MediWound Ltd. (MDWD) Q3 2016 Earnings Report, Transcript and Summary

Good day ladies and gentlemen, and welcome to the MediWound Q3 2016 Financial Results Conference Call. [Operator Instructions] As a reminder this conference is being recorded. I like to introduce your host for today's conference, Ms. Anne Marie Fields, Senior Vice President with LHA. Ma'am, please begin.

Thank you, Vince. 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 third quarter ended September 30, 2016. If you have not received this news release or if you like to be added to the company's distribution list, please call LHA in New York at 212-838-3777 and speak with [Karen]. 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 Forms 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, November 14, 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. 2016 to date has been a busy and productive time for MediWound highlighted by a number of important achievements with both our commercial and clinical programs. Commercially, this includes continued growth in the number of burn centers treating and the number of burn patients treated with NexoBrid, the growing conversion of usage into sales after obtaining funding for NexoBrid on the hospital level or on the national level such as in Belgium and Italy, expanding NexoBrid’s reach into important international markets, and growing support from the medical community highlighted in over 100 presentations and award winning abstract at premier conferences. We also made significant progress with our R&D programs. Notably, the result of positive top line data from our second Phase 2 clinical study of EscharEx to treat chronic wounds, the initiation of the second cohort of the study of EscharEx to provide patients with even more flexibility in using EscharEx in place and time that best suits their individual daily routine, and the advancement of our U.S. Phase 3 DETECT study, our pediatric study and our progress with our MWPC003 program. The progress we have made throughout the last nine months put us in a strong position to build on this momentum throughout the remainder of the year and into 2017. Let me now turn to a more detailed review of our progress beginning with our ongoing commercial progress with NexoBrid in Europe. As evidenced by our revenue gain in the third quarter, we are continuing to make progress converting awareness and interest in NexoBrid into usage and sales. We continue to focus our efforts on having more centers, integrate NexoBrid into the workflows, increasing the number of patients treated in those centers, and gradually increasing the burn area or the total body surface area, the TBSA, treated by those centers, as physicians gain more experience and confidence in the use of the product and ultimately moving from experimenting to usage and from usage to procurement at these centers. In line with our continued efforts, we see quarterly increases in the number of patients being treated and we are beginning to see that usage is gradually starting to turn into revenue. The progress we are making with adoption is largely the result of our focused effort on securing national, regional and local hospital funding, which enables us to turn usage into sales. We are keenly aware of the impact such funding has on adoption as we endeavor to establish NexoBrid as the new standard of care for debridement of severe burns. As we reported, we are very pleased to have the Italian Drug Agency approve the pricing and reimbursement conditions for NexoBrid for the removal of eschar in patients with deep partial and full-thickness thermal burns with pricing in line with the European list price. With national reimbursement now in place, we continue to work on formulary inclusion at the hospital and regional level in order to firmly establish NexoBrid as a standard of care in Italy. We continue to make meaningful progress with those efforts across Europe, and we are seeing more centers starting to buy NexoBrid in additional markets such as Spain and the UK. Another key component of adoption is enhancing awareness, interest and peer discussion about NexoBrid. Over the past 18 months we brought NexoBrid to the forefront of innovation in burn care. NexoBrid has been the subject of over 100 oral and poster presentations at every local, international burn conference, where leading clinicians demonstrate the benefit of NexoBrid in debridement and highlight its potential as the new standard of care in the treatment of severe burns. Given this success, we will continue to sponsor international, European national and regional burn conferences, and in fact in August this year, there were 14 posters presented in support of NexoBrid and EscharEx at the International Society of Burn Injuries meeting in Miami. This is an important meeting because it drove a diverse international audience of burn specialists, which leads me to our progress expanding NexoBrid into other global markets. Throughout the year, we have advanced our strategy that leverages our EMA marketing authorization to expand NexoBrid internationally. This year many of the participants at the ISBI came from Latin America, where we have partners in most of the major markets. These partners are in the process of obtaining marketing authorization, or as in the case of Argentina, have already launched. NexoBrid’s broad exposure and [endorsement] at the last international meetings, like the ISBI, support the local effort. International distribution partners from other regions have also submitted registration files in countries such as South Korea and Russia with more preparing to do so in the near future such as India and Japan. Some of these filings will provide approvals and launches in 2017, which we expect will further contribute to our top line. The ongoing international exposure NexoBrid received drives ongoing interest in the product as we pursue potential distribution partners in other important geographies. As always, we look forward to providing you with updates on this front. Finally, let me review the progress we have made with our clinical programs I will start with our ongoing US Phase 3 clinical study for NexoBrid, which is fully funded by BARDA. Following recent discussions with the FDA, we amended the protocol for our US Phase 3 study of