Good day. And welcome to MediWound’s Fourth Quarter and Year End 2022 Earnings Call. Today’s conference is being recorded. At this time, I would like to turn the conference over to Monique Kosse of LifeSci Advisors. Monique, please go ahead.

Thank you, Operator, and welcome, everyone. Earlier today, MediWound issued a press release announcing financial results for the fourth quarter and year ended December 31, 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 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 the 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’d like to turn the call over to Ofer Gonen, Chief Executive Officer of MediWound. Ofer?

Thank you, Monique, and good morning, everyone. It is my pleasure to welcome you to our conference call. I am excited to be here today to discuss the remarkable company achievements in the fourth quarter and throughout 2022. We have made important achievements in all of our programs, positioning ourselves to become a global biopharmaceutical company. During my eight months tenure as CEO, our progress has been significant, including the FDA approval of NexoBrid, which is now ready for a commercial launch in the United States with our partner Vericel. This innovative therapy has the potential to transform treatment of severe burns and become the standard-of-care in the United States as it is already in Europe. Additionally, we are moving EscharEx into Phase 3 study in venous leg ulcers, demonstrating our commitment to advancing treatment for patients in need. Our success is due in part to our strong financial position, fueled by fundraising efforts that have brought in $70 million over the past year from top quality institutional investors. Looking ahead, we are well positioned to take advantage of what we believe will be another excellent year. Our team is fully dedicated to realizing the mission of improving patient outcomes and bringing innovative therapies to the global healthcare market. Now let me discuss NexoBrid in more detail. We were proud to see NexoBrid approved by the FDA in December. This achievement is a testament to the hard work and dedication of our team who left no stone unturned in developing the science, conducting the trials, analyzing the data, completing the BLA, and of course, putting manufacturing protocols in place. We are confident that NexoBrid has the potential to change the standard-of-care for burn patients in the United States and around the world and we are proud to be at the…

Good morning, everyone, and thank you, Ofer, for your kind words. I would also like to express my gratitude to all of you, our investors and analysts for your support and collaboration throughout my time as CFO at MediWound. As Ofer mentioned, I will be stepping down from a role at the end of July. It has been an honor and a pleasure to lead such a talented team of individuals and to spearhead the financial and commercial accomplishments that we have achieved together. I am proud to have played the key role in driving our growth and success and I am confident that the company is in a strong financial position to continue executing in clinical and commercial programs under the new leadership of Ofer as CEO. It was important for me to assist with Ofer transition as CEO at MediWound and to contribute to the recent fundraising warrants, as well as to develop and execute on our European operations and our global expansion strategy. With these efforts, I am confident that MediWound is well positioned for continued success. Not less, it was fun working together. Once again, thank you for the great communication and collaboration over the years. It has been a wonderful journey and it’s time for me to move on. Moving to the financial statement. Total revenues for the full year were $26.5 million, compared to $23.8 million for the year ended December 31, 2021, an increase of 12% year-over-year. License revenues were $8.2 million, driven by the $7.5 million of BLA approval milestones from Vericel. Revenues from products were $5.3 million, a decrease of 44%, compared to the $9.6 million in 2021 due to BARDA’s procurement completion for emergency stockpile. Total revenue for the fourth quarter of 2022 were $11.6 million, compared to $5.5 million…

Thank you, Boaz. Our positive momentum continues and we expect 2023 to be driven by several significant categories; strong growth and meaningful revenue for NexoBrid fueled by commercial launches in key markets such as the United States, India and Japan; scaling up our manufacturing facility to ensure we can meet the growing global demand for our products; initiating a Phase 3 pivotal trial for EscharEx targeting $1 billion market opportunity; and finally, we look forward to sharing more about our MW005 development plans for BCC. With that, we would now like to open the call for any questions you may have. Operator?

[Operator Instructions] And our first question comes from Josh Jennings from TD Cowen. Josh, please go ahead.

