MediWound Ltd. (MDWD) Q4 2024 Earnings Report, Transcript and Summary

Good day, and welcome to MediWound’s Fourth Quarter and Full Year 2024 Earnings Conference Call. All participants will be in listen-only mode. [Operator Instructions] After today's presentation, there will be an opportunity to ask questions. [Operator Instructions] Please note today's event is being recorded. I would now to turn the conference over to Dan Ferry of LifeSci Advisors. Please go ahead.

Thank you, operator, and welcome everyone. Earlier today, premarket open, MediWound issued a press release announcing financial results for the fourth quarter and full year ended December 31, 2024. You may access this press release on the Company's website under the Investors tab. I would ask you to review the full text of our forward-looking statements within this morning's press release. Before we begin, I would 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. These statements may involve risks and uncertainties that could cause actual results to differ materially from expectations and are described more fully in our filings with the SEC. In addition, all forward-looking statements represent our views only as of today, and MediWound assumes no obligation to update or supplement any forward-looking statements, whether as a result of new information, future events or otherwise. This conference call is the property of MediWound, and any recording or rebroadcast is expressly prohibited without the written consent of MediWound. 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. Now, I would to turn the call over to Ofer Gonin, Chief Executive Officer of MediWound. Ofer?

Thank you, Dan, and good morning, everyone. 2024 was a pivotal year for MediWound marked by strong execution, significant progress in clinical development, commercial expansion and strategic partnerships. These achievements have strengthened our position, enabling us to drive continued growth and innovation in 2025 and beyond. I'll begin with EscharEx, our next generation enzymatic debridement therapy for chronic wounds. In early 2024, we reported compelling results from our head-to-head analysis against SANTYL. Currently, the only FDA approved enzymatic debridement product in the United States, generating approximately $370 million annually. The data demonstrated EscharEx’s superiority over SANTYL across key clinical endpoints, including higher incidence of complete debridement, faster time to complete debridement, more rapid and effective wound bed preparation, and faster time to wound closure. Clinicians surveyed across diverse care settings, recognized these superior clinical benefits and the substantial value they provide. In fact, recently conducted market research estimates EscharEx peak sales potential at approximately $725 million for its primary indications in the Sled ulcers and diabetic foot ulcers. These clinical benefits also make EscharEx well positioned for upcoming changes in wound care reimbursement. Starting next month, Medicare’s new LCD policy will require full wound debridement and granulation tissue formation before covering cellular- and tissue-based products. This shift strengthened EscharEx’s opportunity as a major commercial opportunity for our company. EscharEx now is in the Phase 3. We recently launched the VALUE Global Phase 3 trial to evaluate EscharEx for venous leg ulcers and involving 216 patients across 40 sites in the United States and Europe. The co-primary endpoints of the trial are the incidence of complete bright and the incidence of wound closure. This program is strategically derisked, building on the strong results of our Phase 2 studies with key modifications to maximize the likelihood of success. Modification that includes a larger patient sample size to strengthen statistical power and interim analysis at 65% enrollment, allowing for adaptive adjustment and standardized treatment protocols to minimize variability and ensure consistency. It is also important to note that EscharEx shares the same active pharmaceutical ingredient as NexoBrid, which is FDA approved for a nearly identical indication, eschar removal. The interim assessment, a significant milestone, is anticipated in mid-2026 with full trial completion expected by year end 2026. To further strengthen our BLA submission and enhance commercial readiness, we are planning a 45 patients randomized prospective Phase 2 