MediWound Ltd. (MDWD) Q1 2016 Earnings Report, Transcript and Summary

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. [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 content of this conference call contains time-sensitive information that is accurate only as of the date of the 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 the 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 effort 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 2 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 represents a tremendous market opportunity. In tendon, we are advancing our US development program for NexoBrid in collaboration with BARDA as well as advancing our R&D programs for the pediatric use and for developing an injectable form of our technology for connected 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 burns 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 Netherlands, in Demark, 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 EMA approval. We have made good progress creating interest in NexoBrid, educating burn specialists and integrating NexoBrid into various burn centers work flows. The next key inflection point for adoption and converting the growing mix of usage to revenues is obtaining reimbursement and formulary inclusion in the applicable markets. We believe that NexoBrid has brought 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 that we 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 your appraised of our progress. Our commercial efforts are aided by the significant presence we have at international and regional medical conference for burn specialists. Burn specialists across Europe continue to generate strong clinical support for NexoBrid as evidenced by the number and quality of papers presenting NexoBrid’s benefits. 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 in recognition. We even see more 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 KOLs to attend the conference and believe they will share the buzz in Europe around NexoBrid with the appeal in the conference attendees. Throughout 2016, we will continue to support the advancement of burn care by sponsoring European national and regional burn conferences. We will continue to invest in user meetings, in peer discussions and sampling programs as well as in market access initiatives that with favorable reimbursement with accelerated 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 EMA marketing authorization to expand NexoBrid into important global markets. Our focus for that effort remains in Latin America, Asia Pacific and the 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 a file for registration and initiated a small regional clinical study to demonstrate local experience and support registration. Our distributor submitted registration files 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 these fronts as well. Turning now to a review of our initiatives in preparedness for mass casualty incidents and 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 extend 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 4th 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 for 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 these as an important new commercial market where we can build a repeat customer base and make a difference in patients’ life. Now let’s turn to a discussion of our program with EscharEx, our drug for chronic and hard-to-heal wounds. In February, we reported positive top line results from our second Phase 2 clinical trial evaluating EscharEx for the treatment of chronic and other hard-to-heal wounds. This prospective randomized control 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 post-surgical or traumatic hard-to-heal wounds. Patients were randomized to either EscharEx or the hydrogel vehicle at the ratio of 2 to 1, respectively. We conducted this trial to assess and to 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 are 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 primary endpoint and it was met with statistical significance. Of note, these 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 the predefined sub-group 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 VLU - that were treated with EscharEx achieved complete debridement compared with 25% of the patients treated with the hydrogel vehicle. Post-hoc 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 the 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 2 study. Importantly, no deleterious effect on wound healing was observed and no material differences were found in 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 hydrogel vehicle is actually a common widely used treatment for debridement of chronic wounds. So our control in this trial was not a [indiscernible] Furthermore, bear in mind that non-sharp, enzymatic and other debridement agents currently available in the US markets require daily applications for several weeks if not months to achieve complete debridement yet they still sell 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 undergo debridement, not that it needs to grow debridement it actually undergo debridement. The set of physicians indicated that the product having the profile of EscharEx would 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 represent a very meaningful market opportunity. This findings were affirmed by a US advisory board comprised of leading US medical marketing and reimbursement experts which we convinced to review, discuss during our recent reports 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 self-debridement requires surgically skilled physicians, requires anesthesia which in elderly patients with values comorbidities is accompanied with a higher risk of local and systemic complications and sharp debridement may also involve hemorrhages which will be more difficult to control due to the high incidence of anticoagulant drugs used in this patient population. Due to this limitation, 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 with in vase reducing the risk associated with sharp debridement and potential allowing the physician to treat more patients every day as their focus would be on 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 its possible associated sequel. This potential change in the current paradigm led health care professionals to indicate that the product having the product profile of EscharEx if approved would capture a portion of the sharp debridement properties 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 a numerous marketed technologies that are aiming to heal these wounds. We see a number of potential synergies with this product and expect that they will be used sequentially in clinical properties. The potential of EscharEx is further confirmed by the enthusiastic response we received at the recent conference with those topline data represented as late breaker encouraged us the considerable interest and enquiry 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 dataset 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 convenient application. This would allow patients even more flexibility in using NexoBrid in a place and time that best fits the individual daily routines further enhancing ease of use and compliance. Having the cohort of the first 73 patients, the second cohort is also a multicenter international perspective randomized vehicle controlled assessor-blinded assessment in which 24 patients in two different wounded theologies 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 extending period of time that is 24 hours, 48 hours with the main objective to document safety after extended application period and assess efficacy as a secondary analysis. Incidents of complete debridement will be evaluated after up to 8 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 impact plan for requesting an end-of-Phase 2 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 continued to fund and execute our commercial plans and clinical programs confident that our investment will enable us to translate the positive momentum into sales and advance of pipeline product 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 shift about 1,100 units of NexoBrid to burn centers across Europe and Israel, of which approximately 50% [Technical Difficulty] in the sampling program. Our commercial efforts continued 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 as these burn centers convert from experimental usage into ongoing commercial orders. Our gross 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. Gross 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 first quarter of 2015. Net loss for the first 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 discussed before, a $1.5 million net financial expenses that were recorded in 2015 which was 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 the loss of $3.7 million for the first quarter of 2015. Turning now to our balance sheet, as of March 31, 2016 the Company had cash and short-term deposits of $41.6 million and working capital of $41.4 million. This compared with cash and short-term deposit 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 impact in the sales and marketing of NexoBrid across Europe and internationally. We will keep continue 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 a later stage by contributing to revenues as a result of the procurement commitment. Consequently, we continue to expect cash used for 2016 to be in the range of $20 million and $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 2 study of EscharEx in our subsequent meeting with the FDA, continued adoption of NexoBrid in Europe including favorable reimbursement decisions for NexoBrid from 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. Representation 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 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 treatment connected tissue disorder. And now operator, please open the call for questions.

