia, Peru, Chile, Ecuador, Panama, as well as India, Bangladesh, and Sri Lanka. In addition, our distribution partner in Argentina received marketing authorization from the Argentinean Ministry of Health, and we look forward for their commercial launch in the coming quarter. Our distributor in Russia submitted the FIFO registration and initiated a sole regional clinical study to demonstrate local experience and support registration. Our distributor submitted Registration 5 in Mexico and in South Korea where we have recently received orphan drug designation. We are negotiating with potential distribution partners in other important markets, and we look forward to providing you with further important news on this front as well.

Turning now to a review of our initiatives in preparedness for mass casualty incidents, an important new market for NexoBrid. Unfortunately, as we see all around us in Europe, in Israel and elsewhere, mass casualties are a critical issue of great need. We are making an effort to expand the medical contribution of NexoBrid and hope to make progress with a variety of governments to aid in their preparedness for such dreadful incidences.

In January, the Fourth International Conference on Preparedness and Response of health systems to emergencies and disasters was held in Tel Aviv. This event provided us with an international platform so initiating discussions with officials from various countries on the merits of NexoBrid for preparedness and response to disasters and emergencies. We continue to pursue opportunities with government and military groups worldwide as we see this as an important new commercial market where we can build a repeat customer base and make a difference in patients' lives.

Now let's turn to a discussion of our progress with EscharEx, our drug for chronic and hard to heal wounds. In February, we reported positive topline results from our second Phase II clinical trial evaluating EscharEx for the treatment of chronic and other hard to heal wounds. This prospective randomized controlled study of 73 patients was conducted at 15 clinical sites in Israel and Europe, and evaluated the safety and efficacy of EscharEx compared with gel vehicle for the treatment of a variety of chronic and hard to heal wounds, including a pre-specified study group of diabetic foot ulcers, a study group of venous leg ulcers, and a study group of postsurgical or traumatic hard to heal wounds. Patients were randomized to either EscharEx or the hydrogel vehicle at a ratio of 2 to 1 respectively. We conducted this trial to assess and demonstrate EscharEx efficacy in debridement of chronic wounds, to evaluate the safety of EscharEx, and to determine the best indications to move forward in our clinical development program. We were delighted to have achieved all three of our goals.

Let me summarize the data. Patients treated with EscharEx demonstrated a higher incidence of complete debridement compared with patients treated with the hydrogel vehicle at 55% versus 29% respectively. This was the study's primary endpoint and it was met with statistical significance.

Of note, this data only captures wounds that were completely debrided within up to 10 daily applications. So any wound that was almost completely debrided or debrided after more than 10 daily applications was not counted.

We also had a pretty fun subgroup analysis that showed that 50% of the patients with diabetic foot ulcers treated with EscharEx achieved complete debridement compared with 40% of patients, one patient treated with hydrogel vehicle. In addition, 63% of patients treated with (technical difficulty) that was (technical difficulty) treated with EscharEx achieved complete debridement compared with 25% of the patients, two patients, treated with the hydrogel vehicle. A post book analysis showed that 93% of all patients with complete debridement with EscharEx were debrided within seven days after four to five applications on average. The incidence for complete debridement was significantly higher with a P value of 0.028, and the time to complete debridement was significantly shorter with a P value of 0.024 in the DFU and VLU patients treated by EscharEx versus the control group. These low P values that were achieved in a sample size of 47 patients are important when thinking about powering a Phase III study.

Importantly, no material effects on wound healing were observed and no material differences were found as reported adverse events between the two groups.

The average wound size treated with EscharEx in the study was 33.6 square centimeters versus 25.8 square centimeters in the control arm. The average wound age treated with EscharEx was 72.8 weeks versus 30.8 weeks in the control arm. These wounds are by far larger and longer in duration in the EscharEx arm versus the control arm, and even more so when compared to wounds usually reported in other debridement studies that refers to wounds of 0.5 square centimeters.

