MediWound Ltd. (MDWD) Q2 2017 Earnings Report, Transcript and Summary

Good day, ladies and gentlemen, and welcome to the Second Quarter MediWound 2017 conference call. At this time, all participants are in a listen-only mode. Later we will conduct a question-and-answer session and instructions will be given at that time. [Operator Instructions] As a reminder, this call is being recorded. I would now like to turn the call over to Bob Yedid. You may begin.

Thank you, Operator, and good morning, everyone. Earlier today, MediWound issued a press release announcing their second quarter 2017 financial results and business update. You may access the release on the website under Investors tab. Leading the call today is Gal Cohen, President and Chief Executive Officer of MediWound, who will provide an update on the company's programs and review upcoming milestones. Then we will hear from Sharon Malka, Chief Financial Officer, who will summarize the company's financial remarks. After the prepared remarks, we will open the call for Q&A. Before we begin, I would like to remind everyone that statements made during this call including the Q&A session relating to MediWound's expected future performance, future business prospects for future events or plans are forward-looking statements as defined under the Private Securities Litigation Reform Act of 1995.Although the company believes that the expectations reflected in such forward-looking statements are based upon reasonable assumptions, actual outcomes or results are subject to risk 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 statement whether as a result of new information, future event or otherwise. Participants are directed to the cautionary note set forth in today's press release as well as risk factors set forth in MediWound's annual report filed with the SEC for factors that can 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 expressively prohibited without the written consent of MediWound. With those remarks, at this time I like to turn the call over to Gal Cohen. Gal?

