Mediwound Ltd (MDWD) 2023 Q4 法說會逐字稿

Good day and welcome to MediWound's fourth quarter and full year 2023 earnings call. Today's conference is being recorded. (Operator Instructions)

At this time, I would like to turn the conference over to Gaia Shamis of LifeSci Advisors. Please go ahead.

Thank you, operator, and welcome, everyone. Today before the market opened, MediWound issued a press release announcing financial results for the fourth quarter and full year ended December 31, 2023. You may access that release on the company website under the Investors tab.

With us today are 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 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 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 the cautionary note set forth in today's press release as well as Ester-E factors set forth in MediWound 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, Gaia, and good morning, everyone. Welcome to MediWound fourth quarter and full year 2023 conference call. Joining me today are Hani Luxenbourg, our Chief Financial Officer, and Barry Wolfenson our Executive Vice President of Strategy and Corporate Development. Following our discussion of the financial results and business highlights, we will open the call for questions.

I'm excited to share that we had a remarkable year our unwavering commitment to executing our commercial strategy of NexoBrid, coupled with our substantial operational excellence, has yielded revenue of $19 million.

Furthermore, we are making significant progress towards initiating our Phase 3 trial of EscharEx a product which targets a $2 billion market, utilizing the same proven active pharmaceutical ingredient as NexoBrid. EscharEx has demonstrated superiority over the current market leader in Phase 2 studies.

Let's begin on discussion with the major milestones we have achieved with NexoBrid in 2023. Nexobrid had an exciting year on a number of fronts. It generated $19 million in revenue, which was primarily driven by its commercial availability in the United States, Japan and India.

Additionally, it received approval for pediatric use in Europe and is currently under review by the FDA for pediatric use as well. Moreover, NexoBrid continues to benefit from federal funding in the United States, supporting both emergency preparedness and ongoing research and development activities with demand for NexoBrid currently exceeds our production capabilities.

We are actively scaling up our GMP compliant state of the art facility, which is all scheduled for completion by mid 2024. We anticipate achieving full production capacity in 2025. This expansion will enhance our production capabilities, sixfold, enabling us to fulfill the increasing global demand for NexoBrid.

Now let's discuss each of the drivers for NexoBrid growth in further detail. Nexobrid was introduced to the US market by our partner, Vericel at the end of the third quarter.

Vericel is focused on building a strong foundation for NexoBrid by supporting P&T committee approvals at the end of 2023, more than 50 burn centers submitted packages to their P&T committees out of which over 25 centers gained committee approvals and nearly 20 centers placed initial product orders.

Most notably the clinical outcomes and the feedback from burn surgeons regarding the initial patient treated with NexoBrid have been extremely positive. This is a strong indicator of NexoBrid potential to change the standard of care in eschar removal for patients with severe burns.

As for commercial access, CMS granted NexoBrid, a permanent J code and transitional pass-through payment status. This became effective in January 2024. NexoBrid has also successfully launched in two major markets, Japan through our partnership with Kaken pharmaceuticals and in India through BSV. Both launches have been progressing as planned and have generated further demand for NexoBrid.

In Europe, we expanded our commercial activity by establishing a collaboration with PolyMedics, which will further facilitate greater NexoBrid usage in Germany, Austria, Belgium, the Netherlands and Luxembourg, the transformative potential of NexoBrid as the new standard of treating of severe burns in emergency scenarios was highlighted during the war in Israel.

Last October, we allocated our entire non-US NexoBrid inventory to meet the critical demand for treating mass casualty burn incidents. NexoBrid paved instrumental in saving lives across both military and civilian sectors.

This successful development has sparked increased interest from various global governments in stockpiling NexoBrid for future emergencies. Our partnership with the US government remains solid. We have secured $13 million R&D grant from the US Department of Defense to develop and to manufacture a new formulation for NexoBrid that is stable at room temperature.

This innovation is intended for the US Army as a nonsurgical treatment for traumatic burns on the battlefield. Additionally, we have received an extra $10 million from BARDA. This funding is designated for the replenishment of expired product previously procured for emergency readiness, along with supporting further R&D efforts.