NexoBrid to increase the Total Body Surface Area of patients eligible for inclusion in the study from 15% Total Body Surface Area to 30% Total Body Surface Area. This allows for the inclusion of patients with much larger burns and it is important because it supports our effort to broaden the label once the product is approved. In burns with large Total Body Surface Area, the early non-surgical removal of eschar has many potential benefits. Since maintaining the presence of a large surface of contaminated eschar on the patient for a longer period of time can result in wound deterioration, infection, scar and other sequela. Currently surgical excision of large surfaces of eschar result in substantial surgical burden on this very severe patient, involve massive blood loss, and is often limited by the availability or the lack of availability of the extensive donor size required or by such severe patient’s condition that might not withstand general anesthesia or the surgical burden. In these cases of large TBSA burns, being able to non-surgically remove the eschar early may offer patients and physicians a real breakthrough in the treatment of very severe burns. From a commercial standpoint, as the number of NexoBrid devices sold is a function of the burn area requiring debridement, having larger TBSA on the label would obviously also grow the sales potential. In addition, since DETECT is also a post-approval commitment study for the European regulators, we are able to obtain in tandem the EMA endorsement for such increase in TBSA in the study. This way the generated data could at the same time serve to support broadening of the European label from 15% to 30% TBSA as well. With the inclusion of patients with expanded TBSA, the FDA requires us to provide sufficient data also in this cohort of patients. The implementation of this change require us to submit certain protocol amendments and adjustments for approval by the clinical site [Indiscernible] to optimize the site selection and to do the training on the amended protocol. As a result, we now expect to have the acute top line data on the extended population in the first half of 2018. Let us turn now to a discussion of our progress with EscharEx, our treatment for chronic and hard-to-heal wounds. Earlier this year, we reported top line results from our second Phase 2 trial evaluating EscharEx for the debridement of chronic and other hard-to-heal wounds. The positive data in post-hoc analysis encourage us to advance this promising product in diabetic foot ulcers and venous leg ulcers, which represent a tremendous market opportunity as reflected by the result of the market research we conducted with over 200 healthcare professionals earlier this year, and which we previously shared with you. During the third quarter, we also had a clinical advisory board comprised of US and European experts to design our pivotal program, which was met with considerable enthusiasm. As planned, we will be ready to file the data package with the FDA and to request a meeting with the agency to discuss the pivotal program by year-end. We expect the FDA to grant us a meeting in early 2017 with the aim to have further clarity on our clinical program going forward in terms of study design, expected timelines and investment. We believe that on top of efficacy, safety and cost-effectiveness, convenience and compliance are very important in the outpatient home use indication for chronic wound care. To potentially achieve substantial market share, we aim to position EscharEx in a way that fits existing and future patient and treatment workflow, as well as the reimbursement program, while providing superior results. Therefore, we continue to invest our effort also for further convenience. After successfully completing the second Phase 2 study in 73 patients, we have initiated a second cohort of patients to demonstrate safety over extended period of application of 24 to 48 hours to further support the product convenience application, which we believe will enhance compliance. In this second cohort, we are recruiting patients from [Indiscernible] at two timeframes randomize the patients to two study arms, EscharEx and hydrogel vehicle at a ratio of 2:1. As such, we expanded this study from 24 patients to 32 patients and expect recruitment to be completed in the first quarter of 2017 with top line safety data in mid-2017. In tandem, we are very pleased to report that we have been working on a second generation of EscharEx, which we refer to as [TX2]. This advanced formulation is designed to have several advantages. For one, based on our current studies, [TX2] demonstrated even higher potency in lower doses, which should further contribute to EscharEx efficacy and tolerability. In addition, EscharEx 2 will be even easier to prepare and administer, which will further support compliance by the patient or caregiver. Last but not least, we have also filed a new patent application for [TX2] that we believe would further expand its exclusivity. We have already discussed the [TX2] formulation with FDA, conducted the manufacturing and control as well as the [Indiscernible] recommended by the agency. We now intend to discuss with the PDA the pivotal clinical program of [TX2] in the coming planned FDA meeting. I would like to emphasize again the important distinction of our EscharEx indication, which is for debridement of wound versus older technologies that have been in development or developed aiming to directly close wounds. As mentioned, EscharEx is complementary with the numerous marketed technologies that aim to close this wound. We see a number of potential synergies with this product and expect that they will be consequentially in clinical practice. With over 1.3 million patients with DFU or VLU in the US alone who undergo debridement, EscharEx represents a very meaningful market opportunity, which is one of the reasons why we are excited to advancing our clinical plan. EscharEx continues to be an important next step in our strategy to build shareholder value by leveraging our proprietary technology and we look forward to keeping you apprised of our progress. With that overview of our commercial and clinical programs, let me turn the call over to Sharon Malka, our CFO, for a review of our third quarter financials. Sharon?

