Mediwound Ltd (MDWD) 2022 Q3 法說會逐字稿

Good day, and welcome to the MediWound Third Quarter 2022 Earnings Call. Today's conference call is being recorded. And at this time, I would like to turn the conference over to Monique Kosse of LifeSci Advisors. Please go ahead, ma'am.

Thank you, operator, and welcome, everyone. Earlier today, MediWound issued a press release announcing financial results for the third quarter ended September 30, 2022. You may access that release on the company's website under the Investors tab. With us today are Ofer Gonen, Chief Executive Officer of MediWound; and Boaz Gur Lavie, Chief Financial Officer. Following our prepared remarks, we will open the call for Q&A.

Before we begin, I would like to remind everyone that statements made during this call, including the Q&A session relating to MediWound's expected future performance, future business prospects or future events or plans are forward-looking statements as defined under the Private Securities Litigation Reform Act of 1995. Although the company believes that the expectations reflected in such forward-looking statements are based upon reasonable assumptions, actual outcomes and results are subject to risks and uncertainties and could differ materially from those forecast due to the impact of many factors beyond the control of MediWound. The company assumes no obligation to update or supplement any forward-looking statements, whether as a result of new information, future events or otherwise. Participants are directed to cautionary notes set forth in today's press release, as well as risk factors set forth in MediWound's annual report filed with the SEC for factors that could cause actual results to differ materially from those anticipated in the forward-looking statements. The conference call is the property of MediWound and any recording or rebroadcast is expressly prohibited without the written consent of MediWound.

Now I would like to turn the call over to Ofer Gonen, Chief Executive Officer of MediWound. Ofer?

Thank you, Monique, and good morning, everyone. Welcome to our third quarter 2022 conference call to discuss our financial and operational highlights. This quarter, we continue to be on track with a series of positive announcements across all our programs. We are approaching several significant inflection points for the company. We believe that once NexoBrid is approved, it will generate meaningful revenues in 2023, and significant growth going forward.

Following the launch of NexoBrid, we will focus on a $1 billion market opportunity presented to us with EscharEx, where we plan to initiate a Phase III study next year. We have all the essential elements aligned for success: a mature pipeline, favorable data, large addressable markets and experienced operational teams, Tier 1 partners, and a strong balance sheet.

Before I discuss the progress we made this quarter, I would like to address the capital raise we completed in October, where we have added an additional $30 million to our balance sheet through a combined registered direct and a 5 offering. This significant addition of funds will support our activities through 2025. It was important for us to complete this raise now ahead of our expected positive news to better position MediWound for success.

We saw participation of our current shareholders and as an additional benefit, we were able to bring in new validating investors for the company. Also, we were pleased with the vote of confidence from both our management team and Board members who participated in the offering, demonstrating commitment and firm support of our strategy. Now with the funding, we will be able to accelerate our clinical progress for EscharEx, scale at manufacturing to address the increasing demand for NexoBrid, and support our global operations. We are in a strong fundamental position for the future, both in the near and long term.

In addition to securing our financing, we have established a strategic advisory board comprised of highly esteemed industry leaders, Dr. John Lantis, Samuel Moed, and Eric Chamtor. They will contribute their experience and insight to our strategic and operational activities by sharing their medical expertise in all aspects of wound care, providing the knowledge of life science innovation, and supporting us, will scale up our manufacturing facilities and optimize our manufacturing processes. As a CEO, I believe engaging with such talent is essential in advancing MediWound into becoming a world-class pharmaceutical company.

Moving to our clinical development program, let me start with an update on EscharEx, where we have demonstrated the tremendous unmet medical need and our belief in the significant commercial opportunities. We are now more certain than ever of its potential to become a blockbuster. Our Phase II results from both clinical studies were robust. EscharEx was proven to be safe, well tolerated, effective, and superior to the nonsurgical standard of care across all key parameters, including the incidence of complete debridement, the number of applications that are required, the time to achieve complete debridement, et cetera. We also saw a reduction of biofilm and bacterial burden, which further demonstrated EscharEx's superiority over the other debridement modalities. These results were highlighted in 2 poster presentations at the symposium on advanced wound care in Las Vegas. We were honored when one of the poster presentations was selected out of the 290 abstracts to be the one featured as an oral presentation. The data were very well received.

