Mediwound Ltd (MDWD) 2023 Q3 法說會逐字稿

Good day, and welcome to MediWound's third quarter 2023 earnings call. (Operator Instructions)

At this time, I would like to turn the conference over to Dan Ferry of LifeSci Advisors.

Thank you operator, and welcome everyone. Earlier this morning MediWound issued a press release announcing financial results for the third quarter ended September 30th, 2023. You may access the earnings press release on the company's website under the Investors tab.

With us today Ofer Gonen, Chief Executive Officer, MediWound, Hani Luxenburg, Chief Financial Officer, and Barry Wolfenson, Executive Vice President of Strategy and Corporate Development. 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 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 medical and annual report filed with the SEC for factors that could cause actual results to differ materially from those anticipated in the forward-looking statements.

Conference call is property of MediWound and any recording or rebroadcast is expressly prohibited without the written consent of MediWound.

Now I'd like to turn the call over to Ofer Gonen, Chief Executive Officer, MediWound. Ofer.

Good morning everyone, and thank you Dan for the introduction, I am pleased to welcome you to our third quarter 2023 earnings conference call. Joining me today are Hani Luxenburg, our Chief Financial Officer, and Barry Wolfenson, our Executive Vice President of Strategy and Corporate Development.

I want to start by expressing my sincere thank you from the entire MediWound family for the overwhelming support through emails, calls, messages that I've received from many of you since October 7, terror attack.

This war has significantly impacted the lives of many of our employees and their families. We feel privileged that our products can contribute to helping victims and make a difference. Our team is working around the clock to ensure we meet the needs of our community, customers, patients and partners.

This quarter marks a pivotal period for us, with significant achievements that set the stage for consistent future revenue growth. NexoBrid was successfully launched in the United States and Japan. In Europe, we expanded both our presence and the target population. Global demand has risen fueled in part by world conflict and governmental actions. We have responded with the necessary reallocation of resources to meet this increase and continue with our plans to aggressively expand our manufacturing capabilities.

Looking ahead, preparation for the Phase III study of EscharEx are progressing with an updated protocol shaped by both the FDA and EMA guidance. Anticipated enrollment is set to begin in the second half of 2024, a new collaboration with the industry leader 3M health care, further validates as EscharEx anticipated impact on the wound care market.

Let's have a more detailed look at NexoBrid. It has been a very busy and productive period. Notably, at the end of the quarter we announced United States commercial availability through our partner, Vericel. Vericle's launch of NexoBrid is progressing swiftly. Patients started treatment soon after its commercial release.

Vericle is dedicated to securing market access obtaining PNT committee approvals and training staff at burn centers. Given the burn care communities positive response to NexoBrid, Vericel expects rapid adoption and significant growth of their burn franchise in 2024 and beyond. Further supporting the commercialization efforts in the US and elsewhere, the Journal of burn care and research published results from the DETECT Phase III study.

This study demonstrated that the treatment with NexoBrid resulted in a nearly complete eschar removal in more than 90% of treated burn patients and reduced the need for surgical excision compared to gel vehicle and standard of care. With the very self early success, enthusiastic reception and strong published data, we feel quite confident about NexoBrid future in the United States.

Similarly, in Japan, another major market. Nexobrid was launched this quarter through our partner, Kaken pharmaceuticals. And the initial feedback from Kaken is positive and it is working diligently to secure contracts in key hospital systems.

In Europe, two recent developments are expected to bolster our sales. The first is that the CHMP recommended NexoBrid label extension to include pediatric indication, expanding NexoBrid availability to all age groups.

This recommendation was based on a global Phase III study evaluating NexoBrid in hospitalized pediatric patients as well as additional data from earlier trials. Pediatric patients with severe thermal burns represents approximately 30% of the total burn population. Therefore, this label extension will significantly increase NexoBrid addressable market.

Secondly, our recently announced collaboration with fully Medix, a burn care market leader will further the adoption of NexoBrid in Europe by expanding our marketing activities in Germany, Austria, Belgium, the Netherlands and Luxembourg.

This collaboration followed NexoBrid, impressive presence at the recent European Burn Association Congress, where NexoBrid was featured in 20 oral and poster presentations. In addition to these three key markets, United States, Japan and the EU, there has been a noticeable rise in global demand for NexoBrid, driven in part by geopolitical conflicts.

In Israel, the entire non-US NexoBrid inventory has been deployed to hospitals and military to successfully treat these affected by the war. The positive outcomes achieved with NexoBrid in the field of prompt additional interest from various governments, including Ukraine, for stockpiling product.