These positive results were even more notable as the hydrogel vehicle is actually a common widely used treatment for the debridement of chronic wounds. So our control in this trial was not a true same placebo.

Furthermore, bear in mind that non-sharp enzymatics and other debridement agents currently available in the US market require daily applications for several weeks, if not months, to achieve complete debridement, yet they still sells in the US hundreds of millions of dollars every year.

As reported, we have completed a comprehensive market research study with EscharEx that involves more than 200 healthcare professionals in the US and Europe. According to the research, there are more than 1.3 million patients with DFUs and VLUs in the US alone who undergo debridement, not that needs to undergo debridement, that actually undergo debridement. The seven physicians indicated that the product having the profile of EscharEx will potentially be prescribed to a significant portion of this patient population. With an average cost of treatment of $1,000 to $2,000 per patient, EscharEx represents a very meaningful market opportunity. These findings were affirmed by a US advisory board comprised of leading US medical, marketing, and reimbursement experts which reconvened to review, discuss the deliverance report, and it was just now recently reaffirmed again in our discussions with US KOLs during the recent symposium on advanced wound care that took place last week in Atlanta.

Let me walk you through the line of thinking behind physician feedback that EscharEx is meeting its target product profile and, approved by FDA, would capture a significant portion of the entire patient population in need of wound debridement. Currently, an effective method to debride a wound is by surgical means, but sharp debridement requires surgically skilled physicians, requires anesthesia, which in elderly patients with various comorbidities is accompanied with a higher risk of local and systemic complications, and sharp debridement may also involve hemorrhages which would be more difficult to control due to the high incidence of anticoagulant drugs used in this patient population. Due to these limitations, many chronic wounds are treated by conservative methods such as the current available enzymes, hydrogels and other autolytic methods which require a long time to achieve a clean wound bed, if they achieve it at all.

Our clinical study results suggest that EscharEx, which is still an investigational drug, could potentially achieve complete debridement within days, reducing the risks associated with sharp debridement, and potentially allowing the physician to treat more patients every day as their focus would be on the diagnosis and prescription followed by application by a nurse or a caregiver. It would potentially alleviate the need for patients to be treated for weeks and weeks by current enzymes or other autolytic methods which necessitate frequent office visits or home care support for an extended period of time, and prolongs the time to remove the eschar with it's possible associated sequela. This potential change in the current paradigm led healthcare professionals to indicate that the product having the product profile of EscharEx, if approved, would capture a portion of the sharp debridement practice part as replacement and part as add-on, as well as capture a good portion of the current enzymatic and autolytic usage, thereby all in all potentially capturing a significant portion of the entire patient population undergoing debridement.

It is also important to note that the EscharEx indication is debridement of wounds. So it is complementary with the numerous markets and technologies that are aiming to heal these wounds. We see a number of potential synergies with these products and expect that they will be used sequentially in clinical practice.

The potential of EscharEx is further confirmed by the enthusiastic response we received at a recent conference where those topline data were presented as late-breaker, encouraged us. The considerable interest and inquiry into EscharEx we received throughout the conference further got us excited.

Expanding into the wound care market with EscharEx is one important next step in our strategy to build shareholder value by leveraging our proprietary technology. The complete data set from this 73-patient study should be available around midyear.

After we already demonstrated the efficacy and safety of EscharEx in the 73-patient study, and while we are waiting for the long follow-up of these 73 patients to complete the clinical study report, we now initiated a second cohort of 24 patients to demonstrate a wider safety margin to further contribute to the product's convenient application. This would allow patients even more flexibility in using NexoBrid in a place and time that best fits their individual daily routines, further enhancing ease of use and compliance.