Thank you, Bob, and good morning, everyone. It is a pleasure speaking with you today on our second quarter call. We are continuing to build on the momentum we saw in Q1 and moving forward in our clinical development programs and our commercial plans. Let me start with an update on our EscharEx program. EscharEx, our topical biological drug being developed for debridement of chronic and other hard-to-heal wounds such as diabetic foot ulcers and venous leg ulcers, we believe that the development risk of EscharEx is lower and at the pivotal program probability of success is higher for 2 main reasons. First, EscharEx is based on the same enzymatic breakthrough technology as NexoBrid, which has been proven effectively and selectively debriding severe wounds in rapid and non-surgical manner in thousands of patients. EscharEx is supported by a wealth of developmental data from NexoBrid, which was approved as a drug in Europe, is in a Phase 3 study in the U.S. and is being developed by a team with proven track record in getting a wound care drug approved. Second, we recently agreed with FDA that the primary endpoint of the EscharEx pivotal program will be the incidence of complete debridement and that wound closer will be measured as a safety outcome to document that EscharEx has no deleterious effect. Both outcomes have been successfully confirmed by the recent Phase 2 study results we published earlier this year. FDA's agreement on the primary endpoint of incidence of complete debridement, which was already proven in our Phase 2 study, is a meaningful advantage for MediWound's pivotal program and its probability of success. We also believe that EscharEx is an excellent commercial opportunity for two main reasons. First, our topical biological drug addresses a large and growing market with over 8.7 million people who suffer from chronic wounds, and importantly, 1.3 million patients with diabetic foot ulcers and venous leg ulcers that undergo debridement in the US alone every year. With an estimated average cost of debridement in DFUs and VLUs of $1,000 to $2,000 per patient, EscharEx initial market opportunity in the US is estimated at over $1 billion without taking into account other additional markets such as Europe or other additional indications such as pressure ulcers. Second, EscharEx has a commercial validation in the US, as topical enzymatic debridement drugs are currently being prescribed by physicians, used by caregivers and patients, are being reimbursed by insurance companies under existing codes and have annual US sales exceeding $340 million. These are the main reasons why we are confident in our decision to invest in the development of EscharEx and strongly believe that it represents a significant commercial opportunity with the high probability of success that will generate value for patients, caregivers, healthcare systems and our shareholders. We have already reported positive results on our first cohort of 73 patients in our EscharEx Phase 2 study using a daily application of four hours. In our second cohort of this Phase 2 study, we have completed the recruitment of 38 patients, which is six more than the planned 32 patients in response to patients who asked to participate and were in screening at the time of the recruitment of the 32nd patient into the trial. In this cohort, EscharEx was applied for 24, 48 or 72 hours to demonstrate safety over an extended period of application to provide a wider range of choice for caregivers and patients to change dressings from as often as everyday to two to three times a week to fit into their routine and lifestyle and thus enhance convenience and compliance. The application frequency and dosing data from this second cohort will further support requirements for our future BLA filing. We expect to report top line results from this second cohort following a [indiscernible] meeting in early September. In parallel, we're working with several U.S. expert groups that specialize in different aspects of the Phase 3 study designs in order to optimize the pivotal program and we plan to initiate the EscharEx U.S. Phase 3 pivotal program in the first half of 2018. We believe EscharEx will become an important product in the wound care market and an important asset for MediWound and we will keep you apprised of our progress. Moving on to NexoBrid. As many of you know, MediWound was awarded a BARDA contract originally in September 2015 for the advancement of the development and manufacturing as well as for the purchase of NexoBrid stock as a medical countermeasure as part of BARDA preparedness for mass casualty events. We are excited to announce that BARDA had upsized and exercised its option to further fund research and development activities to expand NexoBrid indications. Under the amended contract, BARDA has more than doubled its committed NexoBrid R&D investment from $24 million to $56 million, an increase of approximately $32 million of committed funds. In addition, BARDA has a $10 million option to fund further R&D activities .BARDA also maintained its contractual obligation to procure NexoBrid for $16 million prior to marketing authorization subject to emergency use authorization and an option to purchase more NexoBrid for up to $50 million. This brings our total deal size for R&D and procurement to up to $132 million of non-diluted funding. The upsized BARDA contract will fund the previously committed development activities to support the submission of a biological license application to FDA for NexoBrid for the use in thermal burn injuries, including the ongoing DETECT U.S. Phase 3 study in adults and in addition the upsized BARDA contract will now fund the Company's ongoing pediatric Phase 3 study and its planned extension to include U.S. pediatric burn centers as well as additional NexoBrid development efforts. This upsizing of the BARDA deal means that the Company has fully funded the NexoBrid development program with no need for additional financing for NexoBrid. Our Children Innovative Debridement Study, that we call CIDS, is an ongoing Phase 3 multicenter, randomized, controlled, open label study evaluating NexoBrid's safety and efficacy versus standard-of-care in children with burns aged 1 to 18 years. In our recent meeting with the FDA, the agency recognized the unmet need for safe and effective treatments for pediatric patients and agreed on the importance of including U.S. pediatric patients in our NexoBrid pediatric Phase 3 program. We have submitted the CIDS Phase 3 protocol to the FDA and are gearing up to open additional clinical sites at US pediatric burn centers in addition to the existing sites that are ongoing in Europe. The extension of the CIDS study to the US will allow, one, more US centers to gain experience in the use of NexoBrid towards preparedness and most importantly future market entry; two; add it to the recruitment efforts of the ongoing CIDS Phase 3 study; and three, generate supportive data towards a US approval of a pediatric indication. Looking ahead, we believe that the US market will be a substantial market for NexoBrid and will have a faster sales ramp than Europe for the following reasons. One, the US is one market with one language and predominantly one reimbursement system, whereas Europe is comprised of many different countries and a fragmented reimbursement system at the national, regional and hospital level. Two, by the time NexoBrid enters the US market, about 25% of the US burn centers will have had exposure and experience through the DETECT and the CIDS Phase 3 programs. Three, the US launch will benefit from the gained experience of treating thousands of patients in Europe and our deep body of scientific evidence supported by hundreds of independently published abstracts presented at premier burn conferences by peer burn specialists from around the globe. Four, BARDA's efforts have already raised awareness of NexoBrid at US burn centers through its mass casualty event preparedness training. We believe it is important for BARDA that many US burn centers will use NexoBrid in routine as it will allow the trained centers to come into play in case of a mass casualty event in the United States. We are also pleased to report that our commercial and market exercise efforts have been supported by several recent publications in general across Europe on the pharmacoeconomic benefits of NexoBrid. In Italy, for example, an independent data showed that NexoBrid reduced the average treatment cost by more than EUR5,000 compared with the standard-of-care. In Germany, a pharmacoeconomic study showed reductions in cost of treatment of up to 30% with NexoBrid versus standard-of-care. We are pleased to see validation of NexoBrid cost savings by these independent sources and expect to see more publications of such independent studies in additional markets.In addition to the above, we are also pleased to announce that over 40 independent abstracts on NexoBrid from all over Europe have been accepted for presentation at the upcoming European Burn Association Conference in Barcelona on September 6 to 9, 2017. We invite analysts and investors to attend the European Burn Association Conference to get a firsthand impression of the magnitude of the revolution in burn treatment since the introduction of NexoBrid in Europe. Finally, as announced a few months ago as we are getting closer to U.S. market entry with NexoBrid and to the initiation of the EscharEx U.S. pivotal program, I am pleased that we have made 4 new additions to our board. We believe that reconstituting the board with seasoned executives in U.S. wound care industry will contribute to our strategy of maximizing the potential value of NexoBrid and EscharEx and will provide important insight in the assessment of additional strategic venues to create the greatest value for our shareholders. With that overview of our commercial and clinical programs, let me turn the call over to Sharon Malka for a review of our 2017 second quarter financials. Sharon?