head-to-head comparison of EscharEx versus collagenase scheduled to begin in 2025. This study will include both SANTYL and the European collagenase product, IRUXOL, generating critical comparative data that will be instrumental in [indiscernible] market access and pricing strategies. The VLU program is supported by strategic research collaborations with leading wound care companies, Solventum, Mölnlycke and MIMEDX. These partners will provide advanced wound care products for our trials, ensuring optimized patient outcomes and standardized wound management across all sites. Additionally, earlier in 2024, we secured €16.5 million in funding from the European Innovation Council to accelerate the development of EscharEx for diabetic food cultures. The Phase 2/3 DFU clinical trial is planned for 2026, and we are pleased to announce a new strategic research collaboration agreement with Kerecis, a subsidiary of Coloplast to support this effort. Kerecis, which is a global leader in wound care solutions will be supplying its fish skin graft for active closure in this trial. Additionally, we anticipate securing another collaboration with a major industry leader to supply their market leading advanced wound care dressings. With these partnerships, MediWound will be working alongside all the relevant key players in advanced wound care, reinforcing our strong industry positioning. Now let's move to NexoBrid, our innovating enzymatic therapy for severe burns. Before we discuss our progress with NexoBrid, I want to take a moment to highlight its critical real-world impact. This past weekend, a devastated night club fire in North Macedonia claimed 59 lives and injured at least 155 people. A medical delegation from Israel equipped with NexoBrid immediately flew in to provide support and treatment. We are grateful that NexoBrid could play such a vital role in this strategy. With that said, in 2024, we achieved significant progress in expanding NexoBrid's commercial reach, generating annual revenue of $20.2 million driven by robust global demand. Moving forward, we anticipate continued strong growth with projected revenue of $24 million in 2025, capped only by our manufacturing capabilities. This growth will be driven by expanding sales in key markets. Europe, where NexoBrid is now available in more than 90 burn centers. Japan, where our partner, Kaken Pharmaceutical, has achieved a remarkable adoption with 400 plus medical facilities using NexoBrid. And the United States, where very strong commercialization efforts yielded a 42% increase in hospital orders in Q4 2024. NexoBrid market's potential was further expanded with FDA approval for pediatric patients, newborn to 18 years old. The pivotal Phase 3 pediatric study data supporting the approval were recently published in Burns, a peer reviewed journal of the International Society for Burn Injuries. Another potential indication expansion emerged during the Israeli Hamas War, where dozens of patients with blast injuries were treated with NexoBrid. The outcomes were remarkable, and the data from these cases will be presented at the upcoming American Burn Association Conference. Additionally, we reported the positive results from the expanded access protocol, NEXT, which evaluated 239 patients across 29 U.S. Burn centers. The study confirms NexoBrid’s safety and efficacy in eschar removal as well as its significant reduction in the need for surgical procedures for burn patients. Operationally, we successfully completed the construction of our state-of-the-art GMP manufacturing facility, which remains on track to reach full operational capacity by late 2025. Commercial availability will depend on regulatory approval from FDA, EMA, which are expected in 2026. This facility will significantly expand our production capabilities, allowing us to meet the growing demand -- the growing global demand and sustain long-term revenue growth. This year, we also strengthened our balance sheet with a strategic $25 million PIPE financing round led by Mölnlycke. This reflects industry confidence in our strategy and provides additional resources to execute our clinical and commercial growth plans. With a robust cash runway of approximately $44 million MediWound is well positioned to deliver on its critical clinical operational and commercial objectives. Now, I'd to turn the call over to Hani to review our financial performance in greater detail.