As in the cohort of the first 73 patients, this second cohort is also (technical difficulty) international, perspective, randomized vehicle control assessment in which 24 patients in two different wound methodologies, namely diabetic foot and venous leg ulcers, are randomized to EscharEx or the gel vehicle at a 2 to 1 ratio. The product is applied for an extended period of time, that is 24 hours, 48 hours, with the main objective to document safety after an extended application period and assess efficacy as a secondary analysis. Incidence of complete debridement will be evaluated after up to eight applications with patients followed up for 12 weeks for wound closure and then for another two weeks for reconfirmation of wound closure. We expect to complete recruitment and have topline results in the second cohort of patients in the second half of 2016. We do not expect this to affect plans for requesting an end of Phase II meeting with the FDA by year end in order to establish plans with the FDA for a pivotal program that would support a BLA submission.

With that overview of our commercial and clinical programs, let me turn the call over to Sharon Malka, our Chief Financial Officer, for a review of our financials. Sharon?

Thank you Gal. It is a pleasure to be reporting our first-quarter 2016 financial results. As we have heard from Gal, we continue to fund and execute our commercial plans and clinical program, confident that our investment will enable us to translate the positive momentum into sales and advance our pipeline products in a number of important medical indications that represent significant commercial opportunities.

Let me turn now to our financial results. The revenues for the first quarter of 2016 were $254,000, compared with $67,000 for the first quarter of 2015. During the first quarter of 2016, we shipped about 1,100 units of NexoBrid to burn centers across Europe and Israel, of which approximately 50% (technical difficulty) in the sampling programs.

Our commercial efforts continue to focus on hands-on experience in burn centers throughout Europe and on market access. Over time, and with reimbursement and formulary inclusion, we expect to drive revenues at these burn centers, current form experimental usage, into ongoing commercial orders.

Our growth research and development expenses for the first quarter of 2016 increased 130% to $3.2 million from $1.4 million for the first quarter of 2015, in line with our budget. The increase was primarily due to an increase of $0.8 million related to expenses of NexoBrid clinical trials and an increase of $0.8 million in respect to EscharEx development. Growth research and development expenses were offset by $1.8 million participation by BARDA and $0.4 million revaluation of office of chief scientist contingent liability.

Sales marketing and G&A expenses remained stable at $2.9 million for the first quarter as it was in the fourth quarter of 2015. Net loss for the first quarter of 2016 was $3.8 million, or $0.17 per share, compared with a loss of $6.4 million or $0.30 per share for the first quarter of 2015. The decrease in net sales -- in net loss, sorry, was primarily due to the following: a decrease of $0.4 million in net R&D expenses, as described before; $1.5 million net financial expenses that were recorded in 2015 which were largely comprised of non-cash revaluation of contingent liabilities and changes in foreign currency exchange rates; and an impairment of discontinued operation recorded in the first quarter of 2015 of about $0.4 million.

The adjusted EBITDA for the first quarter of 2016 was a loss of $3 million compared with a loss of $3.7 million for the first quarter of 2015.

Turning now to our balance sheet, as of March 31, 2016, this Company had cash and short-term deposits of $41.6 million, and a working capital of $41.4 million. This compares with cash and short-term deposits of $45.8 million and working capital of $45.2 million as of December 31, 2015.

We remain on plan with regards to cash used, utilizing $4.2 million in cash during the first quarter of 2016 to fund operating activities. During 2016, we will continue to primarily invest in the sales and marketing of NexoBrid across Europe and internationally. We will keep continuing to invest in research and development efforts of NexoBrid supported by BARDA funding, as well as to amplify the development of EscharEx for chronic wounds and other pipeline product candidates. We expect that the BARDA contract will positively affect our financials by offsetting NexoBrid development costs, and at a later stage by contributing to revenues as a result of the procurement commitment. Consequently, we continue to expect cash use for 2016 to be in the range of $20 million to $22 million.

With that financial overview, let me turn the call back to Gal.

Thank you for that review, Sharon.

As I said earlier, we look forward to building on the progress we've made to achieve a number of value creating milestones throughout 2016. These include final data from our Phase II study of EscharEx in our subsequent meeting with the FDA, continued adoption of NexoBrid in Europe, including favorable reimbursement decisions for NexoBrid for applicable European countries, further commercialization of NexoBrid in international markets, including the launch of NexoBrid in Argentina, approval of NexoBrid in certain countries, and further important distribution agreements for NexoBrid in important countries. The presentation of more than a dozen posters highlighting NexoBrid at the upcoming American Burn Association meeting and at the International Society of Burn Injuries meeting in Florida in late August as well as in other international and national important conferences.