Thank you, Gal, and good morning, everyone. We are pleased with our financial performance in the second quarter of 2017, which is highlighted by growing revenues as NexoBrid adoption in Europe is increasing, combined with a disciplined budget and with the continued support by BARDA. More specifically, we are thrilled with BARDA's increased commitment to NexoBrid as BARDA's increased financing will now fully fund our development programs for NexoBrid and substantially reducing the requirement for MediWound's investment in these programs. Moving forward, we expect it will enable us to focus our resources in funding and advancing our development program for EscharEx. Turning now to our financial results, we are pleased to report that revenues in the second quarter of 2017 increased 93% to $687,000, up from $356,000 in the prior year's second quarter. Gross profit for the second quarter of 2017 was $0.2 million compared to a gross loss of $0.1 million in the second quarter of 2016.Research and development expenses net of participations for the second quarter of 2017 were $1.7 million compared with $2.9 million for the second quarter of 2016. The decrease in research and development gross expenses was primarily due to a decrease of $1 million related to NexoBrid and EscharEx clinical trials and EscharEx non-clinical development, while participation by BARDA increased by $0.2 million. Selling, marketing and general and administrative expenses in the second quarter of 2017 decreased $1.5 million to $2.2 million from $3.7 million in the second quarter of 2016. This was primarily due to a reduction of $1.1 million related to marketing expenses associated with launch activities and $0.4 million decrease in non-cash share based compensation. The operating loss for the second quarter of 2017 was $3.7 million, down 45% from $6.7 million in the second quarter of 2016. The decrease was primarily due to improvements in gross margins and a decrease of about $2.7 million in operating expenses compared to the second quarter of 2016. The net loss for the second quarter of 2017 was $4.5 million or $0.20 per share compared with a net loss of $7.5 million or $0.34 per share for the second quarter of 2016. The decrease was as a result of the aforementioned decrease of $3 million in operating loss. The adjusted EBITDA for the second quarter of 2017 was a negative $3.2 million compared with a negative $5.7 million for the second quarter of 2016. A reconciliation of the adjusted EBITDA to get net income is included in our press release we filed with the SEC earlier this morning. Looking at the first half results versus prior year, revenues for the first half of 2017 were $1.2 million compared with $0.6 million for the first half of 2016, an increase of 101%. The gross profit for the first half of 2017 was $0.4 million compared with a gross loss of $0.2 million in the prior year period, a change of $0.6 million. Net loss for the 6 months ended June 30, 2017 was $8.8 million or $0.40 per share compared with a net loss of $11.3 million or $0.52 per share for the same period in 2016. The decrease of $2.5 million in net loss was attributed primarily to a decrease of $3.3 million in operating loss primarily due to improvement in gross margins and a decrease in operating expenses compared to the prior year period, which was partially offset by an increase of $0.8 million net financial expenses which was largely comprised of non-cash re-evaluation of contingent liabilities and changes in foreign currency exchange rate. Turning now to our balance sheet. As of June 30, 2017, the company had cash and short-term deposits of $20.9 million and this compares with $30 million as of December 31, 2016. We remained on budget, utilizing $9.1 million in cash to fund operating activities during the first half of 2017. Throughout 2017, we will continue to invest primarily in research and development efforts for NexoBrid, which is now fully funded by BARDA, and for EscharEx and chronic wounds. As a result of the increased funding by BARDA following upsizing the contract, we intend to allocate cash resources to advance the development of EscharEx and we expect that cash use for 2017 lower end of our $15 million to $17 million guidance. With that financial overview, let me turn the call back to Gal. Gal?