Our next step in the coming few weeks is to meet with the FDA to discuss the Phase III study design. We will provide an update once we gain clarity of the regulatory path forward. In the meantime, we are on track and prepared to initiate our planned pivotal Phase III study in the first half of 2023. We believe that our EscharEx clinical development program [Indiscernible] not only due to the robust data we've generated to date, but also due to the fact that EscharEx has the same API as NexoBrid, and we have seen NexoBrid used as a commercial product to successfully treat over 11,000 patients worldwide.

We continue to generate interest from strategic players. A topical debridement agent with a competitive quality demonstrated by EscharEx in the Phase II studies is something most players in the wound care market are following very closely. We are evaluating all of our options, from collaborating with the strategic partner to developing EscharEx on our own. We are pleased to be very well positioned with the flexibility to create significant shareholder value. We believe we have a winner here.

Turning to NexoBrid. As we announced in our last call, the NexoBrid BLA resubmission was accepted for review by the FDA and given a PDUFA date of January 1, 2023. The FDA's review of the BLA is progressing and inspection of our manufacturing facilities in Taiwan and in Israel are underway. Our partner, Vericel continues to actively plan for a potential NexoBrid launch in the first half of 2023.

Our expanded access program NEXT continues to enroll patients and help physicians gain important first-hand experience with NexoBrid. To date, 183 burn patients have been treated with NexoBrid at 24 of the leading Burn Centers in the United States. These sites have been very supportive of NexoBrid. The patient and physician experiences confirm our belief that NexoBrid will become an important part of the standard of care practice in the United States.

Additionally, I'm pleased to report that our collaboration with the United States Department of Defense for the development of NexoBrid as a nonsurgical solution for the treatment of burns in the filed remains on track. In Europe, sales of NexoBrid steadily grow. We see that NexoBrid is embraced as the standard of care in more and more countries. Last quarter, we started a pediatric label extension request to the European Medicines Agency, and we anticipate a decision in first quarter of 2023. Pediatric patients represent about 25% to 30% of the total burn population. They often painful surgery, which can be very traumatic to the young patients and their families. An approval will allow pediatric patients to have safe, fast, and effective debridement option without having to undergo a painful surgery.

The growing interest in burn mass casualty incidence preparedness in Europe is another opportunity for NexoBrid. This is fueled in part by the Ukrainian-Russian country and by mass casualty events that have occurred just recently. While we are unable to quantify the magnitude of this opportunity, we believe that the preparedness strategy that BARDA endorsed in the United States will be embraced in Europe as well.

Lastly, we were pleased by the warm reception we received at the 19th European Burn Association Congress in Italy. NexoBrid was highlighted in 45 posters and presentations. Leading burn specialists and thought leaders from around the world shared their positive experiences in patient outcomes using NexoBrid in a wide range of settings. Internationally, we anticipate additional approval in large, meaningful markets such as Japan and India by the end of this year. Today, NexoBrid is approved in 41 countries, and we look forward to the expansion.

Turning to MW005. We continue to move forward in the development of the topical treatment for the patients with basal cell carcinoma or BCC. We saw positive initial results from our U.S. Phase I/II study, MW005 were shown to be safe and well tolerated with the majority of patients who completed the study, achieving clinical and histological clearance of the target lesion. We anticipate announcing the study results by the end of this year.

In conclusion, we are very well positioned to continue to excel across the board. We anticipate the potential approval and commercial launch of NexoBrid in the United States. This will also enable us to generate meaningful revenues in the near term. We are eager to launch our Phase III pivotal program in EscharEx, and we continue to develop a compelling pipeline of follow-on therapies such as MW005. We have all the resources to do that. I'm very optimistic about MediWound's future and look forward to updating you on our progress.

Let me now turn the call over to Boaz for a brief review of our financials. Boaz?

Thank you, Ofer, and good morning, everyone. We are pleased with the recent fundraising despite the turbulent capital market, which has significantly strengthened our balance sheet. Along with the expected $7.5 million milestone payment from Vericel upon the BLA approval, planned in January 2023 and NexoBrid commercial sales growth, we believe that we have sufficient funding to support our EscharEx clinical development program.