Hi. Good morning. Thanks for taking the questions and congratulations on all the progress in 2022. Boaz, good luck in your next chapter. I was hoping to just start with asking a couple on EscharEx, and first, just on the back and forth with the FDA and finalizing the clinical development program from here, clinical trial design. Anything you can share just in terms of incremental color or are there any sticking points or any other details you can provide would be helpful to understand. I know that you said the time line for when you expect those -- the finalization of the design, but I was wondering if there are anything more you could share on that?

Hi, Josh. Thank you for the question. So, as I said, we submitted the protocol design for the FDA for their review. The final trial design will be announced once the discussions are done. We don’t anticipate any issues. I think we have got very good answer from the FDA and I think that we are in the last stages of having their understanding in how the Phase 3 will look like. As I said that in parallel, we plan to submit a request to EMA for a scientific advice and also to understand how the clinical development plan of EscharEx looks in Europe. This global approach should not have an impact on the time line. So we still estimate that the trial will start in 2023. As for how the trial will look like, I reiterate what I said in the previous call, we will try to make it as close as possible to the Phase 2 study in order for all the investors and strategic players understand that we are going to meet the endpoint with no issues.

Excellent. Thanks for reviewing that again. I appreciate it. And I wanted to ask just about partnership opportunities for EscharEx and MW005. How should investors be thinking about future partnership opportunities, it sounds like, I mean, you are moving forward with EscharEx independently. But should we think that down the line, there could still be partnership opportunities?

It’s a very good question. As you can imagine, we discussed it internally, of course, there is all sorts of gains, the attention of all the wound care specialists and many important strategic players in the market. Everyone is looking these days for a topical debriding agent with the advantages of EscharEx being able to debride a wound in one week. We are very lucky to have the funding and flexibility to be very -- to discuss a deal that will be very favorable for MediWound. Having said that, we are not speaking about North America licensing because this is the big market and it’s going to stay with us. Having said that, we are in discussion with several potential partners regarding a collaboration in the Phase 3 study. Our cash position and our track record is exceeding in size. I will remind you that we succeeded in 14 out of 14 clinical trials in a few indications. The cash position that the track record enables us to have the stability in those discussions, but I can tell you that there is a lot of interest. As for MW005, these pharma companies interested in that. We are waiting patiently to Q3 2023 and we are going to see if MW005 has the same qualities as NexoBrid has with burns and EscharEx for chronic wound. If the results remain positive, I believe we have a strong collaboration for that.

Excellent. I appreciate that. And then last question just on NexoBrid. It sounds like Vericel is expecting somewhere between $4 million to $8 million in NexoBrid revenues once they launch that product in the U.S. and it sounds like second quarter of 2023. Can you just remind us of kind of the royalty flow through and how that could impact the revenue line for MediWound in 2023? Thanks for taking my questions.

Okay. Josh, thank you for your comments in the beginning, and definitely, it was a real pleasure working with you and your team. So regarding the question for Vericel, so the economics going forward, after the $7.5 million was received in February is three kind of streamlines for the revenue. One is the transfer pricing of the product and the cost ratio. Second, stream of revenues is royalties, which is a high single-digit royalty upon sales of Vericel’s end customers. And the third would be the milestones upon reaching a certain threshold of revenues then they get a certain percentage. And I think to that, you can take around 20%, 25% of the economic conversion that would be in our P&L.

Thanks. That’s helpful color. It’s my pleasure working with you as well.

Any additional question, Josh. I think you just cut off.

Yes. We have a question now from Francois Brisebois from Oppenheimer. Francois, please go ahead.

Hi. Thanks for taking questions and best of luck, Boaz, on the next venture here. On my side, I just wanted to touch on, in terms of EscharEx, you talked about keeping it to yourself in the U.S. just based on its massive opportunity. Can you just maybe help us understand how many physicians are out there and what kind of sales force would be necessary, what kind of maybe numbers was to be able to target the physician?