Thank you, Gal and good morning everyone. As you have heard from Gal, we continue to make important progress throughout the third quarter that positions us to build on the momentum for the remainder of 2016 and beyond. Most notably, we were pleased with our financial performance, which is highlighted by growing revenues as NexoBrid adoption is increasing and the use of NexoBrid starts converting into sales following obtainment of reimbursement, combined with disciplined budget and with continued support by the US clinical programs by BARDA. More specifically, we are pleased to report that revenues for the third quarter of 2016 increased to $518,000 from $102,000 a year ago and from $356,000 in the second quarter of 2016. Revenues for the first nine months of 2016 were $1.1 million, up from $300,000 for the first nine months of 2015. During the first nine months of 2016, we delivered EU customers approximately 3,400 units of NexoBrid, of which about a third were part of our sampling program. This compares with approximately 2600 NexoBrid units shipped in the first nine months of 2015 of which about two thirds were part of our sampling program. Net research and development expenses for the third quarter of 2016 were $2.4 million, which is in-line with our budget and compared with $0.8 million for the third quarter of 2015. The increase was primarily due to an increase of $1.2 million related to expenses for NexoBrid clinical trials and about $0.8 million for EscharEx and product candidate 003 development. The increase of gross R&D expenses for the third quarter of 2016 was partially offset by an increase of $0.5 million participation from BARDA and the Israeli office of Chief Scientist. Sales, marketing and G&A expenses during the third quarter of 2016 saw a modest decrease to $2.6 million from $2.8 million in the 2015 third quarter. Operating expenses for the first nine months of 2016 were $15.5 million compared with $12.9 million for the first nine months of 2015, again primarily due to an increase in net R&D expenses of $2.3 million and about $0.3 million increase in non-cash share based compensation expenses. This increase in net R&D expenses was comprised of $3.7 million increase for NexoBrid clinical trials and an increase of $2.4 million for EscharEx and product candidate 003 development. This increase was offset by an increase of $3.6 million participation by BARDA. The net loss for the third quarter of 2016 was $5.7 million or $0.26 per share compared with a loss for the third quarter of 2016 of $3.8 million or $0.17 per share. For the nine months ended September 30, 2016, the company had a net loss of $17 million or $0.78 per share compared with a net loss of $14.3 million or $0.66 per share for the same period in 2015. Adjusted EBITDA for the third quarter of 2016 was a loss of $4.2 million compared with a loss of $3.6 million for the third quarter of '15, while adjusted EBITDA for the first nine months of 2016, was a loss of $12.9 million compared with a loss of $12.1 million for the first nine months of 2015. Turning now to our balance sheet. As of September 30, 2016, the company had cash in short term deposits of $34 million. And the net working capital of about $32.6 million. During the first nine months of 2016, we remained on budget utilizing $12.2 million in cash to fund operating activities which was somewhat offset by license fees paid by certain distributors. Although BARDA contract continues to positively affect our financial, by offsetting NexoBrid development cost, and at the later stage, we expect it to have positive impact on our financial by contributing to revenue as a result of the procurement commitment. Consequentially, we now expect cash use for 2016 to be in the lower end of $17 million to $20 million. With the financial overview, let me turn the call back to Gal.