We have also received European Commission approval to broaden NexoBrid label in Europe to include patients for all ages. Additionally, a supplemental BLA for pediatric use has been accepted for review by the FDA with a decision anticipated later this year, considering the pediatric patients, consider that those patients represent approximately 40% of all burn victims, this approval could substantially expand NexoBrid market reach.

Overall, we are very pleased with the tremendous progress we have made with NexoBrid this year and the strong global demand we have experienced, as we enter 2024 for the influx of order for the entire year has allowed us to project revenues of $24 million.

Looking ahead, we anticipate significant revenue growth exceeding 40% in the coming years, with revenue projection of $30 million for 2025 and $39 million for 2026.

Now I would like to discuss EscharEx. We are fully aligned with both FDA and EMA on the Phase 3 protocol evaluating EscharEx in patients with venous leg ulcers. The protocol submission is planned for the first half of this year, and we anticipate initiating the trial in the second half of 2024.

This will be a multicenter prospective, randomized, placebo-controlled global trial. We aim to enroll 216 patients in over 40 sites that will be randomized one to one to receive either EscharEx or placebo. So I will focus on two co-primary endpoints, the incidence of complete debridement and the indication of the incidence of wound closure.

An interim assessment is scheduled after 67% of the patients have completed the trial. The study is estimated to take about 24 months to complete. The design of the trial is very similar to our successful Phase 2 studies and the total sample size provides 90% statistical power.

We were excited to recently report the results of a head-to-head comparative analysis of EscharEx versus SANTYL. And now I will hand it over to Barry, who will elaborate further, Barry.

Thanks Ofer. In our Phase 2 study, EscharEx demonstrated superior results, SANTYL Collage and assortment approved in the 1960s is the current leading treatment for enzymatic debridement of chronic wounds, generating over $360 million in sales in the United States.

EscharEx, a complex mixture of enzymes targeting different components of nonviable tissue in wounds typically works within one to two weeks. In contrast, SANTYL focuses solely on collagen and often needs four to eight weeks of treatment usually alongside sharp debridement.

The results of the head-to-head analysis are compelling and were achieved with robust statistical significance. Starting with the incidence of complete debridement, 63% of patients achieved complete debridement within two weeks with EscharEx versus 0% with SANTYL.

Importantly, the estimated median time it took for EscharEx to achieve debridement during the full 85 days of the study was nine days, while patients treated with SANTYL didn't achieve the median time to complete debridement.

Looking at wound bed preparation, which includes both complete debridement and also having the wound bed completely covered with granulation tissue, a critical step in wound healing, 78.3% of patients treated with EscharEx achieved during the study versus only 37.5% of patients treated with SANTYL.

Once again, it was very quick with EscharEx where the median time to achieve it was only 11 days versus no achievement of a median time with SANTYL. While the incidence of wound closure was favorable to EscharEx but not statistically significant in this small sample size, the average time to complete wound closure was only 48.4 days for EscharEx versus 76 days for sample, a full month differential, which reached significance with a p-value of 0.05.

The safety profile was comparable between the two. We look forward to sharing this data at three leading congresses in the field that are taking place in May this year, the wound healing society Symposium on Advanced Wound Care and the European Wound Management Association.

Thanks to the Phase 2 promising results. We have garnered much interest from leading companies in the wound-healing space and have established research collaborations to support the EscharEx Phase 3 study with 3M, Mölnlycke, MIMEDX.

These three companies represent the top offerings in the product categories integral to venous leg ulcer care compression therapy, advanced wound dressings and cell-based products. EscharEx is a potential blockbuster and the company is focused and committed to the successful execution of the clinical development program and to diligently performing all the pre-commercial activities required to ensure an optimal launch. With that Ofer back to you.

Thank you, Barry. So to summarize, MediWound has made as town and outstanding progress in 2023 NexoBrid would launch in three major markets. Its indication has been expanded to include the pediatric population in Europe with further potential of pediatric use in the United States later this year.

There has been continued commitment in grant funding from the US government. All of these have driven an increased global demand, which we are on track to meet with the scale-up of our manufacturing facility. Our promising drug candidate, EscharEx is gaining recognition for its potential in revolutionizing chronic wound care with validation from leading global wound care entities. We are eagerly anticipating the commencing of the Phase 3 study in the second half of 2024.

