Good day, and welcome to the MediWound's Third Quarter 2022 Earnings Call. Today's conference call is being recorded. And at this time, I would like to turn the conference over to Monique Kosse of LifeSci Advisors. Please go ahead, ma'am.

Thank you, operator, and welcome, everyone. Earlier today, MediWound issued a press release announcing financial results for the third quarter ended September 30, 2022. You may access that release on the company's website under the Investors tab. With us today are Ofer Gonen, Chief Executive Officer of MediWound; and Boaz Gur-Lavie, Chief Financial Officer. Following our prepared remarks, we will open the call for Q&A. Before we begin, I would like to remind everyone that statements made during this call, including the Q&A session relating to MediWound's expected future performance, future business prospects or future events or plans are forward-looking statements as defined under the Private Securities Litigation Reform Act of 1995. Although, the company believes that the expectations reflected in such forward-looking statements are based upon reasonable assumptions, actual outcomes and results are subject to risks and uncertainties and could differ materially from those forecast due to the impact of many factors beyond the control of MediWound. The company assumes no obligation to update or supplement any forward-looking statements, whether as a result of new information, future events or otherwise. Participants are directed to cautionary notes set forth in today's press release as well as Risk Factors set forth in MediWound's Annual Report filed with the SEC for factors that could cause actual results to differ materially from those anticipated in the forward-looking statements. The conference call is the property of MediWound, and any recording or rebroadcast is expressly prohibited without the written consent of MediWound. Now, I would like to turn the call over to Ofer Gonen, Chief Executive Officer of MediWound. Ofer?

Thank you, Monique. Good morning, everyone. Welcome to our third quarter 2022 conference call to discuss our financial and operational highlights. This quarter, we continue to be on track with a series of positive announcements across all our programs. We are approaching several significant inflection points for the company. We believe that once NexoBrid is approved, it will generate meaningful revenues in 2023 and significant growth going forward. Following the launch of NexoBrid, we will focus on $1 billion market opportunity presented to us with EscharEx where we plan to initiate a Phase 3 study next year. We have all these essential elements aligned for success, a mature pipeline, favorable data, large addressable markets, and experienced operational team, Tier 1 partners, and a strong balance sheet. Before I discuss the progress, we made this quarter, I would like to address the capital raise we completed in October where we have added an additional $30 million to our balance sheet through the combined Registered Direct and a Private offering. This significant addition of funds will support our activities through 2025. It was important for us to complete this raise now ahead of our expected positive news to better position MediWound for success. We saw participation of our current shareholders, and as an additional benefit, we were able to bring in new validating investors for the company. Also, we were pleased with the vote of confidence from both our management team and Board members who participated in the offering, demonstrating commitment and firm support of our strategy. Now with the funding, we will be able to accelerate our clinical progress for EscharEx, scale up manufacturing to address the increasing demand for NexoBrid, and support our global operation. We are in a strong sentimental position for the future both the near and long-term.…

Thank you, Ofer, and good morning, everyone. We're pleased with the recent fundraising despite the turbulent capital market, which has significantly stressing our balance sheet. Along with the expected $7.5 million milestone payments from Vericel upon the BLA approval plan in January 2023, and NexoBrid commercial sales growth, we believe that we have sufficient funding to support our EscharEx clinical development program. Moving to our financial statement. Total revenues for the third quarter of 2022 were $5.8 million compared to $6.4 million for the third quarter of 2021. Revenues from products in the third quarter of 2022 were $1.4 million compared to $2.6 million. This was primarily the result of a $1 million decrease in emergency stockpile procurement by BARDA. Gross profit for the third quarter of 2022 was $2.4 million, or 42% of net revenues, compared to a gross profit of $2.5 million or 39% of net revenues. Research and development expenses for the third quarter of 2022 were $2.9 million same as in the prior period. SG&A expenses for the third quarter of 2022 were $3.1 million, compared to $2.4 million. The increase was primarily a result of approximately $0.2 million of share-based compensation costs and $0.3 million of one-time marketing expenses related to EscharEx market research activities in the European Burn Association Congress. Operating loss for the third quarter of 2022 was $3.5 million compared to $2.9 million. Our financial expenses, which are non-cash in nature, were $0.7 million compared to $0.5 million in the third quarter of 2021. The increase was primarily due to $0.4 million resulting from warrants expenses allocation related to our recent fundraising. This allocation is dictated by IFRS regulation, which is different than the U.S. GAAP. This has affected our loss per share by $0.02. The company posted a net loss for…

Thank you, Boaz. Our momentum continues to build. We believe that we are on a very positive trajectory through this year and into 2023. As I mentioned, we have significant catalysts ahead to anticipate NexoBrid marketing approvals in India, Japan, and the United States, and expect meaningful revenues to follow. As our revenues continue to increase, we are scaling up our manufacturing facility to ensure we are able to meet the growing demand. We are ready to confirm our Phase 3 design and move into a pivotal development program next year with EscharEx. This $1 billion market opportunity will definitely be our profit. Finally, we look forward to sharing more about our MW005 development plan in basal cell carcinoma. With that, it is now my pleasure to open the call for your questions. Operator?