Thank you for that, Sharon. In conclusion, we are pleased with the progress we have made in both our commercial and clinical programs. We expect to build on these achievements in the months and year ahead as we work to increase commercial revenues from NexoBrid in Europe and newly launch international market to advent our clinical development plans for NexoBrid and EscharEx in the US and to pursue other opportunities for growth and expansion with our novel proteolytic enzyme worldwide. And now operator, please open the call for question?

Yes, sir. [Operator Instructions] Our first question is from Raj Denhoy of Jefferies. Your line is open.

Hi, good morning.

Hi, good morning.

Wonder if I could start with some of the clinical trials that you've underway. It sounds like you've pushed out the timing of both the EscharEx second cohort into 2017 as well as the NexoBrid trial as well, given the expanded TBSA. I just wanted to confirm if those are in fact true that both those trials are not getting pushed up by a little bit?

Yes. As important, because we will lead now to record patients on the larger TBSA with NexoBrid, on one hand it gives us the access to a much broader label, on the other hand it will require us to make some submissions locally to because of our bid and to do some adjustments to the protocol and to retrain the centers on the larger brand and therefore we believe that it will postpone the availability of the topline results in this pool of patients. And also EscharEx, I think this is more technical, first of all the second cohort of patients is just to generate for us a safety data and to see, to provide this data of putting the product on patients for 24 hours and 48 hours and it's not a limiting steps for us for going to the FDA and discussing the pivotal program which is what we see as the critical pact going forward. Because this study is being conducted in several side in tune indication, in two arm and in two time frames, we thought that it might be wise to increase the sample size by couple of more patients, six more patients from 24 to 32 and therefore we believe that the availability of that will be a little bit postponed. We have to remember that after we finish to recruit the last patient, we need to drive the patient which takes about week or two, then we have to wait for 12 months, for 12 weeks for the wound to close and then we have to wait for another two weeks just to reconfirm the wound is closed or something like that. So, on this follow-up period prolonged timeline of what could it been a very short study. But as I mentioned, it's not a limiting step for us to go to the FDA or push forward our pivotal program anyhow.

Now, that's helpful, Gal. And then just another kind of clarification. I think last quarter you said the first half of 2016 you shipped 2800 units of NexoBrid. If I'm not mistaken, I think this quarter you said 3400 now for the first nine months. Is that the right number, 3400?

Yes. The -- nine months it's 3400 for European customers.

Right. And I guess the question now is -- the first and for the first half of the year was 2800, so roughly 1400 a quarter and this quarter was a little off trend there. So, I'm curious was it just seasonality into the summer months or something else that caused the trend to bend down a little bit in terms of the unit ship?

I don’t remember but I have today, figures that you mention for the six months that forcibly it kind of see we just put those on the lever to the EU market, but during the second quarter of 2016, where delivered also to Argentina for the launching of Argentina. So, I ask to verify what was included within the say 2800, 100 that you mentioned.

Okay, that's helpful. We'll follow-up after. And then just a last question I had was just on the results for the first three quarters of the year, even if we're looking back until last year, it's been a fairly linear progression in terms of the revenue increasing kind of modestly each quarter. And I guess as we think about the development of this market and certainly there are lot of activities that you guys are doing on the NexoBrid side. But are there any events that you look to over the next 12 to 18 months that could really be sort of a catalyst or an inflection point in the sense of that revenue growth perhaps starts to accelerate from this kind of very linear level that we seem to be seeing right now?