I'll now hand it over to Hani to briefly review our financials. Hani?

Thank you, Ofer. Let me begin with our revenue for the first quarter. In the first quarter of 2023, the company reported revenue of $5.3 million, a decrease from $11.6 million in the first quarter of 2022. This decrease is mainly due to the BLA approval milestone payment for Vericel received in the previous year.

Gross profit for the quarter was $0.7 million or 13.5% of total revenue compared to the $8.2 million or 70.2% of total revenue in the first quarter of 2022. The decrease in gross profit profit is largely attributed to the BLA approval milestone payment from Vericel in prior year.

Turning to our operating expenses, the company's research and development expenses amounted to $1.8 million, a decrease from $2.7 million in the first quarter of 2022. This reduction is primarily due to the completion of the EscharEx Phase 2 study in 2022.

Selling, general and administrative expenses were reported at $2.8 million, slightly less than the $3 million in the same quarter of the previous year.

The operating loss of the quarter was $3.9 million compared to an operating profit of $2.1 million in the first quarter of 2022, net loss was reported at $1.7 million, or $0.19 per share, which is a decrease from a net loss of $7.5 million or $1.18 per share in the first quarter of the previous year. This improvement in net loss is mainly due to the favorable adjustment from the revaluation of warrants.

The non-GAAP adjusted EBITDA for the quarter was a loss of $3.2 million compared to a profit of $3.4 million in the first quarter of 2022. This shift primarily result from the revaluation of the warrants.

Now let's discuss the full year 2023 financial highlights. For the year ended December 31, 2023. The company's revenue totaled $18.7 million, a decrease from $26.5 million for the year ended 2022. This decrease is once again, primarily due to the BLA approval milestone payment for Vericel in the previous year.

Gross profit for the year was $3.6 million or 19.1% of total revenue it decreased from $13.2 million or 49.7% of total revenue in prior year. The decrease in gross profit percentage reflects the absence of the significant onetime payment received in 2022.

Research and development expenses for the year were $7.5 million, a decrease from $10.2 million in the previous year. This decrease reflects the completion of our EscharEx Phase 2 study in 2022.

Selling, general and administrative expenses for the year increased slightly to $11.6 million from $10.6 million in previous year. The operating loss for the year was $15.3 million compared to an $8.3 million loss in previous year.

The net loss for the year was $6.7 million or $0.75 per share compared to a net loss of $19.6 million or $3.93 per share for the year ended December 31, 2022.

The non-GAAP adjusted EBITDA showed a loss of $12.3 million compared to a loss of $4.4 million reported in the previous year.

Regarding our balance sheet, as of December 31, 2023, the company's cash, restricted cash and investments stood at $42.1 million, an increase from $34.1 million reported in the end of 2022. In the first quarter of 2023, the company successfully raised $27.5 million through a public offering.

Throughout the year, the company utilized $70.1 million to fund its activity, with the current financial standing. We believe the company's cash reserves are sufficient to support operations through profitability.

With that, I have concluded the financial review, and we'll turn the call back to Ofer. Ofer?

Thank you, Hani. To conclude, the company achieved significant milestones in the past quarter and in 2023 overall, and we are confident about 2024 in our future growth. We continue to prioritize increasing our manufacturing capabilities to fulfill both current and future orders and meet the rising demand for NexoBrid and thereby grow our revenue by greater than 40%.

EscharEx has demonstrated superior results over the dominant product in this over $2 billion potential market.

As we look forward to initiating the Phase 3 trial in the second half of 2024, we are delighted to have three research collaborations with a top oral care companies supporting us with this study. I'm excited about what the future holds for us as we stay committed to redefining the standard of care with NexoBrid and EscharEx.

Now I would like to open the call for your questions. Operator?

Will now begin the question and answer session to ask a question. (Operator Instructions)

Joshua Jennings, TD Cowen. Please go ahead.

Thanks, and good morning. Congratulations on all the progress and the increased demand for NexoBrid over I was just hoping to just to have a two-part question on NexoBrid. First, it just seems like the demand is surging globally, US partner with an offer at multiple international markets.

