MediWound Ltd. (MDWD) Q3 2024 Earnings Report, Transcript and Summary

Good day, and welcome to the MediWound Third Quarter 2024 Earnings Call. All participants will be in a listen-only mode. [Operator Instructions] Please note, this event is being recorded. I would now like to turn the conference over to Mr. Dan Ferry of LifeSci Advisors. Please go ahead, sir.

Thank you, operator, and welcome, everyone. Today, before the market open, MediWound issued a press release announcing financial results for the third quarter ended September 30, 2024. 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; Hani Luxenburg, Chief Financial Officer; and Barry Wolfenson, Executive Vice President of Strategy and Corporate Development. 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 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 would like to turn the call over to Ofer Gonen, Chief Executive Officer of MediWound. Ofer?

Thank you, Dan, and good morning, everyone. I appreciate you joining us today to discuss MediWound's performance and progress during the third quarter of 2024. This has been a strong quarter for MediWound, marked by meaningful achievements that contribute to our long-term growth and advances us closer to realizing our vision. Let me start with an update on NexoBrid, our innovative enzymatic therapy for severe burns. This quarter, we reached a significant milestone with FDA approval on NexoBrid for pediatric use in the United States, expanding its label to cover patients from newborn to 18 years old with deep partial thickness and full thickness thermal burns. This approval solidifies NexoBrid's status as a treatment option for all age groups in the United States, bringing its indications in line with those in the European Union and Japan. Commercial revenue of NexoBrid has met expectations limited only by our existing capacity constraints. In the United States, NexoBrid continues to make substantial progress, thanks to Vericel's dedicated commercialization efforts. More than 70 burn centers have already made P&T committee submissions, of which approximately 50 are already securing approval and placing initial orders. Additionally, NexoBrid recently received a Category III CPT code, which is scheduled to be posted on the AMA website January 1 and go into effect July 1 next year. Vericel has also reported an impressive 43% quarter-over-quarter increase in revenue of NexoBrid, reflecting its expanding impact in the United States burn care market. We are also excited to share that the World Health Organization, WHO, has recently designated enzymatic debridement as an essential treatment for burn injuries in its standard recommendation for Burn Care in Mass Casualty Incidents guidelines. This reinforces NexoBrid's crucial role in emergency response and global preparedness and strengthen ongoing initiatives to develop strategic stockpiling of NexoBrid in the European Union, building on the successful precedent set by BARDA in the United States. As we shared before, we have also completed construction of our state-of-the-art GMP-compliant manufacturing facility with commissioning currently underway. The facility is expected to reach full operational capacity by the end of 2025 and to increase our manufacturing output six-fold. Commercial availability will be contingent upon obtaining the necessary regulatory approvals. The company anticipates $20 million in revenue for 2024, compared to prior guidance of $24 million. NexoBrid product revenue remains in line with expectations, driven by strong demand that well exceeds current manufacturing capacity. However, the FDA approved NexoBrid pediatric indication without requiring any additional post-approval activities. This eliminates the need for BARDA funding for such activities and reduces the associated revenue. Additionally, following a Type C meeting with the FDA, clinical activities for the temperature-stable formulation of NexoBrid for the US Army have been scheduled for 2026, which postponed the associated contribution from the US Department of Defense. To conclude, demand for NexoBrid continues to grow, driven by US expansion via Vericel, FDA pediatric approval and inclusion in the WHO BMCI guidelines. Our new GMP facility set to