Thank you. And we will now begin the question-and-answer session. [Operator Instructions]. Our first question today will come from Josh Jennings with Cowen. Please go ahead.

Hi, good morning, Ofer, Boaz. Thanks for taking the questions. I wanted two questions. First on EscharEx. Sounds like you're making nice progress there and about to get in front of the FDA and propose the final design of the Phase 3 program. Just wanted to see whether there's any push/pull in terms of the timing there and moving forward with the FDA locking in a trial design in front of locking in a strategic that may want to be involved in the program and have their own team contribute to that to the design parameters. And then just on NexoBrid maybe for Boaz, it'd be helpful to just remind us on just the revenue generation potential of FDA approval and then any milestone payments that we should be having -- have on our radar as Vericel gets ready to launch in the United States. And also just any timing in terms of revenue contributions for NexoBrid launches in India and Japan would be helpful. Thanks for taking the questions.

Hi, Josh, very good question. Thank you for asking. So as we said our next step in that upcoming weeks is to meet with the FDA and discuss the study design. What you can assume that we will run for the early indication to begin with. But the discussion is basically around the sample size, the study design, protocol, et cetera. We will provide an update once we get clarity of the regulatory path forward. And as you can imagine, strategic partners that are interested in being part of that are also very interested in the answers of what we get from regulatory agencies. As for the next -- by the way, after that, we will go also for the DFU, but also we need to get some clarity from the agency about how they see the future development plan. As for NexoBrid I think Boaz should answer the question.

Yes. So, hi Josh. Regarding NexoBrid, I think you know what we should expect 2023, first is the BLA milestone payment of $7.5 million from Vericel. That hopefully right after the BLA approval. In addition to that we mentioned that we're expecting marketing approval in Japan and India. We're starting to see first order and kind of focus for next year, and I believe that should be $1.52 million range. That's probably kind of the key milestones that we should look. Aside from Vericel, they haven't yet should only forecast, but expecting launching in the first half of 2022. In addition to that, we have Europe itself, which we anticipate that we like if you -- in the last few years will have a consistent growth and additional marketing approvals we received in smaller countries that will contribute to the product revenue. Did that answer the question, Josh?

That's helpful. Thanks so much. Yes, absolutely. That was great. Thank you.

And our next question will come from Francois Brisebois with Oppenheimer. Please go ahead.

Hi, thanks for taking the question. So just in terms of the update that you'll give on the design with the end of Phase 2 coming up here, is there any big questions or are we -- should this be kind of a no surprise, similar maybe design as a successful Phase 2? And then just on that note, is there any debate about how many pivotals you're going to need?

Excellent question. So regarding a debate, we are going to -- we are trying to have a similar Phase 3 study to the Phase 2 study that we succeeded in a very robust manner. So this is what we aim for. We are discussing it with the agency, and hopefully, it'll be very clear once we provide you with an update about the regulatory path going forward. Definitely, our aim is that the study design will be very close to the one that we already succeeded. What was the next question?

Just in terms of the -- the number -- potential number of pivotal trials and then just on that note, if they're -- sorry, I'll let you take that. Yes.

Yes, yes, I understand. I understand. So as I said, the -- we are going to the development cost of the additional territories other than United States are marginal, so we decided to go for a global approval. So in Europe it is very clear cut. In Europe, you need to do one pivotal study. This is -- the guidelines are very clear. We don't need anything other than a single Phase 3 study. Based on the FDA guidelines and the fact that NexoBrid and EscharEx contain the same API we -- and the same product are intended to use both for a debridement, we believe that the single Phase 3 with the existing available data will be the basis of the approval.

Okay. Great. And then, you mentioned venous leg ulcers, any discussion about maybe the market? Maybe if you can help remind us VLUs versus DFUs and why you go with the VLUs in the Phase 3 design?