Capacity constraints are kind of limiting, but any way to quantify the increased demand that you're seeing here in 2024 versus 2023? And we're assuming that $24 million revenue guide would be high without capacity constraints and somewhere in between $24 million and $39 million for 2026 that target. But in any way to just give some incremental the details are quantification of the increased demand for NexoBrid currently?

And thank you, Joshua, for your question and to address that, I will just repeat that currently we have a threefold fall demand more than we can actually manufacture in the first week of 2024. We already got binding orders that are actually filled the capacity that we have in 2024.

Assuming that this demand continues as planned, we see the 40% growth as something that is very conservative in our expectations and guidance is is only limited by our ability to manufacture.

So as long as we repeat our guidance by completing the construction of the facility in 2024 and having it in full state scale sometime in 2025. We can meet those demands accordingly, I hope I answered your question.

Yes, so thanks for reviewing that. And and just one follow up on EscharEx and maybe just help us think about the final steps here that are required before getting full sign-off on the Phase 3 study. And then also just on the manufacturing side for EscharEx, if there are any where are you there in terms of being able to deliver product for the full study as it kicks off in the second half. Thanks a lot for taking the questions.

So that's a very good question. So the reason that we then start the day, we start the trial in the second half of 2024 is primarily due to the fact that we focused on manufacturing NexoBrid and in order to be able to meet the demand that we have from United States, Japan, Europe, India, et cetera.

The last thing that we need to do before initiating the trial is making sure that we're manufacturing enough batches of EscharEx and actually we are doing it as we speak, and then we need to wait 30 days for stability, submit the protocols that are already aligned with both the FDA and EMA and then we can start recruiting patients.

So this is the first though, for the clinical manufacturing, we don't see any problems. We are now getting ready for the commercial piece we don't want to be in a position that once EscharEx is approved, we are in the same situation as we are in NexoBrid.

We want to be able to launch successfully EscharEx supporting a multi hundreds of millions of dollars of demand in the first one or two years of the launch.

Thanks so much.

François Brisebois, Oppenheimer. Please go ahead.

Well, thanks for the question. Just in terms of the design, can you remind us on EscharEx if it's based on the timing of the start of the trial here in the second half. Can you remind us maybe the timing and when it be realistic for us to expect the interim readout?

So thank you for the question, Francois.

So the trial, we need to recruit 216 patients that will be randomized one to one EscharEx versus placebo after a 67% of the recruitment and after those participants have completed the trial, we have an interim assessment. I would expect that something like 18 months after the study initiate.

Okay, great. Thank you. And then in terms of the you talked about Vericel and the centers a little bit of metrics there from 50 centers, 25, just the numbers. Can you maybe help us understand how many centers total order for Vericel and where do we stand?

So again, Vericel is responsible for the US market, so it's better to ask them that question. But what I can share with you that there are around 100 centers that treat burn patients for adults. And once we get the approval of the pediatric population, there will be additional 30 centers that will be relevant.

So all in all, in the United States, around 130 centers, very said already reported that by the end of last year, they were approached already 50, they got 50 a committee engagement, 25 of them already approved. So I assume that that we have they're doing a very good job with that.

Okay. Just lastly, quickly in terms of the shelf life, you talked about exploration and obviously demand can continue depending on the exploration. How long does it take for your product to expire?

The shelf life of NexoBrid currently is almost 3 years. It's 2 years and 9 months. But as you can imagine, imagine, due to the fact that the demand for commercial, I'm not speaking about the about the even stockpiling for commercial use is such a significant.

We don't expect any explanation of NexoBrid product everything is going to be used. Everything that we ship every vial of NexoBrid that is shipped to a customer is being used in the following few months. So exploration at this stage at this stage is not something that bothers us.

Thank you.

Thank you.

RK, HC Wainwright. Please go ahead.

Thank you. Good morning Ofer and Hani. So I'm sorry. And then I also had a question on capacity in NexoBrid. Just trying to think through some of the projections you put out there for '25 and '26. And so going to the far end in '26?

And EscharEx projection of $39 million, what are you taking into consideration there? Are you taking that you will be able to handle all the demand that is out there at this point or you are also including the projected growth from all these territories, whether it is US, Japan, India pediatric approval and the governments?

Hi RK, well, it's a good question. We took conservatively when we looked at the $39 million, we didn't plan on there very significant growth of demand. We are looking at the current demand.