Expansion of NexoBrid is an important tool in the management of mass casualty injuries, and advancement of our technology in injectable form to treat connective tissue disorders.

And now, operator, please open the call for questions.

(Operator Instructions). Bruce Nudell, SunTrust Robinson.

Good morning. Thanks for taking the question. Gal, we looked at a large series from India using SANTYL and it looked like they got about 84% debridement in after about a month with wounds that were about 24 square centimeters.

The question is like, for competitive positioning, how are you thinking about the performance of EscharEx relative to SANTYL in this regard? It seems to be the ease-of-use and time to debridement are the key advantages potentially. So are you going to have a head-to-head study, and/or where do you think the results might be if you did a head-to-head study in terms of percent debridement after a month for both agents? Thanks.

Thank you for the question, Bruce. I think that, with EscharEx, we can solve several difficulties or challenges that we see with other agents. If a patient is debrided within a month or two months, it means that this patient has to come to a wound clinic once a week, twice a week. Usually somebody needs to drive them to this clinic. This someone is usually a spouse or family member that has to lose a day of work and drive into the clinic. That's a big burden.

If one chooses another method and has a nurse come to this patient's house for two or three times a week for six weeks, for eight weeks, that's a huge financial burden as well. So if you are able to remove the eschar in practically a week, that's a big I would say challenge that you are addressing immediately.

In addition to that, in the US, this year, so 2015, more than 100,000 legs were amputated because of a wound that didn't heal. The mortality rate of a patient that goes through an amputation is lower comparable to a patient having cancer. And these wounds get to amputations because they are not progressing on healing and in the vast majority of cases, or in many cases, it is because you are not able to debride the wounds.

So debriding a wound after six weeks, eight weeks and more than that can be done with a hydrogel.

I think that, by using a product that can remove the eschar within days, you gain several things. First of all, you don't expose the patient to the risks that are associated with sharp debridement. Today, physicians have to sharp debridement because they don't have any other effective way to remove the eschar quickly. But by doing that, they have a patient coming to the office, sitting in the office for 15, 20 minutes. They have the risk of bleeding. They are surgically cutting a wound on a patient that doesn't heal well. So, these are a lot of challenges. If they have EscharEx, they see the patient, they say you have a chronic wound. You need debridement. Here's a prescription. The nurse will show you how to use the product. Come in two or three days again. It takes them three or four minutes; they can see many more patients in a day. When the patient comes in after three or four days, either the wound is totally clean or it's let's say showing great progress towards being clean, and at that point in time, the physician can either remove what is left with sharp debridement if he wants to, or give him another course of three or four days to remove the eschar. He doesn't expose himself to the risk of sharp debridement; he doesn't spend the time it takes with sharp debridement; he doesn't expose the patient to the risk of having his wound debrided for four weeks, six weeks, eight weeks. He doesn't expose the system and the patient to all of the burden of managing this wound for six to eight weeks or debridement.

Because of all these reasons, I would -- not me actually, the market started -- actually asked these questions to 230 healthcare professionals as well as our discussions in the recent conference last week in August in Atlanta showed that physicians believe that this kind of a product is something that can be used in a large portion of their patients.

I cannot refer to the study that you are referring to because I cannot refer to the methodology, material method of this study. Was there a control? What kind of wounds were they? Were they old wounds and all these kind of things? And I wouldn't like to predict -- it's better to report results post a study than to predict what would be the results of the study. But if one sees that is the EscharEx study, we removed eschar in four or five applications, in 93% of the cases that we debrided, and if you see in another enzyme study that they remove the eschar after 42 days, and we're talking about wounds of 0.5 centimeter versus wounds of 33.6 centimeters, then each one can do the math for themselves.