So, thank you for the question, Frank. So, first of all, the reason for us is EscharEx, the North American right and the reason that it is our top priority to have it approved is, first of all, if we target a market of $2 billion. I think we made that very clear in our previous presentation. Our first priority is to have it approved. Currently, we look at the SANTYL sales, SANTYL sales are between $300 million and $400 million annually. According to market research that was done by an external party, we saw that not only that we draw a significant share from the current enzymatic debriding agent, but also we draw a significant share from the other modalities, mainly the sharp debridement, which is used by 50% of the physicians. It’s a very big market. Maybe one should -- we will get ready for that commercially in the next few years. I -- since I see the interest from the big players, I don’t believe that in the end of the story, maybe one will be the one that will approach the final users. Having said that, we are preparing for that.

Okay. Thank you very much for that. And then in terms of EscharEx and you talked about approaching the EMA. Any reason here in terms of maybe historically in the space that EMA and FDA would want different -- would require different things for trial design or is there any wait from the U.S. maybe on to see what the EMA does or are these completely independent and there shouldn’t be much impact there?

So it’s a very interesting question. Since I tackled that basically in the first couple of months that I became a CEO. So MediWound has a history of developing a drug for severe burns. It was approved by EMA. Only a few years later, it was approved by the FDA. The requirements were quite different, even the endpoints were different. Having said that, when a pediatric label extension was discussed, both agencies, EMA and FDA agreed that the company will do the same trial for both agencies. We are following EMA guidelines and we are looking closely at the FDA guidelines. And we also, of course, as we communicated, we also spoke with the FDA a couple of times. So we know what is required from the FDA. We think we know how to adjust this to EMA’s requirement as well, but these are not identical requirements for a Phase 3 study. Having said that, the bar for the FDA is considered higher. Therefore, I think, that we are in a good shape, and this is the reason that we estimated that approaching EMA regarding our Phase 3 study will not change the time line.

Understood. Okay. And then, lastly, the pediatric label expansion hopefully in the middle of this year in Europe. Can you just maybe help us understand how much -- how big the pediatric footprint in the market commercially and then just maybe any thoughts about label expansion into pediatrics in the U.S.? Thank you.

Okay. So let’s start with the first question. Pediatric patients represent about 20% to -- 25% to 30% of the total burn population. Having said that, the market is a little bit smaller than 25% to 30%, because the people -- the children are smaller than adult patients. Pediatric population often face painful surgery and it can be very traumatic for the young patients and their families. So we believe that approval will allow the pediatric patients and their family a much better of experience. So we think that this will have a big impact on the demand of NexoBrid in Europe once it is approved. As for the United States, we have also a plan to submit for pediatric label expansion. It’s the same clinical trial. We did the same clinical trial for EMA and the FDA. Therefore, we don’t think that we don’t see any issues with approval. Having said that, the time line will be a little bit shifted, because we started with Europe first.

That’s it for me. Thank you.

Thank you.

We now have a question from Swayampakula Ramakanth from H.C. Wainwright. Swayampakula, please go ahead.

Thank you. This is RK from H.C. Wainwright. Boaz, it’s been a great pleasure working with you. Certainly, we will miss you and good luck…

Thank you, RK.

… as you move on progress.

Thank you.

So, Ofer, a couple of questions from me. On the NexoBrid Expanded Access program, you stated that about 200-odd patients have been treated so far. Just trying to understand what your learnings are from that, and how are you and Vericel utilizing that information as you prepare for the commercial launch?

So, hi, RK. Good to hear for you -- from you. So, as I said, we have successfully treated 20 -- 206 patients at 26 leading burn centers in the United States. At some point, we will need some data from those treatments. But what I can share is that they are very consistent with the clinical trial. When we said that the patients were treated successfully, we mean successfully NexoBrid is very effective, 95%, 96% of the applications are a success in 4 hours. So we just see it as a kind of an education for the U.S. burn centers and specialists. I think this expanded access trial will support Vericel’s launch, because, I don’t know, something like, 20% of the centers in the United States are treating patients with that drug regularly. Having said that, don’t forget that the approval currently is only for adults, and in the Expanded Access program, we are also treating pediatric population. So I think it will support, if I go back to the question that Frank asked me earlier, it would also support the pediatric indication expansion, because we will keep on recruiting patients in this study. Although, NexoBrid will be approved in the United States will be available in the United States commercially very soon.