In the United States, we secured a $6.5 million R&D budget for the Department of Defense to advance the development of a new temperature stable formulation for NexoBrid. It is planned to be the first line non-surgical solution for field care burn treatment for the United States Army.

All of these developments, major markets launches, indication expansion, DoD funding, governmental interest. All of these will accelerate the demand for NexoBrid worldwide, it is therefore critical that we expand our operational capabilities to address this need.

Our primary goal is to ensure that our new GMP compliant state of the art facility is on schedule for completion by mid 2024, reaching full-scale manufacturing capabilities in 2025. To this end, we are focused on assembling the right team and allocating the necessary resources for that.

We are thrilled to welcome Dr. Shmulik Hess as our recently appointed Chief Operating Officer and Chief Commercial Officer. With his extensive experience, we are confident that Dr. Hess will play a pivotal role in ensuring the success of our upgraded production and help us refine our commercial strategy. His expertise will undoubtedly contribute to the efforts to meet the escalating market demands effectively.

Now I'd like to provide an update on our EscharEx program. We have received guidance from both the FDA and EMA on the protocol for the global Phase III study indicating our pathway towards approval, with the strong data from our Phase III studies and with the added information we made to the protocol, we are entering the phase III portion of our clinical development program with great confidence.

The Phase III trial is a multicenter, prospective, randomized, placebo-controlled study evaluating the safety and efficacy of EscharEx in patients with venous leg ulcers. The trial will enroll 216 patients equally randomized between EscharEx and the flexible gel vehicle. The trial will focus on two co-primary endpoints, the incidence of complete debridement at the conclusion of the daily visit period, and the incidence of one closure by the end of the weekly follow-up period.

An interim assessment is planned after 67% of the patients have completed the trial. We are currently finalizing the logistic aspect of the trial and anticipate submitting an updated protocol to the FDA in the first quarter of 2024 with patient enrollment to follow by the second half of 2024.

At the same time, we are also advancing plans for exploratory studies, including a pharmacokinetic study and a human factor study, these are designed to support the BLA of EscharEx and to improved our future commercialization and market access strategies.

Much like NexoBrid, a notable impact in the burn care market. Escharex is also attracting significant interest in the chronic wound care sector. This is demonstrated by the interest expressed by key market leaders to form research collaborations around our study. To tell you more about these collaborations.

I will now turn the call over to Barry. Barry?

Thanks Ofer, this quarter we secured an additional research collaboration partner for a Phase III study 3M health care, which is in addition to the previously announced ones MIMEDX and Molnlyncke.

Our primary goals in securing these agreements were to ensure that we minimized as much as possible. The variability between study arms and to provide best in class products for patients in our study. As a reminder, we focused on three key areas of venous leg ulcer management, one compression therapy. Two advanced wound dressings that provide optimal moisture management. And three, a cell or tissue-based product to drive active closure, which is key to our endpoint of incidence of enclosure.

Compression therapy is part of the gold standard for the management of venous leg ulcers and is an essential component in all the validated clinical practice guidelines for this indication. The superior benefits of 3M health care's Coban 2 and Coban 2 lite were confirmed in a recent real-world evidence retrospective study presented at both the symposium on advances in wound care and the European Wound Management Association conference this year.

These are the two largest annual global wound care conferences. Given the prominent position of this product in the market, we are quite pleased with 3M health care will be supplying them for the patients in our study, as well as providing the investigators and their teams with the training required to use them appropriately. What happens under the compression wrap system is equally as important, venous leg ulcers are known to have high levels of wound fluid drainage. And since systems such as and two are designed to remain in place for up to one week managing this moisture so that it is all handled by the dressing is key.

For this Molnlycke will provide their category leading Mepilex foam dressings as well as their Exufiber, Exufiber AG dressings. Mepilex is the top brand in the largest category of advanced wound dressings, which are called foam dressings. Exufiber will be included for added moisture management and Exufiber AG for the additional management of localized bioburden.

Lastly, a key goal of our III study is to demonstrate that EscharEx significantly improves the facilitation of active closure. Due to the sheer amount of clinical data supporting its use, along with its demonstrated ease of use the cell or tissue-based product to be used in our Phase III study will come from medics, who will provide EpiFix their placental tissue allograft. Epifix will be used on study subjects as soon as the wound is completely depleted and has 100% granulation tissue when allografting is not an option.