I think that the main thing at this stage would be to get funding. So, for example, we got the national level funding in Italy in the end of the second quarter and now we have to grow open by province to get this thing into the formulary of the region and then the hospital. So, this like a technical process that we have to run which would take throughout Italy and on several quarters and I think as once we get this thing done and we can actually utilize or the usage of NexoBrid in Italy in the topline, that would be something that will effect this trend. Same thing about other country that we just now see to starting to contribute like Spain, like England that is again in England it's I can go to visit if you like to general -- again formula in both those hospital by hospital. So, we believe that this things once they gain more momentum because we're in the walks for these things, would affect significantly the revenue line. And the most important thing on a global level I would say, in addition to by the way in procurement of the international market because we expect South Korea, Mexico and maybe additional market to start in getting the approvals in launching. But the most important obviously would be BARDA, which has a $60 million commitment. And again, if the BARDA decision went to procure this product, our estimation is that they will most probably start in 18, 19, 20.

Right. But I guess, I know you don’t like to give guidance around numbers and things but around revenues in particular. But if we think about again this year has been 300,000 in the first quarter, 400,000, 500,000 this quarter. Are we at a point that given everything you've described in terms of Italy and the other markets in Europe, Argentina, Japan, that we could start to see the growth, in the sense the momentum you describe starts to pick up as you move into '17 and ultimately '18, '19 to get part in things. But really just trying to gauge the trajectory of the business without I know you without asking you to give guidance but not going to do that, but just in terms of how you're thinking about the numbers as we move into '17?

Yes. I think in general, as we see, Europe is very fragmented, the processes there differ from country to country, from province to province, from hospital to hospital, and definitely takes time until you're able to like give the result into system and stop running. And I think that if we look at, again, what we can look at is other comparable in the market of I don’t want to give name but if you look at the biggest wound care products in the world and managed by the biggest wound care companies in the world and you look at the entry pairs, in most cases you'll see that it takes several years before you can actually get to this infliction point where I am both of this in place, funding is in place, and then it starts to move in steeply and climb.

Okay. That's helpful. And then congratulations on the progress thus far.

Thank you, very much.

Thank you. Our next question is from Imran Zafar of SunTrust Robinson Humphrey. Your line is open.

Hi, good morning. Thank you, very much for taking my question. I had a first follow-on question to Raj is about the vehicle trajectory in for NexoBrid. Obviously, the trajectory is taking longer than we had anticipated a few quarters ago just in terms of reimbursement and changes in practice patterns and maybe even lesser percentage of burns that are surgically debrided. Is there any strategic change in terms of maybe focusing more resources more on sort of the 10 to 30 hospitals in Europe that are your highest volume centers or is your commercial strategy kind of with the one change from what it spend previously? Thanks.

Thank you for the question, Imran. I think that what we see, that we went into the European market and there are about 130 burn centers in the Europe. And we by now trend about 80, 90 centers out of them. And through these centers that divide between the countries, we see who are the earlier adopter, who are the center that are moving faster and obviously we are in reshifting our focals to the one that move faster in connection make a change earlier. So, you're absolutely correct that going forward, the more we go forward we focus more on the one that we can actually get a contradict on and we can start to see revenues being generated. And we left this snowball this clinical by peer-to-peer discussions, by the conferences, by a further detailing to expand into the other centers. I think in general, there are three kind of centers, they wanted to early adopters, they want to be fitting on the fans and they move more forward when they see the other doctors want, and then there are few that's just happy with their ways and it's very difficult to convert into anything else from what they are always used to. So, I think we have identified although the European thing, so these are exactly the centers that has started to buy in England, they wanted us to buy in Spain, and obviously in the other market as we've been more saturated in like in Germany and more these and others.

Okay, thank you. And then one question on, I'm sorry go ahead.

Yes. So, as it, just to recap I mean you're absolutely right, we are going to focus more in these centers and we see that in these centers we are capturing already in I would say a significant market share of the patients, of the eligible patient.