I guess my question, just to phrase it another way perhaps, is based on what you've seen so far with EscharEx. Is it safe to say that like, after two weeks of application, the vast majority of wounds are almost completely debrided, and hence the amount of cleanup a physician might have to do with a sharp instrument would be very small. So effectively definitive treatment in the vast majority of wounds could be administered within a couple of weeks as opposed to four to six weeks with SANTYL, or perhaps even longer with hydrogel.

I would say the clinical study results support this kind of line of thinking.

Thanks so much.

Matt Keeler, Credit Suisse.

Thanks for taking the question. I just wanted to start on the commercial trend. I think excluding the Romanian order in the fourth quarter, it looks like revenues were up maybe 50% or so sequentially in the first quarter. Is that about right? And then, if so, what's driving that increased usage?

Thank you for the question. So, you are right. Excluding the Romanian occasion in Q4, the increase in Q1 versus Q4 was exactly 54%. And the reasons behind that is, as Gal mentioned during the call. First of all, there are new orders from new countries such as Spain, such as Netherlands, and such as Switzerland. In addition, the number of sites treating within the countries already treated, such as Germany, increased during this quarter, and the number of patients with the bi-dose side were increased. So all of that together results with an increase of revenues.

Got you. And do you expect that revenues will kind of continue to increase sequentially throughout the year?

Yes. We estimate, we believe that the number of patients will keep increasing in the next quarters, and with the favorable reimbursement that we anticipate in the second half of 2016, we believe that we can convert the usage and increase number of patients and number of sites, that it will generate more revenue. Then we can convert this usage into revenues.

As we mentioned, we just recently got the approval for reimbursement in Belgium. The approval was for the full price that we asked for. So usually what happens is after you get the reimbursement on an initial level, you need apply it in -- on the formal levels of the hospitals, which is another positive, takes several weeks or a couple of months. And since we expect to see additional positive feedback like that from countries, then we would expect the momentum to be like you mentioned during the second half of the year.

Okay, perfect. Thanks guys.

Jason Wittes, Brean Capital.

So I just -- do you expect to hear from the majority of European countries by the second half in terms of reimbursement?

I think that, as we discussed, there are several -- new orders differ from country to country. So some countries we submitted a file in an initial level process, because this is what is required, for example Belgium, for example Italy, for example other countries like Spain and so on. And we expect to -- again, we don't have full control on these processes, but we have reason to believe that certainly at least some of them will heal sooner than later. And again, we have reasons to believe that their decision would not be totally different than the Belgian one.

Is there specific decisions we should be looking for that we should expect in that second half?

I'm looking forward to be able to report this as soon as I can.

Understood. Fair enough.

And in terms of you mentioned you did a polling, and you said at $1,000 to $2,000, there was a lot of interest in EscharEx. I assume that pricing is based largely on sort of matching sort of what SANTYL goes for now, or actually somewhat of a discount to SANTYL. Can you just again maybe describe how you came to that pricing decision in that study that you did?

Exactly like you mentioned, how much does a tube of SANTYL costs? How many tubes will you need to debrided a patient if you need to treat him for four to eight weeks. You do the math, you get to any number between $700, $800 to $2,000. So the cost of treatment currently is something around that ballpark, and I'm not even referring to some economical benefits, as I mentioned before, you know, sending a nurse to a patient's house, driving the patient to the office, spending time with the patient in the clinic, all these kind of things. These are obviously things that we will capture in our clinical studies, but I was just referring particularly to the expense of the product.

Right. And in that study, there seemed to be a lot of interest also within sharp debridement. First of all, I think there are three buckets as you pointed out. One was sharp debridement, which seemed like there was a decent amount of interest in replacing sharp debridement. The other was SANTYL, which I think, head-to-head, it compares extremely well to. I know you had an earlier question about whether you would want to do a head-to-head trial at some point. And then finally, there is a whole class of sort of -- I wouldn't call them -- not necessarily regulated, but a whole class of products out there that are being used that don't really have that much data behind them. I was curious to know how this would stack up against those, because it seems like there's a lot of these little products that have a following despite the fact that they don't have much data behind them. And if you had came out with a product like EscharEx, which actually had some pretty strong clinical data, I wonder how well they would stand up against that.