Thank you, Sharon. We look forward to continued progress in the balance of 2017 as we continue to execute on our commercial and development programs. During the coming year, we expect to achieve several important milestones. We plan to report top line data on the 38 patients recorded in the second cohort of our Phase 2 clinical trial of EscharEx in chronic wounds in early September.We expect to expand the CIDS pediatric Phase 3 study to the U.S. in early 2018. We expect our distribution partners to obtain marketing authorizations for NexoBrid in important international markets. We expect to initiate the U.S. pivotal Phase 3 trial for EscharEx during the first half of 2018 and we expect to finalize recruitment and report top line data of our NexoBrid U.S. phase 3 DETECT study in the first half of 2018.We believe that executing our plan and achieving these milestones will create significant value for our shareholders. And now, Operator, please open the call for questions. Thank you.

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

Hi, good morning.

Good morning, Raj.

I wonder if I could maybe start on the NexoBrid side. I just wanted to confirm, now with the additional BARDA funding that -- NexoBrid is largely self-funding, not only on the clinical side, but also given the commercial activities you're still undertaking in Europe, that that business is largely sort of paying for itself at this point and all the company's investments are really on the EscharEx side.

Yes, I think this statement is correct. We would like to bring NexoBrid to like breakeven so that it will grow from a profitable standpoint. And with BARDA taking off the R&D expenses and with revenues growing in Europe and the launch effort behind us, this is exactly where we are going.

Okay. And then just one other one on NexoBrid as well. With the DETECT study ongoing, I think you noted you'll have sort of primary or kind of acute data in the first half of '18, 12 month data in kind of first half of '19. Is the expectation still that you'll have to wait for the full 24 months in order to file for approval of that product or is there any chance we could accelerate the approval?

For NexoBrid, as you rightfully mentioned, practically the primary, the secondary and the safety measurements are done; once we finish to recruit the patients, then maybe wait for 1 month for wound closure and 3 months follow up. The 12 months follow up and the 24 months follow up is just to look at long-term data, because it takes a long time to get there. We believe that if the primary, secondary and safety data will be positive, we'll go to FDA and ask to submit the file at that stage and to supplement the long-term data thereafter. There are several reasons why we believe that this is reasonable. One, by the time that we will submit the file, we will almost already have the 12 month. We can submit the 12 month follow up data very shortly after the submission of the BLA while FDA is still reviewing the file. Two, FDA did not ask for the 24 months follow up. It was a European request because the DETECT is a post-approval commitment for Europe. So FDA was looking for the 12 months, which gives us some kind of comfort that we will not even wait -- need to wait for the 24 months. Last is that we already have a study conducted on 89 patients, most probably one of the biggest studies ever conducted on long-term data of burns that show that the long-term data of patients treated with NexoBrid is at least as good as the one treated with standard-of-care. So our plan at the pre-BLA meeting is to ask FDA to do exactly like you mentioned. Obviously, we cannot comment because we cannot speak on behalf of the FDA.

Okay. So the expectation should still be maybe late 2019, early 2020, potentially at the earliest if the FDA is cooperative in terms of a US approval?

Yes. And I think that it's also in the interest of BARDA, because BARDA is interested, as I mentioned, that as soon as possible as many US centers will use NexoBrid because it will help the preparedness efforts. So I think all vectors are in the right direction, but still we have to get FDA to agree to that as well, which is most important.

Understood. And then maybe just one on EscharEx. I guess my question is really why wait? I mean at this point you have the FDA largely signing off on your protocol. You have to obviously get centers up and committed here. But why wait till early next year to begin this study, the first half of next year, given you have everything in place already?