Moving to our financial statements. Total revenues for the third quarter of 2022 were $5.8 million compared to $6.4 million for the third quarter of 2021. Revenues from products in the third quarter of 2022 were $1.4 million compared to $2.6 million. This was primarily the result of a $1 million decrease in emergency stockpile recruitment by BARDA.

Gross profit for the third quarter of 2022 was $2.4 million or 42% of net revenues compared to a gross profit of $2.5 million or 39% of net revenue. Research and development expenses for the third quarter of 2022 were $2.9 million, same as in the prior year period. SG&A expenses for the third quarter of 2022 were $3.1 million compared to $2.4 million. The increase was primarily a result of approximately $0.2 million of share-based compensation costs and $0.3 million of one-time marketing expenses related to EscharEx market research activities in the European Burn Association Conference.

Operating loss for the third quarter of 2022 was $3.5 million compared to $2.9 million. Our financial expenses, which are noncash in nature, were $0.7 million compared to $0.5 million in the third quarter of 2021. The increase was primarily due to $0.4 million, resulting from warrants expenses allocation related to our recent fund raising. This allocation is dictated by IFRS regulation, which is different than the U.S. GAAP. This has affected our loss per share by $0.02. The company posted a net loss for the third quarter of 2022 of $4.2 million or $0.13 per share compared to a net loss of $3.3 million or $0.12 per share. Adjusted EBITDA for the third quarter of 2022 was a loss of $2.5 million compared to a loss of $2.2 million.

Moving now to year-to-date 2022 financial results. Total revenues for the first 9 months of 2022 were $14.9 million compared to $18.3 million in the first 9 months of 2021. Revenues from products in the first 9 months of 2022 were $4.2 million compared to $7.7 million. This was primarily the result of a decrease of $3.3 million in emergency stockpile of equipment by BARDA. Operating loss for the first 9 months of 2022 was $10.5 million compared to an operating loss of $7.7 million. Net loss for the first 9 months of 2022 was $12.1 million or $0.38 per share compared to a net loss of $9.4 million or $0.34 per share. Adjusted EBITDA for the first 9 months of 2022 was a loss of $7.9 million compared to a loss of $5.5 million.

Moving to the balance sheet highlights. As of September 30, 2022, MediWound had $17.6 million in cash and short-term investments compared with $11 million as of December 31, 2021. MediWound utilized $4.6 million in the third quarter of 2022 for its operational activities. The company reiterates its cash used for 2022 to be in the range of $13 million to $15 million. In addition, $17.2 million in gross proceeds, $16.6 million in net proceeds were received in October from the $30.5 million equity offering, providing sufficient cash to fund the company's expected operations through 2025.

With that, I have concluded the financial overview. I will now turn the call back to Ofer. Ofer?

Thank you, Boaz. Our momentum continues to build. We believe that we are on a very positive trajectory through this year and into 2023. As I mentioned, we have significant catalysts ahead. We anticipate NexoBrid marketing approvals in India, Japan, and the United States and expect meaningful revenue to follow.

As our revenues continue to increase, we are scaling up our manufacturing facility to ensure we are able to meet the growing demand. We are ready to confirm our Phase III design and move in to a pivotal development program next year with EscharEx. This billion-dollar market opportunity will definitely be our focus. Finally, we look forward to sharing more about our MW005 development plan in basal cell cacinoma.

With that, it is now my pleasure to open the call for your questions. Operator?

Thank you. [Operator Instructions] Our first question today will come from Josh Jennings with Cowen. Please go ahead.

Hi, good morning, Ofer, Boaz. Thanks for taking the questions. I wanted 2 questions, first on EscharEx. It sounds like you're making nice progress there and about to get in front of the FDA and propose the final design of the Phase III program. I just wanted to see whether there's any push pull in terms of the timing there and moving forward with the FDA locking in a trial design in front of locking in a strategic that may want to be involved in the program and have their own team contribute to that -- to the design parameters?