increase capacity six-fold will support this rising global demand and revenue growth. I will now turn to EscharEx, our advanced enzymatic debridement therapy for chronic wounds. We have completed all preparations for the upcoming Phase III study of EscharEx in venous leg ulcers, marking a major step forward in addressing an unmet need in the $2 billion chronic wound debridement market. The study is set to commence with IND submission planned by year-end. This pivotal trial will evaluate the efficacy and safety of EscharEx and aims to establish it as a transformative treatment for VLUs. All setup activities for the trial have been finalized, including successfully passing the required EMA inspection, ensuring compliance with regulatory standards and readiness to initiate the study. To provide insight into this upcoming Phase III study and to the broader commercial potential of EscharEx, MediWound will host a virtual key opinion leader event on January 8, 2025. During the event, experts will discuss the trial design, objectives and highlight EscharEx anticipated impact on patient outcomes. In parallel, we are working with a third-party research firm on a comprehensive market analysis to refine our understanding of the potential market share, target segments across various care settings, pricing strategies and projected peak sales. We look forward to sharing the findings of this analysis alongside expert perspectives during this KOL event. In addition, we are preparing to launch a randomized head-to-head Phase II study of EscharEx versus collagenase in 2025. This trial is designed to support our BLA submission and further establish EscharEx competitive advantages. This study will enroll 45 VLU patients across multiple sites in the United States and Europe. Participants will be randomized into a 1:1:1 ratio to receive EscharEx, placebo or collagenase, which is marketed in the United States as SANTYL and in Europe as IRUXOL. Over a 14-week period, the EscharEx and placebo groups will receive up to eight daily application during the first two weeks, while the collagenase group will follow the product-specific instructions for use. The trial will evaluate key safety endpoints, including the incidence of severe advent events and time to complete one closure as well as other efficacy endpoints such as time to complete debridement and wound bed preparation. To ensure consistency and optimize patient outcomes, the study standardizes wound care and compression management made possible through strategic research collaborations with Solventum and Mölnlycke. We have also obtained €16.25 million in funding from the European Innovation Council to advance the development of EscharEx for diabetic foot ulcers, accelerating our program timelines by four years. With over 1.6 million DFU patients in the United States requiring debridement each year, this funding will afford us the opportunity to bring a potential new treatment to these currently underserved patients facing the risk of amputations, infections and deaths from DFUs complications. The preparation for the Phase II/III study in those patients are progressing well, and we are excited about the potential to impact that EscharEx have impact on these improving outcomes for substantial patient population. So, as for EscharEx, we are finalizing the IND submission for the VLU patients setting the stage for the initiation of the Phase III trial. Furthermore, the upcoming head-to-head study comparing EscharEx to collagenase alongside advancements in the recently funded DFU program will solidify EscharEx position as the leading solution to address critical unmet needs in the chronic wound market. Having summarized our significant progress with both NexoBrid and EscharEx, I'd now like to highlight the key strategic and financial milestones. This quarter, we secured $25 million through a private investment led by Mölnlycke Health Care, which is a global leader in the wound care field. This strategic partnership provides not only critical funding but also access to Mölnlycke's extensive commercial expertise and regulatory insights, enabling us to advance our strategic plans with greater focus and momentum. Now, I'll hand it over to Hani to briefly review our financials.