[Operator Instructions] The first question is from Bruce Nudell of SunTrust Robinson. Your line is open.

Gal, we looked at a large series from India using SANTYL and it looked like they got about 84% debridement after about a month with wounds that were about 24 square centimeters. The question is like for competitive positioning how you’re think about the performance of EscharEx relative to SANTYL in this regard, I mean 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. I think that with EscharEx we can solve several difficulties or challenges that we see with other agencies. 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 him to this clinic, this somebody is usually a spouse or a family member and has to lose their work and drive into the clinic. That’s a big burden. If one chooses another method and have a nurse come to this patient house for 2 or 3 times a week, for 6 weeks, for 8 weeks, that’s a huge financial burden as well. So if you’re able to remove the eschar in practically week, that’s a big and I would say challenge that you’re addressing immediately. In addition to that, in the US, this year - in 2015, more than 100,000 legs were amputated because of a wound that didn’t heal. The mortality rate of a patient that goes for an amputation is lower or comparable to a patient having cancer and these wounds get to amputations because they’re not progressing on healing and in a vast majority of cases or in many cases, it’s because you’re not able to debride the wounds. So debriding a wound after 6 weeks, 8 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 do 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’re 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 is the prescription. The nurse will show you how to use the product. Come in 2, 3 days again. It takes them 3, 4 minutes. They can see many more patients in a day. When the patient comes in after 3, 4 days, either the wound is cured 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 3, 4 days to remove the eschar. He doesn’t expose himself to the risk of sharp debridement, he doesn’t spend the time if he takes to sharp debridement, he doesn’t expose the patient to the risk of having this wound debrided for 4 weeks, 6 weeks, 8 weeks. He doesn’t expose the system and the patient to all the burden of managing this wound for 6 to 8 weeks of debridement. Because of all these reasons, I would, not me actually, I mean the market started actually ask these questions to 230 healthcare professionals as well as our discussions in the recent conference last week in Atlanta showed that physicians believe that this kind of a product that can be used in a large portion of the patients. I cannot refer to this study that you’re referring to, because I cannot refer to the methodology, material and methodology study, was there a control, what kind of wounds were they, were they odd wounds and all these kind of things and I wouldn’t like to predict, it’s better to report the processed story than to predict what would be the results of a study, but if one see that in the EscharEx study, we removed eschar in 4, 5 applications, in 93% of the cases that we debrided, and if you see in other enzyme study that did remove the eschar after 42 days and we are talking about wounds of 0.5 centimeter versus wounds of 33.6 centimeter, then each one can do the math for himself.

All right. 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 2 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 4 to 6 weeks with Santyl or perhaps even longer with hydrogel?

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

Thank you. The next question is from Matt Keeler of Credit Suisse. Your line is open.