Thank you for the question. I think that I can share with you what we have heard from physicians and heard from professionals, both in the 230 attendant or participants market study, both in the advisory board and in the recent discussions that we had in Atlanta last week with physicians in the US. What they told us is as follows. They believe that about 60% of the patients in the US are undergoing sharp debridement, about 20% are undergoing systematic debridement and about 20 are going through what we call autolytic debridement with hydrogels or whatever. Again, this enzymatic use and (inaudible) use is more in nursing homes, in other treatment centers versus of the clinics, offices, that are associated -- affiliated with university hospitals and so on. They do not think that we will replace sharp debridement, but what they say is along the lines that I just mentioned before. They think that we will replace some of the sharp debridement and we will be an add-on to some of the sharp debridement. How? Some patients will come to the clinic. The physician will say you need debridement. Here is EscharEx, go for two or three days, come back. At that point in time, the patient will come back before the EscharEx is gone, fine. That's replacement. If not, he can say, well, if everything is soft here and cozy, let's just remove with a spoon the rest, and that will be what we call add-on. Or he can send the patient home and say, look, come in three days, you continue with EscharEx, which would , again, be replacement. Or the third possibility would be that he would remove whatever is easy to remove when he comes to the office, and then send him home with a prescription to do two or three days with EscharEx and by that be an add-on to sharp debridement. So their conclusion was that it would take a portion of the sharp debridement market.

Then you've got the enzymatic market, where, in the enzymatic market, I mean one can do a head-to-head study or not. I said that I will be very encouraged to see randomized controlled studies to show significant efficacy versus autolytic debridement. So physicians are under the impression that if EscharEx would be approved and would be a target product profile, practically we would be able take a large portion of this market. And for the autolytic market, again, these are simple products. They are not very effective. So we would take, again, a nice portion of that market potentially as well. Still they will all be patients that would prefer to use these kind of methods because they are less expensive. So we are take 100% of all the market, but physicians indicated that they believe that we will take a significant portion of the entire market.

Some of the misconceptions is that people think that we will aim to take part of the SANTYL market, but we will not. At least what our physicians said, it seems that this product could potentially take a portion of the entire market, not just the enzymatic market.

Fair, fair, fair point. Actually one last follow-up, and I'll jump back in queue. And that is in terms of the sampling program in Europe, as reimbursement comes online, do you sort of phase out that program relatively quickly, or does that sampling program still continue? Do you have reimbursement in place in big geographies?

In 2015, about 70% of the product that we supplied was samples. And in 2016, we believe that this will go down to about 50%, obviously in countries that will have reimbursement. If they can pay, then we don't need to provide them with a product. But because we don't have direct control on the exact date, we don't know in which months of the year it could happen, and this is why we don't know when it's going to be. So we say 50% with the samples.

Thank you very much.

Anthony Petrone, Jefferies.

Thanks and good morning. Maybe a couple on NexoBrid and one on EscharEx. Just on the pricing there, you mentioned $1,000 to $2,000. I'm just wondering. What is the average body surface area covered by that price? I think the old pricing was at $400 per 1% [DBSA]. So, this would cover I think a smaller surface area burn. And so is NexoBrid being positioned for smaller burns now, or do you still see it over time being used in larger burn sizes?

I think you're absolutely correct in burns. NexoBrid is a product in Europe and this is the product -- and pricing EUR400 per 1% DBSA. On average, a burn patient, hospitalized burn patients would have about 10% DBSA. So an average patient would be about EUR4,000. Since we are starting -- so physicians do not always start there, they start with smaller wounds and go up. But if you come to the American Burn Association, I'm sure you would be able to talk with physicians that tell you that they will all be treating 15% DBSA, and if it wasn't for the labeling, maybe they would do even more than that.