And then just on NexoBrid, maybe for Boaz, it would be helpful to just remind us on just the revenue generation potential of FDA approval and then any milestone payments that we should be having -- have on the radar as Vericel gets ready to launch in the United States? And also just any timing in just terms of revenue contributions for NexoBrid launches in India and Japan would be helpful. Thanks for taking the questions.

Hi, Josh. Very good question. Thank you for asking. So as we said, our next step in the upcoming weeks is to meet with the FDA and discuss the study design. What you can assume that we will run for the real indication to begin with, but the discussion is basically around the sample size, the study design, the protocol, et cetera. We will provide an update once we get clarity of the regulatory path forward. And as you can imagine, strategic partners that are interested in being part of that are also very interested in the answer of what we get from regulatory agencies.

As for the next -- by the way, after that, we will go also for the biofilm. But also, we need to get some clarity from the agency about how they see the future development plan. As for NexoBird, I think Boaz you should answer the question.

Yes. So,hi Josh. Regarding NexoBrid, I think what you should expect into 2023 first is the BLA milestone payment of $7.5 million from Vericel, that hopefully right after the BLA approval. In addition to that, we mentioned that we're expecting marketing also in Japan and India. We're starting to see first orders and kind of forecast for next year. And I believe that would be $1.5 million range. That's probably kind of the key margin that we should look. Aside from Vericel, as you know, they haven't yet issued any forecast, but expecting launch in the first half of 2022. In addition to that, we have Europe sales, which we anticipate that will like -- if you -- in the last few years you have the consistent growth and additional marketing approvals we received in smaller countries that will contribute to the product revenue.

Thank you so much. Absoulutely that was great. Thank you.

And our next question will come from Francois Brisebois with Oppenheimer. Please go ahead.

Hi. Thanks for taking the questions. So just in terms of the update that you'll give on the design with the end of Phase II coming up here, is there any big questions or should this be kind of a no surprise, similar maybe design as a successful Phase II? And then just on that note, is there any debate about how many pivotals you're going to need?

Excellent question. So regarding debate, we are going to -- we are trying to have a similar Phase III study to the Phase II study that we succeeded in a very robust manner. So this is what we aim for. We are discussing it with the agency and hopefully it will be very clear once we provide you with an update about the regulatory path going forward. Definitely, our aim is that the study design will be very close to the one that we already succeeded. What was the next question?

Just in terms of the number -- potential number of pivotal trials. And then just on that note, is there -- sorry, I'll let you take that. Yes.

So as I said, we are going to -- the development cost of additional territories other than United States are marginal. So we decided to go for a global approval. So in Europe it is very clear cut. In Europe you need to do one pivotal study. This is -- the guidelines are very clear. We don't need anything other than a single Phase III study. Based on the FDA guidelines and the fact that NexoBrid and EscharEx contain the same API, we -- and the same products are intended to use both for debridement, we believe that the single Phase III with the existing available data will be the basis of the approval.

Okay. Great. And then you mentioned venous leg ulcers. Any discussion about, maybe the market. Maybe if you can help remind us VLUs versus DFUs, and why you just go with the VLUs in the Phase III design here?

Okay. This is also a very good question. We have the data that supports both VLU and DFU Phase III study. We know that EscharEx works for debridement, the same for both indications. Having said -- and the markets are almost similar. You have 1.1 million eligible patients for VLUs and 1 point something million for DFU. So the markets are quite the same. The unmet medical need for VLU is much bigger because VLU wounds are very, very painful. You can't even get close to them. So a sharp debridement is not a solution. And DFU, they don't feel -- the patients do not feel the -- the do not feel the would at all, so you can debride it with a knife. So the unmet medical need for VLU is extremely bigger than the DFU. Add to that, that if you look -- if you go into clinicaltrials.gov, you will see that there are something like 100 clinical trials now on the few patients, not for debridement, all kind of devices and appliances that are supposed to ease their pain or to make it heal quicker. And as for the VLU, you can see that there is also nothing out there. So we believe that we will be able to recruit patients quicker and the unmet medical need is bigger after having the VLU indication approved, moving to the DFU population will be easier.

Excellent. That's very helpful. Thank you very much.

Welcome.

Our next question will come from Swayampakula Ramakanth with H.C. Wainwright. Please go ahead.