Okay. Thank you for that. And then a quick question on EscharEx. I think you mentioned you had a recent meeting with your medical advisory board. I was just wondering what your latest thoughts are, vis-à-vis end points, size of trial, timing, etcetera for the clinical in study?

Yes. Well, first of all I can that the clinical advisory board was very in educating and I think we got very good feedback and I think the physicians were very pleased with these development. We discussed several alternatives and all kinds of possibilities to go forward with that. I think it would be wise to discuss them with the FDA. We have our views, we want to learn what our FDA's views and to see where they're aligning where we need to do further education provide for that and so on. So, these are the fee that we are planning to ask the FDA. And once we have a more clarity from FDA, we would be in a better position to communicate what of the designs, what are the timelines, what kind of investments will be required to bring this exciting opportunities to the market.

Okay. Thank you.

Thank you. Our next question is from David Marez of Wells Fargo. Your line is open.

I don’t know if you've addressed this already as I jumped on a little bit late. But can you give a little more detail on how you came to the decision to expand the protocol. Was that at your suggestion or the request by the FDA? Thank you.

Thank you, David. It was our initiative and because of several reasons. 1) We are always doing the paper study. So, with 70% of the authority out there, it makes much sense to get a large a label as you can, so this is one reason. 2) The second reason, it also makes a lot of sense to brought them because we know in the Mass Casualty Event we cannot anticipate what will be the level of the variety of injuries and we do expect that more severe patients would be affected. So, it makes sense to investigate that. 3) The third thing is, that you have also wanted to get this information in order to allow us to expand the label in Europe, because as you remember our Phase 2 study in Europe was also up to 30% TBSA and not 15% TBSA. So, we wanted both studies to target the same population so that we can have all these information both for the FDA and for the EMEA at the same effort. 4) And last but not least, as I mentioned, from medical standpoint, we truly believe that in the larger brands, NexoBrid has even bigger advantage. Because these are exactly the patients where there is not enough donor side to cover them, where you lose a lot of blood when you try to excise them. Where, many of these patients can't even grow to a no while because you can't put them under general anesthesia because of the situation, because the status there, the overall condition. And because of all these reasons, we saw that it makes while that it's worthwhile maybe to in spend a little bit more time but to get a much broader indication.

Great, thank you very much.

Thank you. Our next question is from Jay Olson of Oppenheimer. Your line is open.

Hi, thank you for taking the question. And congratulations on the progress. Just going back to the expansion of the eligibility criteria for the Phase 3 DETECT study. I understand why you're expanding it to 30% TBSA. But could you help us understand the timing, why did you decide to expand it now and not at the beginning of this trial, it especially when the European study was enrolling patients with up to 30% TBSA. Why did the US study start with 15% and then expand to 30 once the trail is already underway.

The main thing is that we have to walk with FDA to convince FDA to allow us to do that. And FDA would come in from a very or they had the conservative approaches of what is called the stage wise development. And we believe by the way that there are many ways to investigate NexoBrid in large grounds, we believe that there is innovating investigating NexoBrid in children. We believe that there is in order to investigate NexoBrid in what is called Burn Induced Compartment Syndrome, which is another problem that burn patients have. And I think for the discussions with FDA, to provide them with more data through exposure of patients in Europe through DSMB and recommendation and we are enabling them FDA to feel more comfortable and allow us to go more in to a broader population at the same time.

Okay. Thank you, for that. And then in Europe the studies were conducted with TBSA up to 30% and yet the European regulators limited the label to patient with only up to 15%. Was that just a matter of the number of the patients and if so how many patients do you need with TBSA up to 30% in order to expand the European label?