Thank you, Ofer, and good morning, everyone. I'll now take you through our financial results for the first quarter and full year of 2024. Starting with the fourth quarter, we reported revenue of $5.8 million compared to $5.3 million in the same period last year. Gross profit came in at $0.9 million with gross margin of 15.5%, up from $0.7 million and a 13.5% margin in Q4 2023. R&D expenses were $3 million compared to $1.8 million in the prior year quarter, primarily due to cost related to the EscharEx VALUE Phase 3 trial. SG&A expenses totaled $4 million compared to $2.8 million in Q4 2023, mainly reflecting higher share-based compensation expenses. This resulted in an operating loss of $6.1 million compared to $3.9 million last year. Net loss for the quarter was $3.9 million or $0.36 per share compared to $1.7 million or $0.19 per share in Q4 2023. On a non-GAAP basis, adjusted EBITDA loss was $4.9 million compared to $3.2 million in the same period last year. Now moving to full year, we reported total revenue of $20.2 million compared to $18.7 million in 2023. The increase was primarily driven by higher revenue for Vericel, a new contract with the U.S. Department of Defense. Gross profit for the year was $2.6 million with a gross margin of 13% compared to $3.6 million and a 19.1% margin in the prior year. The decline was mainly due to changes in revenue mix and higher fixed costs associated with scaling our production. R&D expenses came in at $8.9 million compared to $7.5 million in 2023, primarily due to costs related to EscharEx VALUE Phase 3 trial. SG&A expenses were $13.1 million compared to $11.6 million in 2023, mainly reflecting higher share-based compensation costs. Our operating loss for the year was $19.4 million compared to $15.3 million in 2023. Net loss for the year was $30.2 million or $3.03 per share compared to $6.7 million or $0.75 per share in the prior year. The $23.5 million increase was primarily due to financial expenses, mainly from the revaluation of warrants following a 75% increase in our share price in 2024. Non-GAAP adjusted EBITDA loss for the year was $40.8 million compared to $12.3 million in 2023. Turning to balance sheet, we ended the year with $43.6 million in cash, cash equivalent and deposit compared to $42.1 million at the end of 2023. During the year, we successfully raised $25 million through PIPE offering, received $1.2 million from the exercise of Series A warrant and secured $1.2 million grant from the European Commission. We also fully settled our liability with Teva. In total, we used $22.9 million to fund operation, including $6.8 million allocated to capital expenditure, primarily for scale up of our manufacturing facility. That concludes my financial review. Ofer, back to you.

Thank you, Hani. So, in summary, 2024 was a transformative year for MediWound, defined by significant clinical, commercial and strategic achievements. Our strong execution, expanding pipeline and key partnerships position us for sustained growth and long-term value creation. As we continue to advance our programs, expand market adoption and drive innovation, our focus remains on delivering meaningful improvements in patient care. We look forward to providing further updates in our progress in the coming quarters. And with that, I will now turn the call back to the operator to open the line for questions. Operator?

Thank you. Yes, sir. We will now begin the question-and-answer session. [Operator Instructions] Today's first question comes from Josh Jennings at Cowen. Please go ahead.

Thanks for taking the questions and congratulations on the initiation of the VALUE study. Appreciate all the review of the trial design and the path forward. One follow-up was, you have some powerful wound care collaborators in the study, Solventum, Mölnlycke, and MIMEDX. And I was just wondering, what is -- outside of supplying their wound care products for the study, what else are they doing in terms of enhancing study execution? Just wanted to get that under our belt.

Hi, Josh, and thank you for the question. Barry, do you want to address it?

Yes. Thanks, Josh, for the question. Generally speaking, having standardized products across these three key categories, the moist wound dressings, the compression bandaging and the tissue substitute will help just to make sure that all variability is minimized throughout the study, which of course will optimize the outcomes. As far as the companies themselves are concerned, aside from the products that they'll be supplying, they'll also be supplying training. So, in fact, this weekend in Philadelphia, we have our investigators meeting, and there'll be training of all the sites. Those companies will be involved, and on an ongoing basis, if there are any questions related specifically to their products, they'll provide that education and training.

Excellent. Thanks for that. And wanted to ask about the DFU study expect to begin in 2026, maybe funding is in place. It's two-part question. One, should we expect it to be a global trial with the EU funding similar to the VLU study, the VALUE study? And then two, maybe just outline what's required in just a similar pathway that you took for VLU in terms of getting trial design approved by the FDA and EMA. Love to just see you walk us through that again, sorry to make you review it.