Okay. This is also a very good question. We have the data that supports both VLU and DFUs Phase 3 study. We know that EscharEx works for the debridement the same for both indications. Having said, and the markets are almost similar, we -- you have 1.1 million eligible patients with VLU -- for VLU and one point something million for DFU. So the markets are quite the same. The unmet medical need for VLU is much bigger because VLU wounds are very, very painful. You can't even get close to them. So a sharp debridement is not a solution. And DFU, you don't feel -- the patients do not feel the -- they do not feel the wound at all. So you can debride it with a knife. So the unmet medical need for VLU is extremely bigger than the DFU. Add to that that, just if you look, if you go into clinical trials with gov, you will see that there are something like a 100 clinical trials now on a DFU patient not for debridement, all kind of devices and appliances that are supposed to ease their pain or to make it heal quicker and as for the VLU, you can see there is -- that there is also nothing out there. So we believe that we'll be able to recruit patients quicker, and the unmet medical need is bigger. After having the VLU indication approved, moving to the DFU population will be easier.

And our next question will come from Swayampakula Ramakanth with H.C. Wainwright. Please go ahead.

Thank you. This is RK from H.C. Wainwright. Good morning, Ofer and Boaz. So congratulations getting this for on the NexoBrid approval situation, getting the -- getting FDA to do your inspection. So it's a good sign. In terms of the EAP program, where you said that there are 183 patients who have been treated so far. How do you see this in terms of launching the product, and how is this experience helping both Vericel and yourself in terms of how to manage detailing and what are you learning from that process itself?

So thank you for the question, RK and it was nice seeing you last week. The NEXT program is an expanded access program. It's a quiet of the standard the FDA program that enable clinical sites to treat patients with drugs that are currently in the FDA review. So as we can see, it keeps on enrolling patients in a very good space and we get a lot of feedback from patients and physicians that still -- that makes us believe that this is going to be the standard of care in the United States. We don't see anything that we didn't see in Europe. The reported results from the study, it's not a clinical trial, but it's actually treating patients. The results that we see are very consistent with what we see in the 11,000 patients that we already treated well, right? And I think that the most important aspect that we have now, assuming that we are going to be approved in the United States in January is that we keep on collecting data for pediatric population, which is also a very significant market in the United States. So we are going to accelerate our effort in the United States to make sure that NexoBrid is going to increase substantially. This is one of the reasons that we said that we expect that after the BLA approval, the revenues from NexoBrid will become meaningful for MediWound.

Okay. Very good. And then, in terms of the approvals in India and Japan, India is a market, which is kind of spread and probably not as clear as either U.S. or Europe is. So how are you planning to manage that market in a sense now? Do you have distributorships in place? I think you have one. And how are you going to manage that market? And Japan is a little bit different as well, which probably has a different strategy there. If you can highlight, your preparations in these two markets, that would be helpful.

Yes. So as I think, we mentioned in the past, in those two markets, we have partners. In Japan, Kaken Pharmaceuticals, which is a global healthcare company, and I must admit that given the demand that we already received from them for next year, I think we're very pleased with what we see in Japanese market and the acceptance of NexoBrid is reviewed. As for India, I believe you're also familiar with a company called Essar [ph] Vaccine, it's also Indian pharmaceutical company working worldwide, that operation also in the U.S. and Germany, well established pharmaceutical company. And they have also expecting and excited about NexoBrid. I think there is still more to learn about the Indian market. On the one hand, probably the biggest amount of severe born patients given the size of a population, given the culture, but not all of them are under medical care. So I think it's too premature to give capital numbers, assuming that together is India and Japan, both of them next year will look to $1.54 million. But once we get more data and working together with BSV and Kaken, hopefully we'll be able to provide more details going forward into 2024 and onwards.

Okay. Thank you for that. And then on the EscharEx, certainly this is larger potential compared to what NexoBrid could have. And then in terms of thinking about potential partnerships, as you said, you have already started receiving at least request for conversation on the product. So what's the type of collaborators, which are coming to the table at this point? And how do you plan to get through that and also make sure that you can initiate your study, your pivotal study in within the next six months?

So this is also very good question. So as I told you that strategic players are very interested. They just cannot ignore the -- our topical debridement agent with such qualities that was demonstrated for -- demonstrated in our Phase 2 studies. So we have all kind of options that are -- all of them are in the textbooks, licensing, collaborations, a territorial licenses from all kind of companies. At this stage since we were very lucky to be able to finalize financing, we are very flexible because we have the capital to do everything by our own. And I'm very proud of MediWound that succeeded to-date in 13 out of 13 clinical trials. So definitely the operational team in MediWound is capable of succeeding in another very significant trial. The partners are -- the potential partners are aware of that. There is a lot of competition around the MediWound, but currently we have -- we are flexible and we think we have a winner in hand. So we are not -- we are going to be very picky if and what partner we are going to choose.

And at this time, there are no further questions in the queue. I would like to turn the call back over to management for any closing remarks.

Okay. So thank you, everyone for joining us today. We look forward to updating you again on our next call. Goodbye.

The conference is now concluded. Thank you for attending today's presentation. You may now disconnect your lines at this time.