I think, well, in Europe, it wasn’t so much a number of patients. If you look at the clinical results of the patient in the upper bracket, the patients between 15% and 30% TBSA, you see that the safety profile is comparable between the and the efficacy data isn’t in -- and again a superior or better in the next patient as it was in the lower bracket of 15% to -- zero to 15% TBSA. The main, the only reason -- the main reason I would say that the so the EMEA invitation that will come from the clinical perspective. It came from the pre-clinical perspective, it happen to be at by the time that we submitted the file in Europe which was in around 2010, we only had 15 data pharmacokinetic data in patients with one application of NexoBrid. Now, when we started to develop NexoBrid, we had to follow some kind of a guideline or some kind of a medical practice, and it happen to be that usually you don’t do surgery to a patient of more than 15% TBSA in one go. So, we follow these kind of pattern. So, if a patient has up to 15% TBSA, he would be bothered with a single application of NexoBrid. If a patient has more than 15% TBSA, he would be applied with two applications of NexoBrid. Now, when we submitted the files, we had PK data only on patients that were treated with one application of NexoBrid and then wanted to see the peak of profile, they want to see if the second application has the similar Cmax, Tmax, t½ and so on. And this is why they limited it. This study along with the study that we already conducted in 30 some patients in Europe would exactly provide this information and this is exactly what now also FDA wants to see. They not only want to see PK in patients up to 15%, they want to see also PK in patients of more than 15% and this is exactly why we believe that because we need to recruit a certain patient then it would in, more limitations and longer the time it takes, but maybe, I mean, I think the main thing is many second come things like moving to go again to [Diabase] leading to maybe close centers that have more small patients in open centers that have more, that have larger patients and needing to retrain the patient the centers because that's the result that we mentioned before. If you're doing PK analysis and you're looking at two applications, when you have to take blood in different time points because you are limited by the overall amount of blood which you can take from patients. So, all these technicalities is just going to take a little bit of time to implement and this is why we believe there will be a little bit of delay.

Okay, that's very helpful. Thank you. And then can you just give us an idea of the magnitude of the increase in patients that will be eligible. Does this double the number of patients that would be eligible for NexoBrid or more than double?

I think in terms of the number of patients doesn't double number of patients because they are less a larger patients been in smaller patients but in terms of commercial potential it does, because we send while per TBSA. So, for us to treat one patient with 20% TBSA, exact treating four patients we'd 5% TBSA. And I think in and also a suggestion to that is a question of maybe this is also an answer for us, one way to drive cells is to increase TBSA. And that's again a process that we see in Europe that center stop with smaller TBSA and only when they get comfortable they start to increase the TBSA and increase the TBSA from a cell 10 point, that's a big difference. Because, if you move the TBSA from 3% to 9%, you triple your cell.

Okay, great. Thank you, very much. I appreciate you taking the question.

Thank you, very much for asking the question.

Thanks. We have a follow-up from Imran Zafar of SunTrust Robinson Humphrey. Your line is open.

This is Bruce. How are you? We always kind of thought that burn it would be a secondary market compared to chronic wound, like 35% of patients to code and for debridement or 35% to 40%. You are seeing in practice, hurdles, there is reimbursement hurdles in Europe clearly. In many new technologies are adopting an S-curve shape. And the question is in Europe for burn, where do you think the inflection along that S-curve is, is it two to three years, three to four years, four to five years, just so that the street could kind of set their expectations properly?

Yes. The thing that in general, what we learn, I mean, we are looking into the future. So, one way to look into the future is to look into the past and see what happened with other technologies. What we saw that in leading technologies that are disrupting that are a big change, not in other acknowledging that change to a cover, it usually took them before between let's say five, four to five, three, years at least before they can actually see this hockey stick starting to move up. I think you are just buying being fragmented to so many countries and the regions and so on put another level of complexity on that. So, trying to project the future which is the, so the best actually that I have is the past. And I would say most probably this would be the same.

And given that, what does that imply for your commitment, financial commitment to commercialization in Europe. And the sufficiency of your cash how long before the cash burn becomes problematic requiring arrays. And I have one more follow-up.