Thank you, Ofer. Let me now take you through our financial results for the third quarter and the year-to-date period of 2024. Revenue for the third quarter of 2024 totaled $4.4 million compared to $4.8 million in the same period of 2023. This decrease was primarily driven by lower revenue from BARDA Development Services. Gross profit for the quarter was $0.7 million, representing 16% of total revenue, compared to $0.9 million or 19% of total revenue in Q3 2023. This decline reflects change in the revenue mix. Turning to operating expenses. R&D expenses were $2.5 million in Q3 2024, up from $1.5 million in the same period last year as we ramp up activity for our pivotal EscharEx Phase III clinical trial. SG&A expenses totaled... [Technical Difficulty]

Pardon me, it seems that our speaker line has disconnected. Please hold while we reconnect. Pardon me, we have our management team to reconnect. You may proceed.

Okay. Moving on to our year-to-date financial highlights. For the first nine months of 2024, total revenue reached $14.4 million, up from $13.3 million in the same period of 2023, primarily driven by revenue contribution from Vericel. Gross profit for the first nine months was $1.7 million, or 12% of total revenue compared to $2.9 million, or 21% of total revenue in the first nine months of 2023. This reflects the same changes in revenue mix mentioned earlier. In terms of expenses, R&D expenses of $5.9 million, slightly higher than $5.7 million in the same period of 2023. SG&A expenses of $9.1 million, up from $8.8 million in 2023, driven by increased share-based compensation costs. Operating loss for the first nine months of 2024 was $13.3 million, compared to $11.4 million in the same period of 2023. Net loss for the first nine months came in $26.3 million, or $2.72 per share, compared to a net loss of $5 million, or $0.56 per share, in the same period of 2023. This increase was largely driven by financial expenses from revaluation of warrants, which were influenced by a remarkable 78% increase in MediWound's share price year-to-date. On a non-GAAP basis, adjusted EBITDA for the first nine months of 2024 was a loss of $9.9 million, compared to a loss of $9 million in the same period last year. Balance sheet highlights. As of September 30, 2024, MediWound maintained a strong financial position with cash, cash equivalent and deposit totaling $46 million, up from $42.1 million at year-end 2023. During the first nine months of 2024, we successfully raised $25 million through a PIPE offering, received $1.2 million from the exercise of Series A warrants, and fully settled our liability with Teva. We used $19.7 million to fund our operating during the period, including $6 million allocated to capital expenditure for the scale-up of our manufacturing facility. This concludes my financial review. Ofer, back to you.

Thank you, Hani. This has been a very strong quarter for MediWound, marked by significant progress and key achievements. We secured FDA approval for the pediatric indication of NexoBrid and raised $25 million in strategic funding. On the EscharEx front, we finalized preparation for the Phase III study in venous leg ulcers and accelerated plans for diabetic foot ulcers, addressing a market with a significant unmet need. We are also gearing up for a head-to-head trial of EscharEx versus collagenase to further validate EscharEx's competitive advantage. Additionally, the completion of our new NexoBrid manufacturing facility and the initiation of the commissioning process represent major milestones in scaling our global capacity. With these accomplishments, we look forward to a strong finish of the year and believe that MediWound is well equipped with the resources, partnerships and momentum to execute our strategic plans and deliver meaningful value to patients and stakeholders. With that, I'll now turn the call back to the operator for any questions. Operator?

[Operator Instructions] And the first question will come from Josh Jennings with Cowen. Please go ahead.

Hi. Thanks for taking the questions. Appreciate the thorough download. Ofer, I was hoping to just ask about the Phase III EscharEx and the IND submission. Anything you can share, any color on your interactions with the FDA? And it seems like with the KOL event timing early in January that you don't expect much pushback in terms of -- from that submission and that you could see an approval of the IND submission pretty soon after. But when should we expect to have trial enrollment to kick off, I guess, is the ultimately -- the goal of my question. Just any interaction with the FDA, your confidence that the design is in play will roll through? And then, when should we expect enrollment to begin?

Okay. So, hi, Josh, thank you for the question. So, as you all know, this trial is the most significant and comprehensive trial in venous leg ulcer patients in over two decades. This is why all the wound care companies are collaborating with us and interested in this specific endeavor. We spent some time with the FDA to discuss the potential protocol with them and with EMA, and we were able to have it cleared both by FDA and EMA. We are in the process -- we also were expected by EMA before you started Phase III trial. This is something that is required before you ship clinical batches overseas here from Israel. So, we had this inspection and we passed it successfully. The IND submission is expected imminently by the end of this year. And 30 days after that, we expect to start enrolling patients.

Excellent. Thanks for that. And I wanted to ask about the head-to-head Phase II study EscharEx versus collagenase or SANTYL in VLU patients. I mean, our assumption is if this is originated internally, but just wanted to check the box that this is not a requirement by any of the regulatory bodies in the U.S. or Europe, and this is just a study that will bolster the evidence of EscharEx's role in chronic wound care and potentially support some reimbursement decisions.

So, the main motivation for executing this trial is that we are four years away from a launch, and we want to be ready with data that will support as high revenue as possible. So, the main reason for doing it is, first of all, to have a real predetermined a priori analysis as opposed to a post-hoc analysis that we had in the previous head-to-head study that we did -- that we released the data of SANTYL. Second, we want to expand the data set that we have and we want to show all of our advantages for us versus SANTYL. Third, we want to include our EscharEx brand also versus IRUXOL in Europe because we are going for the process to having it approved globally and not just in the United States. So, we don't have data yet versus IRUXOL and this is another reason that we are doing a study in Europe and in the United States. All this strengthened our position and give us a head start in that -- for the commercial launch. As for the requirements from the FDA, we are now completing a full package, as I said earlier, during the Phase III study that we need to conduct, but we have all kind of small studies such as a PK study and a human factor study and all kinds of data that we are collecting in order to make sure that once the Phase III study is successful, we have all the relevant data in order to have this drug approved.