Yes. I think two main reasons and the second one would be even bigger than the first. The first one is, FDA is only one stakeholder in a Phase 3 study. So we now have particularly almost three groups in the US of experts in different disciplines looking at the following. One, we want to make sure that we plug all the pharmacoeconomical measurements into the study, not as standard or anything, but to collect this data so we'll have a very good story, value proposition for CMS. Two, we want to look at mechanism of actions to support the cost accentuation of VLU to DFU. Three, we're looking -- the easiest thing is just to do the most trivial, statistical analysis plan. But where you get to a more I would say sophisticated, more professional statistical analysis plan is where you get more out of the study. So we have these three groups working now in parallel to practically optimize the small pieces of the protocol, because the big pieces are done, I mean the primary endpoints, the population are done -- the small pieces so we'll have a very good protocol. The second thing is it just takes time. Look at the timeline. You get a CRO, you submit the protocol with the IND, you wait for FDA now to comment, you go to an IRB of a clinical site, you do qualification visit, you submit it to the IRB, that's two to four months to get an approval. So just the mechanic of that gets you to the first half '18.

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

Hi. Thanks for taking for my questions and congratulations on all the progress. I was impressed by the independent study published in Germany. Can you comment on how that may support NexoBrid’s reimbursement in that country and potentially in that country and potentially in other markets?

Thank you very much for the question. We are also very happy to see this independent study being published. I think the takeaway from this study is that they looked at the current DRG system in Germany and they said that under the current DRG system NexoBrid can save up to 30% of the cost of a patient, which was one important takeaway message. The second important takeaway message was that the current DRG is triggered by several parameters, not one, which means that if you use NexoBrid, you do not change the DRG that the hospitals will get because they can trigger it from at least 3 reasons. So practically what it says, it says it maintains the compensation for the centers and by using that the centers can reduce up to 30% of their costs. How it will help us going forward? First of all, in any discussion with reimbursement budget in Europe, but specifically in Germany, I'm sure that this will be helpful especially that it comes from a very distinguished center. And two, I think that now that there is a large body of information in Germany supporting the use of NexoBrid, the German Burn Association decided to apply for an OPS code for NexoBrid by the U.S. government. So it's not us applying; it's the German Burn Association asking for that. I don't know -- there's no certainty that they will get it, but it's a better -- a more productive initiative than us asking for it. So the reimbursement system in Europe is very complex, but this is certainly a very big step towards that.

Okay, great. And do you think that those findings would apply more broadly outside of German to other markets?

I think that what we see, we see an accumulation of data that would support us in Europe, and not less importantly, will support us in the U.S. Because when we came to Europe, we didn't have this body of information. We just saw a paper from Italy showing that we reduced the cost, comparing NexoBrid to standard-of-care, by €5,000. We know that investigators are working on such things in England, in Spain. Again, as I said in the EBA, there will be reports from England and other places about this kind of subjects. And one thing that I think is also very important. The most compelling clinical evidence is the long-term functional and cosmetic outcome, because at the end this is the goal -- except for survival, this is the goal of treating a burn patient. The burn patient is going to live all his life with scars and functional inabilities. The issue with long-term data is that it takes a long time to get the data. But in the EBA we will already see a first paper by Dalla Costa demonstrating how NexoBrid can improve the long-term functional and cosmetic results of patients. I think this exactly is the kind of data that will make physicians also in the U.S. make decisions on the first choice of treatment, will get patients advocating it and will also satisfy a lot of the reimbursement requirements, because most of the money that the reimbursement is paying is not for the acute treatment, is for the years and years and years of rehabilitation and functional therapy for these patients.

Okay. And then in your prepared remarks, you mentioned pursuing approval for NexoBrid in some additional markets. Can you comment on which markets those are and the timing of those potential approvals?

Thank you for the question. So currently the NexoBrid registration file is being evaluated by many, many ministries of health around the world, South Korea, Russia, Mexico, certain Latin American countries, Japan. According to the feedback that we get from the distributors in these countries which are experts in their local regulatory processes, we believe that several important countries should get approval during the coming year.

[Operator Instructions] Our next question comes from Bruce Nudell of SunTrust Robinson Humphrey. Your line is open.

Good morning fellas. Thanks for taking the call. Gal, like given all the lessons you've learned on clinical segmentation and reimbursement realities and thinking ahead to the US, our model shows around $80 million to $90 million in NexoBrid sales worldwide excluding BARDA type things in the 2025 timeframe. Is that $80 million to $90 million a realistic expectation given all that you've learned today and given the power of the compound?