So, the Phase 3 study with the DFU patients will be as close as we can to this Phase 3 study of the VLU patients. The only difference is that we have less data that we have for VLU patients. So, in order for the agencies to agree to that structure of the study, we need to get their sign off. Our plan is to approach both FDA and EMA in the second half of this year with a protocol that is based on the data that we have to date. We have a few dozens of patients that we treated with DFU patients and the data looks basically similar to what we have with VLU, but we need to have it approved. This is why when we guide about this study, we say a Phase 2/3 study because maybe we need a kind of an interim assessment and shift into a Phase 3 down the road. Having said that, we need to get clearance from the agencies before we can give a lot of details. Our thoughts about how the study will look is currently posted on our website, and it looks quite similar to the VLU trial. With this trial, we will also have strategic collaborations the same as we have with the VLU trial, but it will be with different partners.

Excellent. And just one last one on NexoBrid. As it made great progress in terms of doing state-of-the-art GMP manufacturing facility in place and ramping up capacity this year. Understand that regulatory approvals are necessary for the product to be commercially available, which is when is the earliest that regulators can get into, I guess, do the inspection and move forward with clearance? I know you don't have any control over the timing, but when is the earliest that they could start that process? And it sounds you're expecting approvals in ‘26.

So currently, our guidance for the revenue reflecting the fact that we will get in the beginning of 2026 approval in Europe. And by mid-2026, we'll get FDA approval. The thing that we need to have in place in order for those approval to take place is that we need to make sure that we are able to manufacture product with the same quality and the same characteristic of the current manufacturing facility that we have, which is quite smaller. After we finish proving that we can do the same, we need to manufacture a few batches of both NexoBrid for the United States and for Europe. Europe demands three months of stability after that they come for an inspection. This is why we expect the European approval to be earlier. And the U.S. FDA, the guidelines is that we need to wait six months of stability. So, these are the timelines, and this is why we guided in the beginning and in the middle of 2026 both approvals.

And our next question today comes from Francois Brisebois with Oppenheimer. Please go ahead.

Hi, thanks for the questions and congrats on the progress this year in ‘24. I was just wondering if you can touch base, you started your call talking about the Medicare update. Can you just remind us when that came in place, and how -- just a little more color on how do you think that is a positive for MediWound? And then the second question is more on the interim analysis. Just a reminder, I think you mentioned it on the timing of that for the trial of the Phase 3 and what are the different outcomes that can come out of this interim analysis?

Okay. Thank you for your question. Barry, can you step in to address the first question and I will answer the interim assessment one?

Sure, of course. So, with regard to the Medicare question, recently as you're likely aware, the seven local MACs, the Medicare Administrator Contractors posted final changes to what's called an LCD, a Local Coverage Determination policy related to the usage of cellular and/or tissue-based products, CTPs. This category has exploded in the last several years to as high as $3 billion in the U.S. And while several dramatic changes were written into the draft policy, as it turns out, the final policy ended up not really too different than the current one. This new policy becomes active in less than a month on April 13, 2025. One key change is the slight limitation on the number of applications of tissue that could be put in place on a patient, during one complete episode. That number has gone down from 10 previously to four, but it does have the ability to do an additional four, if the wound situation warrants additional applications. And for these additional four, the sites must complete some additional paperwork, but that extra work is not deemed to be too time consuming to keep them from doing so. That's the bigger change that the industry will focus on. From a MediWound perspective and how it relates to EscharEx, another meaningful change from this new LCD is the increased attention to documentation required showing that the wound is completely debrided and covered in granulation tissue prior to application of any tissue substitute to the wound. And given that this is what EscharEx does so well, it debrides and it gets wound bed, the wounds prepared, this will position our drug as the optimal product of choice when surgery or sharp debridement is not deemed to be the best option.