As a whole, these three class leading collaborations underscore just how significant of a trial. This is in the field of wound management and to the anticipation of what EscharEx can mean to the market upon its approval.

With that, I'll hand it back to you, Ofer.

Thank you Barry. In summary, we are making substantial strides towards achieving our strategic goals. Nexobrid has successfully launched in the United States and Japan and is expanding its addressable markets and commercial presence in Europe.

The construction and the commissioning of our new manufacturing facility that will support this increased demand are on track. Additionally, EscharEx has attracted collaborations with industry leaders, 3M mimetics and molecules, and we are well positioned for for our pivotal Phase three trial.

Finally, our solid balance sheet with $46 million in cash is a key strategic asset that empowers us to successfully execute on our main goals, increase NexoBrid revenues, develop EscharEx through FDA approval and reach profitability.

To discuss our financials in more detail, I will now hand it over Hani.

Thank you Ofer. Let me begin with our revenue. In this quarter the company reported revenue of $4.8 million, which is a decrease from the $5.8 million reported in the same quarter of the previous year. This decrease is primarily due to the absence of the non-recurring income from Bada, gross profit for the quarter stood at $0.9 million of 19% of total revenue, compared to the $2.4 million of 41.9% of total revenue in the third quarter of 2022. The decrease in gross profit is mainly attributed to the absence of non-recurring income from bad debt.

Turning to our operating expenses, the company's R&D expenses amounted to $1.5 million, a decrease from EUR2.9 million in the third quarter of 2022, mainly due to the completion of EscharEx Phase II study. SG&A expenses were reported at $2.6 million compared to the $3.1 million in the same quarter of the previous year.

The operating loss for the quarter was $3 million, which shows an improvement from a $3.5 million loss in the third quarter of 2022. The net loss was reported at $2.2 million of $0.24 per share compared to the net loss of $4.2 million or $0.88 per share in the same quarter last year. This improvement is mainly attributed to a favourable adjustment from the revaluation of warrants.

The non-GAAP adjusted EBITDA for the quarter was a loss of $2.6 million compared $2.5 million loss in the third quarter of 2022.

Now let's look at the year-to-date financial highlights. The company's revenue for the first nine months of 2023 totalled $13.3 million, a decrease from $14.9 million in the first nine months of 2022. The operating loss for this period was $11.4 million compared to the operating loss of $10.5 million recorded in the same period last year.

The net loss for the first nine months was $5 million of $0.56 per share which is a significant improvement from a net loss of $12.1 million or $2.67 per share for the first nine months of 2022. The non-GAAP adjusted EBITDA showed a loss of $9 million compared to a loss of $7.9 million reported in the first nine months of 2022.

And now a few words about the balance sheet. As of September 30, 2023, the company's cash, restricted cash and investments were at $46 million, an increase from $34.1 million reported on December 31, 2022. In the first quarter of 2023, the company successfully raised the gross amount of $27.5 million. During the third quarter of 2023, the company used $5.4 million to fund its activities, with the current financial standing the company's cash reserves are expected to support its operations through profitability.

With that, I will now turn the call back to Ofer. Ofer.

Thank you, Hani. This quarter is marked by significant progress for MediWound. Our optimism for NexoBrid global revenue growth is high, driven by its commercial launches in the United States and Japan, growing presence in the European market and rising global governmental interest. Addressing this surging demand is our foremost priority in the coming months. We are committed to maintaining our manufacturing targets and expanding our production capabilities. We anticipate a substantial increase in NexoBrid revenue following the completion of this scale-up.

In parallel, our EscharEx Phase III global study is progressing towards the initiation guided by the FDA and EMA and bolstered by partnerships with top 3 global wound and companies. Escharex stands at the forefront of the $2 billion chronic would driven market. It holds the promise to enhancing the lives of millions. With that, we'll now open the call for your questions. Operator?

Thank you. We will now begin the question-and-answer session. (Operator Instructions)

RK, HC Wainwright.

Thank you. Good afternoon Ofer and Hani. Hope you folks are doing well and your families are doing well.

To start off with NexoBrid in terms of Japan, you said you're getting good feedback and I'm just trying to see if you can expand on that comment a little bit more. And also in terms of powders, how does the commercialization work in Japan for a product like this. So if you can highlight on both of those, that will be helpful.

Hi RK, hope you're well as well. Thank you for the question. So as I said, in Japan, a Kaken pharmaceutical has successfully launched the NexoBrid commercially and the Japanese market is quite substantial and more than 6,000 patients, but annually receiving the treatment of severe burns and the majority of them undergoing EscharEx removal as a critical first step.