Thank you. This is RK from H.C. Wainwright. Good morning, Ofer and Boaz. So congratulations on getting this far on the NexoBrid approval situation -- getting FDA to do inspection. So it's a good sign. In terms of the EAP program, where you said there are 183 patients who have been treated so far. How do you see this in terms of launching the product? How is this experience helping both Vericel and yourselves in terms of how to manage detailing? And what are you learning from that process itself?

So thank you for the question, RK, and it was nice seeing you last week. The NEXT program is an extended access program. It's quite of the standard the FDA program that enable clinical sites to treat patients with drugs that are currently in the FDA review. So as we can see, it keeps on enrolling patients in a very good pace. And we get a lot of feedback from patients and physicians that still -- that makes us believe that this is going to be the standard of care in the United States. We don't see anything that we didn't see in Europe. The reported results from the study. It's not a clinical trial, but it's actually treating patients. The results that we see are very consistent with what we see in the 11,000 patients that we already treated worldwide. And I think that the most important aspect that we have now, assuming that we are going to be approved in the United States in January, is that we keep on collecting data for pediatric population, which is also a very significant market in the United States. So we are going to accelerate our efforts in the United States to make sure that NexoBrid is going to increase substantially. This is one of the reasons that we said that we expect after the BLA approval, the revenues from NexoBrid will become meaningful for MediWound.

Ni, it's very good. And then in terms of the approvals in India and Japan, India is a market which is kind of spread and probably not as clear as either U.S. or Europe is. So how are you planning to manage that market in the sense -- do you have distributorships in place? I think you have one. And how are we going to manage that market? And Japan is a little bit different as well, which probably has a different strategy there. If you can highlight your preparations in these 2 markets that would be helpful.

Yes. So as I think we mentioned in the past, in those 2 markets we have partners. In Japan, it's Kaken Pharmaceutical, which is a global health care company, and the massive needs -- that given the demand that we already received from them for next year, I think we are very pleased with what we see in the Japanese market and the access for NexoBrid we'll reviwe it. As for India, I believe you also are familiar with the company called [Indiscernible] Vaccine. It's also Indian pharmaceutical company. They are working worldwide, has operation also in the U.S. and Germany, well established a pharmaceutical company. And they are also expecting and excited about NexoBrid. I think there is still more to learn about the Indian market. On the one hand they are -- probably the biggest demand for severe burn patients, given the size of the population, given the culture, but not all of them are under medical care. So I think it's too premature to give numbers. We're assuming that the radar is India and Japan, both of them, next year we're looking to $1.5 milion to $2 million. But once we get more data and working together with BSV and Kaken, hopefully, we'll be able to provide more details going forward into 2024 and onwards.

Okay. Thank you for that. And then on the EscharEx, certainly this is a larger potential compared to what NexoBrid could have. And then in terms of thinking about potential partnerships, as you said, you have already started receiving at least requests for conversation on the product. So what's the type of collaborators which are coming to the table at this point? And how do you plan to get through that and also make sure that you can initiate your study -- your pivotal study within the next 6 months?

So this is also a very good question. So as I told you that the strategic players are very interested. They just cannot ignore our topical debridement agent with such qualities that was demonstrated -- or demonstrated in our Phase II studies. So we have all kinds of options. You know that all of them are in the textbooks, licensing, collaborations, territorial licenses from all kinds of companies. At this stage, since we were very lucky to be able to finalize financing, we are very flexible because we have the capital to do everything by our own. And I'm very proud of MediWound that succeeded to date in 13 out of 13 clinical trials. So definitely the operational team in MediWound is capable of succeeding in another very significant trial. The partners -- the potential partners are aware of that. There is a lot of competition around MediWound. But currently we are flexible, and we think we have a winner in hand. So we are not -- we are going to be very picky if and what partner we are going to choose.

Great. Thank you very much, Ofer and Boez. Talk to you folks soon.

Thank you.

And at this time, there are no further questions in the queue. I would like to turn the call back over to management for any closing remarks.

Okay. So thank you, everyone, for joining us today. We look forward to updating you again on our next call. Goodbye.

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect your lines at this time.