Now, the $1,000 to $2,000 was referring to EscharEx for chronic wounds. And chronic wounds are much smaller. Diabetic foot ulcers are very small. They can be 6 square centimeters, 1 square centimeter. And venous ulcers are a bit bigger, but still they are smaller than burns. And if you even go to pressure solve or post-surgical patients, in general chronic wounds are smaller than burns. This is why the cost of treatment is smaller. But you have many more patients I guess obviously.

That's helpful. Just to clarify then, the level of reimbursement that you secured in Belgium for NexoBrid, you mentioned you got the full amount that you were requesting. Are you disclosing that?

Yes.

How much is it?

The reimbursement in Belgium basically is a 100% reimbursement of our price, but we got already with this agreement of reimbursement is over or confident for our price, which is the European price. As Gal mentioned before, the European price is EUR400 per DBSA per 2 grams of NexoBrid, and this is the price agreed with the Belgium authorities.

That's helpful. And then if you look out, we are expecting reimbursement in the various countries to be a driver for revenues for NexoBrid. Now that you have Belgium, are you expecting stocking orders in that country for hospitals that bring this onto formulary? How do you think it plays out in Belgium now that you have reimbursement there?

We believe that we will see integration sales in Belgium because we practically didn't sell anything in Belgium. As you mentioned, it's a process that we now need to implement that it into the formularies of the hospital. Obviously, Belgium is a country of about 10 million people. And taking this into account, this is what we expect to see from that country.

Okay. And then just one on EscharEx. When you look at the Phase II results, there was a slight benefit in VLUs versus DFUs, diabetic foot ulcers. So I'm just wondering if the data continues to show that in the follow-up phase of the study. Do you think there's a strategy here where the Company potentially pursues a single indication if one of those two shows a better benefit over time, or is it still that a BLA will be pursued here even if there is a slight benefit in either VLU or DFU over time?

First of all, we already see, we believe, a great benefit in this study, this small study. But as I mentioned, this study only looked at patients that had complete debridement within up to 10 applications. So, if a patient had almost complete debridement, he was not even counted. If a patient had complete debridement in 11 applications, he was not counted. So we clearly see a very marked, statistically significant, the P value of 0.028, 0.024, very significant results. Whether we would do a study in VLUs or DFUs is something that we will discuss with FDA. We need to -- it depends. So I don't want to go into too much detail now on that design, because it has all kinds of implications of how to best work with the FDA on our pivotal program.

Helpful. Thanks again.

This is going to be a single study -- or FDA will require to do two studies although we have so much information already with NexoBrid and things of that kind.

Thank you again.

David Maris, Wells Fargo.

It's [Kate Brennan] in for David. Thanks for taking the question. I have a few. The first is is there any update on your expectation for BARDA applying for the emergency use authorization?

So, BARDA is in the process of doing that. In order for BARDA to do that, there are several things that need to happen. And as we expected, this process usually is something that takes -- signing I would say one to two years. So we are expecting I believe BARDA to start doing that probably in the second half of 2017, though I have to say this is an option for BARDA. BARDA has a signed commitment to buy $60 million of NexoBrid in the contract. We can have some color on when we believe BARDA will do that, but at the end of the day, it's a decision of BARDA. BARDA can decide to buy everything in 2017. They can decide to buy everything in 2019. We have reason to believe that they would most probably spread it over the contract because of expiry dates and things like that, that they want to have sustainable inventory to stockpiles. But I cannot speak on behalf of BARDA with you.

So they have begun the process of applying for the emergency use authorization but you just have to wait for that approval to come through before they can begin procuring NexoBrid?

Yes, they will have to, they will have to wait for that approval. From what we understand from BARDA, usually -- I mean the FDA allows them to do that, but at the end of the day, it's an FDA decision and a BARDA decision and I would not like to speak on their behalf. From our perspective, they have a firm commitment, a binding commitment, to buy the product for $60 million. We have plans in -- we have plans that we discuss, and I can assume what is planned, but there is no -- it's their decision how to up their option, when to do that exactly.