Fantastic. And then regarding your obligation to BARDA, if there’s any, can you kind of tell us or highlight for 2023?

Can you repeat the question, is that obligation to BARDA?

Do you have any obligation to BARDA in 2023?

Yes. We have, as you know, BARDA has the kind of a replenishment program, $16.5 million done in the previous two years. We are currently negotiating 2023 and 2024. BARDA also supports our Sulfur Mustard Program. As you know, after NexoBrid was approved, we started pushing the $43 million grant that we got from them in order to have a debriding agent also for Sulfur Mustard Gas Injuries. So if we look at 2023, I would expect for additional stockpile commitment, a little bit more of fundraising of financing of R&D staff and especially the Sulfur Mustard Program.

Okay. My last question is on the manufacturing facility, you said that it’s progressing well. But do you -- can you give us a little bit on the time line for commissioning it and also is that a needed step for a successful launch of NexoBrid or these are independent events?

Yeah. Okay. First of all, it’s an independent event. We are going -- we are working in order to meet the time lines that we communicated to the market of the Q2 U.S. launch. But you are right…

Hello. I lost you.

I am sorry. I think we lost a line here. Let me check back with the presenters. Please hold on.

Hello, Operator.

Yes. We have the speakers back. Sorry for that glitch.

Yeah. Sorry about that.

Yeah. Please go ahead.

All right.

Let me put the questioner back as well. Okay.

Okay. Yeah.

Everybody is live now. Go ahead, please.

Okay. I am sorry about that. I think it’s Boaz both. So I am going back to speak about the manufacturing. So, as I said, our current sales are limited by our production capacity. Having said that, we are going to meet the launch requirement. Vericel is a very important partner for us. This year is going to be a special one, because on top of the demand that we have from the market, we also need to manufacture EscharEx for our Phase 3 trial. So we have initiated the scale-up of the manufacturing facility immediately after we raised the capital in September 2022. The total cost is something like $10 million to $12 million, but we expect 30% to be covered by all kind of grants. Since it’s a sterile manufacturing facility, the process of the scaling up will take approximately 24 months. It’s not something that you can do in five months, because there are a lot of regulatory affairs that are involved. But we are working very hard in order to execute and make sure that we are doing it on time and then all the gaps will be recovered.

Thank you, Ofer. Thanks for taking the questions.

And we have a question coming up here. [Operator Instructions] The question now comes from Michael Okunewitch from Maxim Group. Michael, please go ahead.

Yes. Thank you for taking my questions and congrats on the great progress over the last couple of months. And also, Boaz, I’d like to wish you luck with the next steps in your career.

Thank you.

So you guys have done a lot to shore up your balance sheet. You have three years to four years of cash at this point. Could you talk a bit about how you plan to leverage that balance sheet, is there anything in your portfolio that would benefit from increased funds to accelerate programs, are you looking at any potential M&A targets or is this best used to just keep your balance sheet strong and provide funding through that Phase 3 for EscharEx?

Thank you. Thank you for your question. Maybe I will start and Boaz will add if needed. So if you ask me two months ago, I would have told you that we have enough cash to do the Phase 3 study and enough cash for the scale-up manufacturing facility, because these were our requirements, and we communicated that we have cash to go through 2025. Having said that, we got a reverse inquiry from a very strong investor for an additional investment, making sure that we are able to accelerate the EscharEx effort. And the reason for accelerating it, because if we are aiming a very significant market for many hundreds of millions of dollars in sales, let’s make sure that we get there quicker. So if you look at the numbers, $66 million reduced from that $25 million for a Phase 3 trial ballpark and another $10 million for the scale uping [ph] efforts. You will see that we have enough capital to do whatever is required. We feel very comfortable these days in these markets to have a cushion of a few tens of millions of dollars. We will not run for adventures, buying assets now because we think that we have a very strong product, which is EscharEx, which will generate a significant value for our shareholders. And NexoBrid is profitable and we will make sure that we increase the revenues quite substantially. I think if we focus on those two efforts, the value of MediWound will increase substantially. Of course, if something opportunistic will arise we can discuss it.