Hey, guys. Thanks for taking the question. I just wanted to start on the commercial trends, 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?

So, hi, Matt. Thank you for the question. So, you’re right and when 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 increasing within the countries already, such as Germany increased during this quarter and the number of patients with those sites 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 a federal reimbursement that we anticipate in the second half of 2016, we believe that we can convert the use in the increased number of patients and number of sites that it will generate more revenues and 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 ask for. So usually what happens is actually, you get the reimbursement on a national level, you need to apply on the formularies of the hospitals, which is another process that takes several weeks or 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.

Thank you. The next question is from Jason Wittes of Brean Capital. Your line is open.

Hi, thank you. So I just, do you expect to hear for the majority of European countries by the second half in terms of reimbursement?

I think that as we discussed, there are several - and it will differ from country to country. So in some countries, we submitted the file in a national level process, because this is what is required, for example, Belgium, for example, Italy, for example, in 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 from some of them, we will hear sooner than later and again, we have reasons to believe that the decision would not be totally different than the Belgian one.

Is there a specific decision 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.

All right. Understood. Fair enough. And in terms of - you mentioned, you did a polling and you said at $1000 to $2000, 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?

Yeah. Exactly like you mentioned. I mean how much does a tube of Santyl cost, how many tubes will you need to debride the patient if you need to treat him for 4 to 8 weeks. You do the math, you get to any number between $700, $800 to $2000. So the cost of treatment currently is something around that ballpark and I’m not even referring to pharmaco-economic benefits as I mentioned before, sending a nurse to a patient 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 would just say emphatically to the expense of the product.

Right. And in that study, there seem to be a lot of interest also within sharp debridement, first of all, there is - I think there are three buckets that you pointed out. One was sharp debridement, which seem 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 too. I know you had an earlier question about whether you’d 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, curious to know how this would stack up against those, because it seems like there is 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 come 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’ve heard from physicians and healthcare 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 enzymatic debridement and about 20% are going through what we call Autolytic debridement with hydrogels or whatever. Again, I mean this enzymatic use and autolytic use is more in nursing homes, district centers versus the clinic’s offices that are affiliated with university hospitals and so on. They do not think that we will replace sharp debridement, but what they say is along the line 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 physicians will say, you need debridement, here is EscharEx, go for 2, 3 days, come back. At that point in time, the patient will come back if all the EscharEx gone fine. That’s replacement. If not, he can say, well, if everything is soft here and cozy, let’s just remove with the spoon the rest and that will be what we call add-on or it can send a patient on and say, come in three days, continue with EscharEx, which would again be replacement or the third possibility would be that he would remove whatever is easy to remove when it comes to the office and then send him home with the prescription to do 2, 3 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 is that, I will be very close 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 meet its target product profile, practically, it would be able to take a large portion of this market and for the autolytic market, again, these are simple products. They’re not very effective. So we would take again a nice portion of that market potentially as well, still, there will always be patients that would prefer to use these kind of methods because they are less expensive. So, we’re not going to take 100% of the market, but physicians indicated that they believe that it would take a significant portion of the entire market. Some of the misconceptions is people think that we will aim to take part of this Santyl market, but we will not. At least from what the physicians said, it seems that this product could potentially take a portion of the entire market, not just the enzymatic market.

Fair point. Actually one last follow up and I will 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 even you have reimbursement in place in quick geographies?

Yes. Well, in 2015, about 70% of the product that we supplied was samples and in 2016, we believe that this goes down to about 50%. Obviously in countries that we have reimbursement, if they compare them we don’t need to provide them with the product and - 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 it’s going to be. So we say 50% would be samples.

Thank you very much.

Thank you. And the next question is from Anthony Petrone of Jefferies. Your line is open.

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

Right. I think you are absolutely correct, in burns NexoBrid is priced euros and this is the price - pricing EUR400 per 1% TBSA. On average, a burnt patient - a hospital with burnt patients would have about 10% TBSA, so an average patient would be about EUR4, 000. Since we are starting, prices don’t always start there. They start with smaller wounds and go up. But if you come to the American Burn Association, I am sure that you will be able to talk with physicians, they would tell you, all that we think is 15% TBSA and if it wasn’t for the labeling, maybe they would be even more than that. Now, the $1,000 to $2,000, I 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 sores or post-surgical complications, in general chronic wounds are smaller than burns and this is why the cost of treatment is smaller. But you have many more patients like that 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 100% reimbursement of our price, but we got already with this agreement of reimbursement and overall confident of our price, which is the European price. As Gal mentioned before, the European price is EUR400 per TBSA per 2 gram of NexoBrid and this is the price agreed with the Belgium authorities.