Well, as we reported in the call, we do believe that the US market would have a faster ramp up, because, as I mentioned, it's one market, one reimbursement system predominantly, much more data coming in and so on. So we do believe that the US market would be a substantial value creation for NexoBrid. In addition to that -- I know that everybody is focused very much on US and Europe. There are additional markets that have relevant potential I will say and I will give an example. So India has 400,000 hospitalized burn patients. This is 10 times more than the US. And it is known that many of the burn patients in India do not have access to healthcare. But market studies do show that even if 10% of the patients in India have market access, that's almost like the potential of the US. Let's take another parameter, let's look at the US and Europe. In Europe, about I would say a quarter to a third of the patients are treated at burn centers and the rest are treated in hospitals, so most patients are treated outside burn centers. In the US, according to the American Burn Association three quarters of the patients are treated in burn centers, the 128 burn centers, whereas only a quarter is treated in the large hospitals. These kind of parameters show some differences between the markets. And I think you can take another example. The recent enzymatic product in the US market that is being sold in the US and in Europe, in the US it sells about $340 million and in Europe it sells a few dozens of millions. So we are hopeful that going to the US market would make a change in the revenues that we see, because we see all the evidence showing that from a clinical standpoint the buzz around it is very, very high and that NexoBrid delivers on what the indications requires it to deliver.

Okay. And then could you comment on the significance of the endpoint that you've settle on with the FDA for EscharEx and its import relative to likely that have success and commercial adoption?

Well, I think that for many, many years, particularly for 40 or 50 years, companies have been trying to work with FDA to find endpoints other than wound closure because we all know the task and we know that many companies attempted to do Phase 3 studies in wound healing, and the wound closure endpoint is very, very challenging. I think FDA itself has working groups to try to identify additional endpoints. As you probably saw, our new director of the broad, Dr. Vickie Driver, is heading the scientific committee together with the FDA to find additional endpoints for chronic wounds. So because EscharEx is a debriding agent, it's not a wound closure agent -- we're not aiming to close wounds, we are cleaning wounds so that other products, complementary products like all the advanced wound care products in the U.S. will have a better chance on closing these wounds. We discussed with the FDA that we would like to have incidences of complete debridement in our Phase 3 program for EscharEx in the U.S., which is exactly by the way the same endpoint that we've agreed with FDA for our DETECT Phase 3 study with NexoBrid. Now that FDA agreed to that, we believe that this is a major factor that alleviates a big part of the risk of the development plan and increases the probability of success. Why? This is exactly what we did now. Our Phase 2 study that we have reported earlier this year is exactly that, comparing EscharEx to the vehicle with a primary endpoint of incidence of complete debridement. In that study if you just look at VLU and DFU, 47 patients had the P value of 0.028. So it does give us a lot of comfort that we should move forward as soon as we can to get this program up and running because it's going to create a lot of value.

And my final question is on EscharEx. Given all the clinical forums that you've held and given the nature of the formulation that you're using, could you hazard a guess as to the treatment interval that you're likely to -- that's going to be the most common in the U.S. market as well as the treatment duration, so in other words, once every 2 days or once every 3 days for a week or 2 weeks? How do you think that that will turn out and how will that compare to SANTYL, which is the $340 million competitor?

Yes. So according to the labeling, the other product that you mentioned is used every day, and from what we see in studies that have been published, it takes 6 to 8 weeks to remove the eschar with the other product. With EscharEx the clinical study showed that when the product was used for 4 hours every day in the wound that it completely debrided, which was 93% of these wounds were completed debrided in 4 to 5 application. This was daily application, so it's practically in a week. Looking ahead to the U.S. market, the chronic wound market is a very large and differentiated market. We want to give patients as much flexibility as possible. Why? Some patients, for example, would like to get rid of the eschar as soon as they can. Let's take all the spend, best case scenario. Best case scenario, you hospitalize, a patient is hospitalized, you treat him constantly with EscharEx, you get the eschar off in a matter of days. Second scenario, the patient is treated at home, but he can treat himself or his spouse can treat him. So he applies EscharEx every day. And according to the clinical data, it shows that in 92% of these cases four to five applications in a week he's done. Another scenario, a patient is being treated by a nurse. The nurse comes to his house every two days, and if it's a weekend, she comes on Friday, on Monday, so that's every three days. The second cohort that we will publish in early September, which I'm blinded to the results of, will show hopefully that within up to eight applications -- because in this study we only allowed up to eight application -- we get the eschar off. If this will be the case, it will be one to two weeks. Now, if I'm a physician, do I want to send my patient home for two months when I know that there are 100,000 legs being untreated in the year in the US because of the chronic wound? If I'm the patient, do I want to apply something for weeks and weeks and weeks with very marginal efficacy or would I get better encouragement and compliance if I see progress within days? If I'm the insurance company, do I want to fund a nurse to go to a patient's house for two to three months or one to two months or do I want to fund a nurse to go to the patient's house for a week or two? Looking at all these parameters and then putting the fourth one, with NexoBrid we have to revolutionize the market. We have to change the treatment paradigm. We have to change the workflows in the hospitals. We have to change the reimbursement system. With EscharEx, physicians in the US today are prescribing enzymatic treatments for removal of eschar in chronic wounds. Patients are using enzymatic debridements for chronic wounds. Reimbursement systems have a code for that already. So all the idea behind EscharEx is to keep the ground running, put a product that already meets all the market dynamics. This will be I think the difference between the two opportunities that I mentioned, the existing one and EscharEx, in the future.