The initial feedback as someone who licenses the product, we get a periodically input from them. So the initial feedback is very positive. They are working diligently to secure contracts in key hospital system in Japan. There are something like 420 relevant hospitals, for instance, in the United States the number is only 120 people take, for the 400 hospitals they are close to ready all of them and they expose the products and gave training to and many dozens of they have a professional.

In the first, after deploying them the first few batches, they increased the order but as we say, and as we said in the last quarter or two, currently, there is much more demand with NexoBrid, then we can actually manufacture and supply. So we will keep our initial commitment according to the contract, but the Japanese launch is going as better than expected.

Very good. And with the added indication of pediatrics in the Europe and the new collaboration of PolyMedics, how does how is this going to work for you folks? And do you think that PolyMedics collaboration will give a little bit of a wind, especially since you have been in Europe for a while.

Right. So again it's an interesting question. So the recommendation for the label extension to include also a pediatric indication is quite substantial in Europe, it was around 30% of all the burn patients are considered the children and we got 100% of what we ask from a EMMA accord, a label that we got is exactly what we aim for.

The collaboration with PMI of course, the impact in the near-term will not be substantial because Europe reflects what we see in other territories. We have much more demand than we can actually supply, but we are looking out to 2025, 2026. We want to have a very strong presence in Germany, Austria, Belgium, Netherlands and Luxembourg in, in 2026 were supposed to have full manufacturing capabilities. We want our spread in Europe to be there as strong as we can as strong as we can. And PMI is quite an ideal partner if you go to European Burn Association Congresses, you'll see very few strong companies in wound care, maybe one, by the way is one of them, but the PMI is very strong there and we've seen it will justify this collaboration.

And then the last question is on the manufacturing piece. So as you said, you have a larger demand than what you can supply. So you are saying by early 2025, you should have manufacturing from the new plant, do you think you have enough material to support commercialization till then? So that's you're not losing on any contracts between now and early 2025?

So this is a tough question, we have commitments to support our clients and our partners. And we also have currently our schedule to complete the GMP compliance state of the art facility is by May 2024, and we hope to reach full-scale manufacturing capability in 2025. By the way EMA we can be quicker.

So we need we need to set priorities. And I think we are very clear with that United States and Japan, our top priority is because these are considered the most important market, after that we have Europe top five EU5 and the rest, we don't need to wait and we might lose some partners in very small countries, but it is what it is.

Thank you very much Ofer and talk to you soon.

Fran�ois Brisebois, Oppenheimer.

Thanks for taking the questions. In terms of the EscharEx trial. Can you help us understand maybe the time lines you talked about an interim assessment, what the start of the trial enrollment starts second half of next year, but do you have an idea when that interim assessment could happen and what can we expect to see there in terms of outcomes? Is there I looked on potential efficacy. Is there opportunity to end the trial early because of and overwhelmingly good efficacy? Or is it any color on timing and interim assessments expectations? Thank you.

Hi Frank, and they appreciate the question. Yes, the Phase III protocol we have been going back and forth with (inaudible) in the FDA to make sure that they are both aligned with the same requirements because we want EscharEx to be approved globally, we managed to approve an interim assessment. This is our plan up to 67% of the participants that completed the trial, we managed to reduce the number of patient.

Last time we said we need to recruit 244 patients, but now an especially due to the fact that we have an interim analysis for able to do a shorter trial. So now we are guiding a shorter trial, not at 24 months rather than 18 months. And the interim assessment will be something like after 15 months in between the data will be it won't be, it will be an efficacy data not safety data but there isn't a stopping rule. It's an interim assessment, If we see that we don't have enough power for succeeding in the endpoint, we might increase the number of patients, but we will not be able two decrease it. So the plan is for 216 patients, and I hope I answered your question.

Yes, thank you. And I'm obviously very unfortunate the reasons for why NexoBrid is in such high demand, but can you maybe help us quantify the maybe by a multiple or how much is the demand superior to the supplies it to three X times and it will the manufacturing capability and building be enough for this supply? Or is that kind of a surgeon in supply? Just any comment there on manufacturing goals, would it completely resolve the greater demand than supply? And what would that do to your balance sheet? Thank you.

Thank you for that, Franc. So as I said our current sales are limited only by our production facility. We have almost zero inventory. As you can probably see in the financial statements, you see that there are always a marginal. We have at least threefold demand more than we can produce that then scale-up is planned to do six x. Okay so currently it seems okay.