Hi, Bruce. We actually reported we are utilizing about $4 million per quarter, means that is probably will have about $30 million in cash by year-end '16. This is sufficient for about two years of activities, '17, '18, taking into account this ramp up, expected ramp up in Europe which as Gal mentioned it will be at least in the next two years. That's still more that. With that regard, as additional triggers that can seek and benefit some more cash. For example, the dilatation of the procurement commitment of BARDA. Means, if BARDA will starting of the procurement in 2018, so it can provide us with additional few million or another few quarters in terms of cash use for example.

And then --.

Just to add to that, Bruce. I think in general what we would like to do as we have BARDA support for the NexoBrid project and as BARDA also has options in other possibilities of procurement and for the R&D and so on. We want to get the situation and as we focus on Europe on the center that can actually drive the self, I think going forward we will be looking at having the NexoBrid project in a situation where the market in revenues would offset, at least the investment and then will grow the investment. And the R&D expense would be mainly funded by BARDA, so that our resources would be a top list on developing the EscharEx program that which would require most of our R&D expenses.

And speaking of EscharEx seems to be the great source of potential value creation. Just given the size of the opportunity. And should we be thinking about EscharEx as side of kind of a convenient way to kind of get 70% to 80% total debridement into couple of weeks, Santos like maybe that add level, maybe a little less at four to six weeks and then not simply as replacement for Santos but rather in combination with sharp debridement so that you have multiple outpatient facility as well as home and nursing care application?

Thank you for the question. I think that we can share with you what we learned in the market study that was conducted with 230 healthcare professionals. What they've said in general is that there are three main ways to debride wounds in the US today. About 50% 60% of the market is being debrided by sharp debridement in which the physician has the patient on sitting in the office and he actually cuts his patients. And the advantage of that it's that be effective, the disadvantage is that these are odd patients, they don’t heal well, they take anticoagulative drugs. So, it takes, there are some risks involved in that. And the main reason that physicians are doing that is because more than 100,000 of these patients are getting soon into patient as real. So, they don’t want to prolong these debriding process. The other two alternatives that they have is to use enzymes which according to the literature seems to take six to eight to debride these wounds, and during this six to eight weeks the patient has to either come to the clinic or nurse has to come to his house for two three times a week. All they can use the less expensive autolytic alternative like hydrogel and others again, prolongs process of six to eight weeks. On one had with some risk that I mentioned before and on the other hand big burden to insurance companies meaning to send these measures to prolong a period of time. So, the aspiration is fine. So, if EscharEx as in the clinical studies can debride most of these patients in a week, maximum two weeks. How would that fit into your practice? And what they said is that in terms of the cell debridement, they believe that if you have a product that you can give a patient and say to him both of them in it and show you how to use it, come back in three four days to the clinic and always see that wound is debrided or on the way to be debrided. And that either send the patient home for another couple of days with EscharEx or they can just remove whatever is left there or they can start with the moving what's easy to remove without fighting with the wound and then completely block it with EscharEx. They believe that EscharEx could be an add-on cell debridement and some replacement to cell debridement and we take a big bite out of this portion of the market. That's for the and dramatic an autolytic debridement. They question whether some of them would continue to use something for six to eight weeks, if you can get the EscharEx in one week or two, especially when the insurance companies instead of sending nurses for six to eight weeks, could send the nurse for a week or two, which would reduce a big burden of their expenses. And they on the other hand they would say you're not going to expect one of the trend of the market, people will always use less expensive alternatives. But although they believe that EscharEx should it meet its startup product profile as we currently seen in the studies already conducted. We take a substantial part of this market. And because this market because when the market research seems to indicate that there are 1.3 million American undergoing debridement and the cost of debridement is $1000 to $2000. So, we're talking about a very lucrative market. So, if we can take a substantial market share out of that, that's going to be very exciting.

Thanks, so much.

Thank you, Bruce.

Thank you. At this time, there is no other questions in queue. I would like to turn it back to Mr. Gal for closing remarks.

Thank you, very much. Thank you, for your questions and thank you for your continued interest in MediWound. We look forward to updating you again when we report our fourth quarter and full-year 2016 result. Have a good day. Thank you, everybody.

Ladies and gentlemen, thank you for your participation in today's conference. This concludes your program. You may now disconnect.