Got it. And lastly, one more question is on NexoBrid. I just wanted to make sure we were digesting the update on the manufacturing capacity increase initiative. Has there been any changes since the last earnings call just in terms of timing of having the capacity increase benefit MediWound and just review that? And if there has been any changes, maybe just help us understand them? Thanks so much for all the questions.

So, this is a very important question. So, as for the new manufacturing facility of NexoBrid, you know that it took us some time to build it. It took us more than two years since we started the process. We guided that we will finish the construction by midyear, and we did it. And now we are in a process that was preplanned in the process, which is called the commissioning. We are getting closer to the point in time when we need to call for inspections for both FDA and EMA. The reason that we gave a little bit more color is basically to make sure that now we have some dependency on the getting closer on inspection. This is why we mentioned it in this earning call.

Great, thanks so much.

Thank you.

The next question will come from François Brisebois with Oppenheimer. Please go ahead.

Hi. This is Dan on for Frank. Thanks for taking our questions. Thanks for all the color around the trials. Just as a follow-up to the Phase II head-to-head versus collagenase, what should we -- how should we be thinking in terms of success expectations? The post-hoc showed potential superiority over SANTYL? Is this designed in a similar way? Is it non-inferiority? Any color there? Thanks.

Yeah, it's an interesting question. So, hi, this head-to-head study is pretty much designed similarly to the previous Phase II that was a success. The only thing that is different is that we don't give an option for the centers to treat with autolytic debridement or all kind of conservative debridement options. They only have two options. They can treat with EscharEx and/or they can treat with SANTYL, and of course, a placebo. What we should expect and this is what we expect is to see some similar effects because we know that SANTYL will also -- basically to -- do not too much effect in the first two weeks when we debride it with EscharEx. The only thing we want to do is to see the same impact. This is a predefined study. So, the data that will be generated here can be used more credibly when we start discussing pricing with relevant entities.

Thank you. That's very helpful. And just one more follow-up. Could you talk about any -- what -- how you expect -- what's the impact of this recent addition of the WHO inclusion is with respect to stockpiling, or does this accelerate any of the timelines that you have in mind? Thank you.

So, now we're thinking about -- we're concluding an event that we are working, I think, for the last two years in order to have it achieved to be -- to include enzymatic debridement as an essential treatment for burn injuries in burn mass casualty incidents is a big achievement for us. When you discuss stockpiling with HERA, which is the European BARDA, it was an event or a check the box that you needed to pass. We are currently under a shortage. We don't have enough NexoBrid to ship to stockpile to all kinds of European countries, but now we are getting closer to that. We believe that in 2026, when the limitation of manufacturing will be beyond us, we believe that then we will be able to sign significant agreements with European countries and with HERA in order to have NexoBrid stockpiles in Europe for all kinds of emergencies.

Thank you. Thanks for taking my questions, and congrats on the quarter.

Thank you.

The next question will come from RK with H.C. Wainwright. Please go ahead.

Thank you. Good afternoon, Ofer and Hani. So, in your opening comments, you were talking about Category III CPT code. So, how do you anticipate getting benefit from this? And what needs to be done so that we can move up the category?

Again, I think in the short term, I don't think it will have any direct impact to the penetration of NexoBrid to the US market. I think hospitals, burn centers has the motivation to acquire NexoBrid regardless of specific codes because it's a better treatment, and it saves money to the burns center itself. So, I don't think it will have a real impact. But this is the process. It's a breakthrough new technology. Data should be gathered. And let's see the impact that will happen in the few -- in the next 12 to 24 months.

Very good. And then, regarding the DFU study that you're anticipating to start with the money that you received from the European authorities, what needs to be done there before we can start thinking about the Phase II study anticipation in DFU?