And maybe just, Mike, from a numbers perspective on top of $34 million that we had end of 2022, we already received the $7.5 million and then we have a recent fundraising, so you are talking about $66 million, which should surprise us through 2026. And also on top of that, we have the commercial sale of NexoBrid, definitely given the recent marketing approvals in India, in Japan and in the U.S. now. We believe that there are going to be increase of 50% in the product revenues, which of course, would strengthen our balance sheet. And just to maybe to summarize on top of that, once we have the facility scale up, we will be able to meet the growing demand, and of course that, I think, will take us out profitability in the future years.

All right. Thank you for that. And then I’d like to follow-up on the EscharEx development plans, obviously, VLUs are the immediate opportunity we have discussed why that’s a particularly attractive market. But how are you looking at the potential use in DFUs, is that something where you think about a parallel Phase 3 program?

Again, it’s a very good question. As I mentioned, I think earlier in this Q&A session, our top priority is to get an approval of EscharEx. We look at the current enzymatic agent, we see our superiority compared to it and we want to get an approval ASAP. Unfortunately, FDA says that, how to build wound or chronic wound is not an indication, the indication of VLUs, DFUs, pressure ulcers et cetera. We know -- we chose venous leg ulcers, because the unmet need there is much bigger. Some of the discussions that we are doing with strategic players is trying to broaden our efforts around additional wound types. We are looking into it. I don’t think that we will need to do another Phase 3 study, maybe we will need to do another bridging study or something like that. But our top priority currently is to get an approval, being able to making sure that we collect data that justifies a very high pricing for our drug, and after we are there, we think we can broaden the indication for additional type of wounds.

All right. Thank you very much. And then just one final one for me and I will hop back in the queue. I’d like to ask a little bit about the opportunities for NexoBrid in Japan and India, obviously, Japan is a major market and doesn’t need much introduction. But in India, we might expect lower pricing, is that offset by the massive population? Can you just give a bit more color on how those markets look for burn debridement?

Yeah. Thank you for the question. So Japanese market definitely is one of the biggest healthcare markets in the world, probably, if we want to look at the numbers, so we see that, probably, around $1.5 million that we see in the first year. And then definitely, we are very excited with the enthusiasm of Kaken, which is a global pharmaceutical company and our distributor in Japan from the launch. The launch is expected by midyear, and of course, we expect it to grow in 2024 and 2025. Regarding India, this is a partnership that we have with BSV, which is also Indian global pharmaceutical company. I agree or hear about the size of population. But I think India is a little bit more complex picture, because mass of the population is not covered under any kind of health of public healthcare insurance. So we are still kind of running this market. It’s the biggest market, by the way, by the number of severe burn patients by far and I think we are still learning. I would expect it around $0.5 million in the first year and then I think we will be able to provide more details about this market.

I will just add one trivia information. India is the only market in the world in which NexoBrid didn’t get the orphan indication. The number of burn patients there are extremely unproportional to the size of the population, which is higher regardless. But as Boaz said, $0.5 million this year and we are learning the market, we will be able to give some more guidance later this year, and again, we are limited by our capacity to manufacture. So this year, we do not plan to sell more to India more than $0.5 million.

All right. Thank you very much.

Thank you.

Michael, we will take another question from you if you so desire.

I was because I got bumped off the call before, so you might have queuing the queue for me.

Okay. All right. At this time, we have no further questions then and I would like to turn the call back over to management for some closing remarks. Thank you.

Okay. So, thank you everyone for joining us today. We look forward to updating you again in our next call or speaking to you offline. Bye-bye.

Thank you everyone for joining us today. We look forward to updating you again. You may now disconnect.