We are looking at the performance on specific markets that we are already in. For instance, in Japan, their expectation was that we can increase quite substantially our shipments to them of the one quarter of being in the market.

So if the product was accepted, they're extremely well. So as for 2026 to $39 million. We do not include all times of growth and unexpected positive surprises is only based on our ability to know that in 2026, we can meet all the demand that we currently have now, if we have surprises this specific facility, we'll be able to support more than $80 million in revenue.

So we are okay with which scenario of and expected growth.

Fantastic. And then in terms of on the EscharEx side, and Barry was saying this is going to be data presented in three different conferences in May and just want to understand if there will be any updates in this in these conferences, which can help us kind of on that figure out how, what to expect in the in the pivotal study in the 216 patient study, which we probably will see some data, as I said, 18 months, some from the start of the program it's probably more like '26, I think?

Let me elaborate a little bit on that. So as you can all figured out the strength of this data of EscharEx versus SANTYL were extremely robust. The position in EscharEx to become the market leader in enzymatic agents for the treatment of chronic wounds.

And there is a lot of interest in the industry around the specific data that we have. But the FDA, I want to remind you all the FDA is focused on the performance of EscharEx versus placebo.

So we will issue additional data. And there is a lot of strategic interest about what we are going to present at the wound healing society at the Symposium of advanced wound care and the European Wound Management Association, but it will not give you more color regarding our probability of succeeding in our Phase 3 trial, it is supposed to be easier because it is versus placebo.

Thanks for taking all my questions for today.

Michael Okunewitch, Maxim Group. Please go ahead.

All right. Thank you very much for taking my questions today and congratulations on all the progress. I guess the first thing I wanted to ask was just with the acceptance in the pediatric sBLA, is there a similar thesis here for pediatric patients in the US. As you had with Europe, where you could see outsized utilization due to the nature of the pediatric burns market or is that a unique feature of the European market?

I hope to understand it correctly. We got, we received European Commission approval and broadened the NexoBrid label in Europe last quarter. And now it is it is for all ages and it will not impact our immediately immediate financial outcome because of the limitation of our capacity.

So maybe the proportion between the treatment of adult and pediatric will change a little bit, but it won't impact our bottom line.

In the United States, we expect the same. We had a very robust Phase 3 study with pediatric patients. We believe that the US the FDA will not have different requirements than the European had.

So as we guided, we expect to get this approval later this year. Again, the impact on future revenue is quite extensive because the number the proportion of pediatric population in the United States is approximately 30% to 40% of the overall population. Therefore, this label extension should significantly increase the addressable market.

I was asking more in terms of the and the greater degree of utilization because NexoBrid is more gentle and provides less scarring, as you said, with the European population, not in terms of immediate revenue?

I believe that if you look at the how the standard of care in the United States was until a quarter ago. It is even painful to watch very aggressive, a lot of pain in blood and associated, we believe that we have an ideal partner in the United States to take over this market quite swiftly and it will be also adopted the same in Europe children are I don't see a parent and further his child will go through a painful operation instead of being applied with a topical drug.

All right. Thank you for that. And then I also wanted to see if you could give me any additional color on the time line you're expecting for the DoD stabilized formulation? And then would this be limited to DoD sales in the program? Or could this be applicable to foreign governments are first responders and more result regions or NGOs, are there other organizations that might also seek to utilize a temperature stabilized formulation?

So Michael, this is a very good question. So as I mentioned, we got $13 million R&D funding from the DoD to advance this project. We believe it can open the gate for us for additional armies as well as simplify our supply chain cost and administration moving from cold chain to room temperature for the project is well underway.

We have all kinds of very successful encouraging results, and we are hoping to see the US Army embracing the foods of our co-lead collaborations in the next few years.

We plan to have a meeting with the FDA next quarter to discuss the development path and to get some guidance of what is required in order to approve this product.

I cannot also mention here that this product is, of course, under the license agreement with Vericel. So any implication or a or any commercial activity in the United States, of course, it's subject to agreement with them.

All right. Thank you very much. And once again, congrats on all the progress you've made.

Thank you, Michael.

At this time, these are all the questions we will be taking today. I would like to now turn the conference back over to management for closing remarks.

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

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.