So, although we have quite significant data about the effectiveness of EscharEx on debriding diabetic foot ulcers, the amount of data that we have is less robust than we have on venous leg ulcers. We see the same results between 60% and 65% success after two weeks. We didn't see any advantage to this indication to the other, but we have less data that supports an immediate Phase III for this indication. So, what we should do is to write a protocol and make sure that all the key opinion leaders, both in Europe and in the United States are aligned with the program and the necessity and the treatment scheme of EscharEx to this indication. We need to obtain clearance from FDA and EMA, and we believe that this process will not take less than a year. This is how we estimated it.

Okay. And then, the last question for me is regarding the Type C meeting that you had with the FDA about the temperature-stable formulation of NexoBrid. What did you learn from that? And what needs to be done? Because you're saying you're going to start the study in 2026. So I'm just trying to understand what needs to be done between now and then.

So mainly, we have two main activities in this program. The first one, we are building a specific facility that will enable us to manufacture clinical materials to this Phase III trial. We are building this facility. It should be constructed next year and operational in 2026. This is the first thing. The second thing, FDA asked us for all kinds of non-clinical development data and working on the CMC in order to make sure that the NexoBrid temperature-stable formulation is very close to NexoBrid in order for us to meet a minimum of a clinical trial. We don't want to develop a drug from zero. So we need to prove to the agency that those products are very similar, and we estimate that this process will enable us to start the clinical trials in 2026.

Okay. Thank you. Thanks for taking on the questions.

Thank you.

The next question will come from Michael Okunewitch with Maxim Group. Please go ahead.

Hey, there. Thank you guys for taking my question today. I guess just a follow-up on RK's question there. Do you have a sense of what kind of clinical work is going to be needed to get the temperature-stable formulation approved? Do you expect that it will just be a single, relatively small trial?

This is our expectations. We shared the program with the agency, with the FDA, and we didn't get negative responses. So yes, this is what we expect, assuming we are able to finish the non-clinical and the CMC request that they have. And as I said, we estimate that it will take us at least a year.

All right. Thank you. And then, looking over to the opportunity in Europe for stockpiling, can you talk a little bit about the size of that potential opportunity? And then just given where the timeline lies, is this something that could make sense to do with the temperature-stable formulation given the advantages that has for stockpiling?

So, this is an interesting question since we are discussing it internally quite a lot. So, as for the potential of stockpiling, we didn't disclose the amount -- the size of the market, but it should be in the low tens of the millions of dollars in stockpiling. And of course, you need to divide it by three because of the shelf life of the product is three years. Currently, the NexoBrid room temperature stable formulation is only being developed to the US market. After we have clarity -- after we get clarity from the FDA that we are -- this is what we need, this is a small study in order to have it approved, we will go to the European authority, and we will ask for similar regulatory pathway, but we are not there yet. The discussions that we are having with European BARDA, which is called HERA is -- we are now analyzing the quantities. We are defining exactly the needs. And I believe this will be matured only towards the end of 2025. And then, in 2026, when we will not have any capacity constraints, we will be able to start shipping products to Europe.

All right. Thank you. And then just one more quick clarification question for me. Looking at the head-to-head study, right, what role is Solventum playing? Is that the same as it is in the Phase III for VLUs?

So maybe, Barry, do you want to jump into this question?

Sure. Our primary goals in securing all of these collaboration agreements were to ensure that in the Phase III and in the head-to-head studies as much as possible, the variability between study arms is minimized and to provide best-in-class products for the patients in our study. Compression therapy is the gold standard for the management of venous leg ulcers, and it's an essential component in all the validated clinical practice guidelines for this indication. Regarding Solventum specifically, the superior benefits of Coban 2 and Coban 2 Lite were confirmed in a recent real-world evidence retrospective study presented at both the Symposium on Advances in Wound Care and at the European Wound Management Association Conference this past year. Given the prominent position of this product in the market, we're quite pleased that Solventum will be supplying them for the patients in the study as they're doing in the Phase III as well, along with providing investigators and their teams with the training required to use them appropriately.

All right, thank you for that. Thank you guys for taking my questions today.

Thank you, Michael.

This concludes our question-and-answer session. I would like to turn the conference back over to Mr. Ofer for any closing remarks. Please go ahead.

So, thank you, everyone, for joining us today. We look forward to continuing our dialogue and updating you on our progress during the next quarterly call.

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.