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

We believe that we will see increasing 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 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 2 results, there was a slight benefit in VLUs versus DFUs, diabetic foot ulcers. So I am just wondering if the data continues to show that in the follow up phase of the study. Do you think there is 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 the BLA will be pursued here even if there is a slight benefit in either VLU or DFU over time?

Well, 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 application. 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, I mean the p value is 0.028, 0.024, very significant results. Whether we would study in VLU or DFU, it’s something that we will discuss with FDA. We need to - it depends, so I don’t want to go into too much details now on that design because it has all kind of complications of how to work with FDA on our pivotal program.

Helpful. Thanks again.

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

Thank you again.

Thank you. The next question is from David Maris of Wells Fargo. Your line is open.

Hi, it’s [indiscernible] for David Maris. Thanks for taking the question. I have a few. The first is on - is there any update on your expectations for BARDA applying for the emergency use authorization?

Yes. So BARDA is in the process of doing that. In order for BARDA to do that, there are certain things that need to happen. As we expected, this process usually is something that takes from signing I would say, one to two years. So we are expecting I believe BARDA to start doing that and probably at 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. BARDA. BARDA can decide to buy everything in 2017, they can decide to buy everything only in 2019. We have a reason to believe that they would most probably spread it over the contract because of expiry date and things like that. They want to have sustainable inventory to stop by. But I cannot speak on behalf of BARDA.

So they would be done in process of applying for the emergency authorization that you would have to wait for that approval to come through before they can begin procuring NexoBrid?

Yes, 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 BARDA decision and I would not like to speak on their behalf. So from our perspective, they have a strong commitment, a binding commitment to buy the product for $60 million. We have plans that we discussed and I can assume what is planned, but there is no - it’s their decision how to opt their option, when to do that exactly.

And 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 [indiscernible] 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 would do small, but clinical studies because again, we are talking about in this indications of part of milligram. With NexoBrid, we are putting grams and grams of this API on patients. With these injections, we need to put like 0.5 milligram. All the preclinical program that supported NexoBrid approval, all the big studies, the chronic wound studies, the segmental studies was done with injecting IV, because you cannot burn an animal in a preclinical study. So I believe that we have a lot of the support that are needed and particularly 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 will try to submit a protocol and start discussion with FDA about the clinical program, all this opportunity.

And then finally, I am sorry if I missed it, earlier in the call, but is everything on track with the enrolment in the Phase 3 in the US?

Yes, we have the center of hope and we are recording patients, we are implement more and more and been to educate the center, 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 ground, primarily focused on recruitment for this - going to the center and sending if they have any issues trying to overcome them. We are going to meet - we have conducted an investigator meeting earlier this year in the US, we have conducted recently an investigator meeting, we are going to meet the investigators the American Burn Association Conference. So I hope everything will be on time and we will be able to meet our plan.

Okay. Just one final question. As far as the outlook for commercializing EscharEx. In a recent conference that you went to, did you set a field for what you expect your commercialization tactics to look like and when you were to strike a distribution agreement, you think the best timing of that would be?

Well, generically I would say - generally, looking at the program looking forward would be - let’s say that we meet with FDA, assuming that FDA agrees with - we can work with FDA in pivotal program, we try to run this program through 2017, 2018, again, it depends if it’s one study or two. Looking at the p values of the sub-group analysis that I just presented, with the p value of 0.024, 0.028, from an efficacy standpoint, if you want to follow a Phase 2 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 a lot of exposure even more so in burns. So we will need to discuss and work with FDA, hear FDA recommendations on how they see this program 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 view the file. So we are talking about a possible launch I would say in 2020 or 2019, or something around that time depending on the pivotal program. The chronic wound market, unlike the burn market is much less focused, 5,000 call 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 and then by relying in health fund and so on. And other strategy would be to partner with somebody that already has this kind of sales force and other possibility will be to do both because you can do a co-marketing, you can market - target part of the market and you probably would target another part of the 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 whenever it would make most sense, and would be relevant this is what we will be looking at. We still have time before we need to make this decision.

Thank you.

Thank you. There are no further questions at this time. I would 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 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.