But this scale that if we work in two shift, it's actually 11 x. So we don't see a reason why this manufacturing facility will not be enough to manufacture everything that NexoBrid needs in the full scene in future.

Thank you.

And just answering the second, the second part of the question. So if you look at our, if the demand today is three x on the (inaudible) manufacture. We don't see why a reason why in the years 2025 or 2026 when we have and if we're manufacturing capabilities, why we're not able to sell four, five times because currently we are just limiting of our sales force in order to be able to keep have many partners happy. We cannot fly everything.

Michael Okunewitch, Maxim Group LLC.

Hey, guys. Thank you for taking my questions today, I guess first I would just like to follow up on the discussion around the manufacturing scale-up and in particular. Does this how this plays into your, your guidance for cash supporting you through profitability I'd like to get a sense of what time lines are kind of baked into that assumption? Is this kind of the expectation here that the manufacturing scale up given the excess demand could push you into profitability relatively quickly after that's fully up and running?

I think Hi, Michael. I think Hani will take that question.

I Michael, appreciate your questions. So our cash, restricted cash and investments totalled to $46 million as of the end of the quarter. As you know, we have two major expenses going forward. The first one is the Phase III program, which will probably cost approximately $30 million. And the second is the remaining cost of the facilities scaler, which totals to about $6 million. And we expect about $1 million to be covered by Bada.

So assuming we meet the scan a timeline according to plan, which means that the construction by mid will be end by mid 2024 and for scale-up manufacturing in 2025. So the next we believe this is expected to generate meaningful revenue in 2025 and going forward. Accordingly, we anticipate that the profitability in 2026, 2027.

Right. Thank you very much. And then, I'd also like to ask a little bit deeper about the research partnerships in particular, now that we have 3M joining in, do research partners get earlier access to the data, we get to follow the trial more closely. I'd like to get a sense if there's some benefit here for partnering or even potential acquisition discussions? And the reason I ask because EscharEx seems like it could be a really attractive compound for someone especially like 3M if they're looking to compete with Santo.

So that's a very important question. And Barry, can you please provide more detail on that?

Sure. Thank you. Thanks for the question.

As far as the data that they're going to get there, they won't have any early look and at the time that we file the BLA they will get a package of information that focuses on their specific product and how it fared across the a couple of arms in the study for them and they get a solid amount of data.

There's not too many Phase III studies that are done in this space. Certainly not too many studies at all with the rigor with which the study is being done. So they'll get a good set of data in an actual controlled study.

And we'll have the marketing capability to say that in the most important Phase III study to come around and wound care for decades that their product was used as standard of care. And that's kind of what they get out of it has to the question about M&A licensing, any kind of business development activities, you're right I would add just as a little bit of flavour the 3M, as you probably know, is splitting off some health care division and into a listed entity sometime I believe in 2024, they just announced the new name of this entity this past week.

So it's becoming a reality. And the intent of that spin-off is to really unlock innovation in that division, which just about $8 billion, I think in sales of year.

So would they be a potential a good acquirer or licensor of EscharEx, absolutely. Obviously our stated intention at this point is to not only bring on EscharEx across the finish line but to commercialize it as well as we believe that is what will maximize value for our shareholders. But of course, when we get there, we'll always be open to see what the prevailing winds are and what the market bears.

Thank you very much. And then just one more and I'll hop back in the queue. I'd like to see if you could expand a little bit on the exploratory studies for EscharEx, would you be more geared towards generating additional marketing data and on values or potentially towards layering in additional indication.

And so when we are thinking about exploring the studies at this stage, we're thinking about guidance that we got from the FDA. FDA is interested in us showing the PK profile of the drug. This study is relatively a small one in 20 patients. And also there is since the EscharEx is a drug which is going to be used at home the FDA also wants us to do something which is called human factor study, just making sure that the labeling to read the patients are able to reduce the inflammation of fuels again, a very small study even without patients only healthy volunteers, we might and we are thinking about it, additional one or two studies that will serve the market access, making sure that we are able to charge as maximum as we can after EscharEx is approved. But when we know exactly what we do, we will share it with you in the public.

All right. Thank you very much and congrats on all the progress you've made this past quarter.

Thank you. (Operator Instructions) I'd like to turn the conference back over to Ofer Gonen for the closing remarks.

Thank you everyone, for joining us today, we look forward to updating you again on our next call.

Thank you. This concludes today's conference call, and we thank you all for attending today's presentation. You may now disconnect your lines and have a wonderful day.