Our next question comes from Ben Haynor of Aegis Capital. Your line is open.

This is [indiscernible] I’ve been weighing on for Ben. I just have two questions. In Germany, I know you said the German Burn Association submitted for an OPS code. Could you help me understand when that, the timeline behind that and when that determinations will be made and I guess when maybe this code could become effective?

Yes. Thank you for the question. Again, from the information that we get from the German Burn Association, this process should take several months to a year. So if everything works out, they should get a response in the coming year about that from the German authorities or reimbursement authorities.

Okay, thanks. And with regard to EscharEx, can you help me understand what kind of pharmoeconomic endpoints you guys are looking at and how you guys are going to measure that?

Yes. So this is still work-in-progress. As I mentioned, we have an expert working group looking exactly at that. Some things are trivial, time to debridement, number of dressing changes, incidence of short debridement. So there are many things that are trivial. We want to make sure that we don't miss anyone and that we have everything captured, so we will have the best possible value proposition for the CMS, taking into account that there is already, as I mentioned, a code in the U.S. for enzymatic debridement. So we just need to fit in.

Okay. Thank you.

Thank you

And next question comes from David Sherman of LifeSci Capital. Your line is open.

I was just wondering if you could provide a little bit more color on over the next year what reimbursement activities might look like in Europe, expanding beyond Italy and Germany?

So I think in Europe -- as I mentioned, Europe is very fragmented. So in Belgium and Italy we have reimbursement on the national level. What we've been doing for the last I would say 12 months in Italy, after getting the national reimbursement is going to the regional level. And by now I think we have reimbursement in I would say half to two thirds of the regions in Italy and still working with the other regions to get these things through. In the coming year I hope that all Italy will already be in a position to be able to buy the product. In England, the process is different. We have to go hospital by hospital and to put the product on the formulary. The catch-22 is that you cannot put the product on a formulary before you have local data on the product and you cannot provide the product to the hospital before you are on the formulary. So we have found a way to address that and I think by now we have about half of the burn -- or maybe less than half, almost half of the burn centers in the U.K. with ability to purchase NexoBrid and we are working on the second half. Again, hopefully, in the next year we'll get through at least the big ones. In Spain, they are buying the product and Spain is doing very, very well. I mean, as I mentioned, if you guys will come to Barcelona, you'll see for yourself what's going on, the amount of drugs there. Going forward, once enough data will be generated -- and as I mentioned, we are aware that in Spain they are preparing a local cost effectiveness paper. Once this thing will be published on local Spanish data, we might work together with the burn surgeons in Spain to go to the country level and ask for reimbursement, which again can take a year or 2 because these processes are not always well structured. Like, for example, when you submit a file to Europe for approval, that is very structured, you get like day 60, day 120, day 180. Here it's more depending on the way that the ministry of health wants to manage that. Did I address your question?

Yes. Thank you.

Thank you.

There are no further questions. I like to turn the call back over to Gal Cohen, President and CEO, for any closing remarks.

Thank you, Operator, and thank you everyone for joining the call today. All of us here at MediWound are very excited to see our commercial and clinical programs moving forward and we're looking forward to provide you with further updates on our next call. Have a good day. Thank you.

Ladies and gentlemen, thank you for participating in today's conference. This does conclude the program and you may all disconnect. Everyone have a great day.