Do you still expect that MWPC003 program will begin clinical studies by the year-end? And if so, what do you need to accomplish between now and then?

So, first of all, we are very excited about that because we really want to have an injectable form of technology because of the vast opportunities around that. I mean just look at the other companies that use enzymes for connective tissue disorders and you see EPITRON, Peroni, (inaudible) and cellulitis and so many potential indications.

We are shifting a little bit of resources toward that product now that we have BARDA funding the NexoBrid program. We are in the process of finalizing a formulation, an injectable formulation. We will do small clinical studies because, again, we are talking about in these indications of parts of milligrams. With NexoBrid, we are putting grams and grams of this API on patients. With these injections, we need to put like 0.5 milligrams. All the preclinical programs that supported NexoBrid approval, all the big studies, the chronic wound studies, the segment 2 studies, was done with injecting IV because you cannot burn an element in a clinical study.

So I believe that we have a lot of the supporting data needed and partly what we need to do is mainly the local toxicity, which are smaller and not as expensive studies. We are in the process of doing that. We hope to be in a position to finish that before the end of this year. And if this will be the case, we would try to submit a protocol and start discussions with FDA about the clinical program for this opportunity.

And then finally, I'm sorry if I missed it earlier in the call, but is everything on track with the enrollment in the Phase III in the US?

Yes. We have the centers open. We are recruiting patients. We are implementing more and more means to educate the centers. We have now two men on ground in the US now that BARDA is already funding the study, and we are working closely with BARDA. We have two men on the ground primarily focused on recruitment for these centers, going to the centers, understanding if there are any issues, trying to overcome them. We're going to meet -- we conducted an investigator meeting earlier this year in the US. We have conducted recently an investigator meeting. We are going to meet the investigators at the American Burn Association conference. So I hope everything will be on time and we will be able to submit our plan.

One final question. As far as the outlook for commercializing EscharEx, in the recent conference that you went to, did you get a feel for what you expect your commercialization tactics to look like? And when, if you were to strike a distribution agreement, you think the best timing of that would be?

Generically, I would say generally looking at the problem looking forward would be let's say that we meet with FDA, assuming that FDA agrees with -- we can work with FDA, agree with our program. We try to run this program through 2017, 2018. Again, it depends on if it's one study or two. Looking at the P values of the subgroup analysis that I just presented, with a P value of 0.024, 0.028, from an efficacy standpoint, if you want to power a Phase II study, one would not need more than 100, 150 patients. There are reasons to have larger sample sizes, for example for exposure, but we already have lots of exposure, even more so in burns. So we would need to discuss and what would the FDA heal (inaudible) commendations on how they see this problem going forward. And this will determine whether this pivotal program will take a year or two years. Following that, we will submit a file, if successful obviously, and then FDA will need to review the file. So we are talking about a possible launch, I would say in 2020 or 219 or something around that time, depending on the pivotal program.

The chronic wound market, unlike the burn market, is much less focused. There are 5,000 calling points in the US. So there are several strategies that one could think of. One would be to build a commercial organization. Other companies did that -- Advanced (inaudible) Healthpoint and so on. Another strategy would be in partner with somebody that already has this kind of sales force. Another possibility would be to do both. Because you can do comarketing, you can target part of the market and your partner would target another part of a market like I used to do with Copaxone in Europe, with Aventis. This has to do a lot with the possibilities and opportunities. At the end of the day, we want to generate value to our stockholders. So whatever we make more sense and will be relevant, this is what we will be looking at. We still have time for me to make this decision.

Thank you.

Thank you. There are no further questions at this time. I'd like to turn the call back to Mr. Cohen for closing remarks.

Thank you. Thank you for your questions and for your continued interest in Mediwound. We look forward to updating you again when we report our second-quarter 2016 results in about three months. Have a good day. Thank you.

Thank you. Ladies and gentlemen, this concludes today's conference. You may now disconnect. Good day.