Okay. Barry, I have nothing to add to that. Thank you for answering. As for the interim assessment, as I said in my prepared remarks, this program is strategically derisked. MediWound succeeded in 14 out of 14 clinical studies, and we have no plans to fail in the most significant study that we are conducting. So, we plan an interim assessment after 65% of the patient in the study, which is 140 patients, are treated. And that two outcomes to this assessment. One, 90%, there is a 90% probability of success. The 90% power for success is maintained. And in this case, we are stopping the enrollment of the study. By then, more than 200 patients will be already included in the study. And then we just are waiting for the follow-up and the study is done. If we see that the likelihood of success is less than 90%, let's say, 77%, we have some flexibility in the protocol to include additional few dozens of patients in order to maintain the 90% probability of success. If everything goes as we planned, the interim assessment should be by mid-2026 and the study completion assuming that 90% probability of success is maintained, the study completion is by the end of 2026. I hope I answered the question.

And our next question today comes from RK from H.C. Wainwright. Please go ahead. Please go ahead.

Thank you. Good afternoon, Ofer and Hani, and good morning, Barry. A couple of questions. Barry, thanks for explaining the LCD, the new LCDs that was going to become official in a month. So based on what you're saying regarding the granulation of the tissue, is there a way where you at least if you can compare for us how SANTYL performs versus what we should expect from EscharEx? And based on that, does EscharEx has potential to be better than what SANTYL does right now?

So, Barry, do you want to address it?

Sure. Well, a couple of things. Firstly, and thank you, RK for the question. As we announced the results from this head-to-head Phase 2 study earlier this year and EscharEx was shown above SANTYL in all the key endpoints, whether that was time to complete debridement, incidence of complete debridement and also time to wound closure. With regard to the -- so right there off the bat, if you're a treating physician and you have a wound that comes in and you want to get towards a CTP for active closure, you're going to know that the data suggests that, EscharEx can get to that CTP within only a couple of weeks that the average is going to be five to six applications within a couple of weeks and the published data, even outside of for SANTYL, even outside of our Phase 2 analysis suggests that it's more along the lines of six to eight, if not even more weeks. So, there's going to be an incentive to use EscharEx because it will get to that CTP application much, much more quickly than would SANTYL.

Thank you for that. And then, Ofer, a quick question on the VLU, the ongoing VLU study. Is there any possibility for this study to enroll quicker than expected so that we can expect data earlier, whether it's the interim or the final complete data set later next year?

Yes. So, hi, RK and thank you for this question. It's a great question because I was asked about it again and again by my Board yesterday. I wouldn't expect a quicker enrollment that many patients, we are in the largest centers in the United States and Europe, that a lot of patients that are available, but we are making sure that we are recruiting the right patients. I want patients with real chronic wounds. I don't want patients with a wound which is not that severe, and even a placebo will do something. So, we're spending a lot of time and a lot of effort in screening and making sure that no patient is getting into the study unless he has a real chronic wound, a real heart rate wound because our intention is that placebo will do nothing to it. I don't mind waiting another month, another two months. I'm not incentivizing centers to recruit as many patients as they can as quickly as they can. On the contrary, I'm just making sure it's a very lucrative study. Everyone wants to get to be treated with ancillaries that we are getting, the most expensive dressings, the most effective pressure garments. We know that we will have -- there is a lot of demand to participate in this trial. Our motivation is to make sure that it is done adequately, and I would not expect quicker enrollments.

Okay. Thanks for that. And then, on the collaboration with BARDA, in terms of identifying a U.S. facility and trying to plan and design a facility in the United States. What is the status there? And also, can you give us any color as to how you're going to manage these big projects you just got done with the Israeli facility? And what's the timeline, if you so decide and identify a specific site in the United States? And how does it play into the expansion of NexoBrid from what you're yet to accomplish that's already been signed up for?

So, the facility in Israel that is going to be in full capacity scale by the end of this year and getting the approval by mid next year, we will have there the capacity to support the foreseeable market of NexoBrid, both in the United States and globally. Having said that, the U.S. government recognized the need to having a backup facility in the United States. So, we are now in a pool. So, we got some funding to identify location, for an ID location for such a facility. We are planning such a facility. We are having additional indications such as the temperature stable formulation and additional indications that we are working on that this facility will need to support. So, we have the funding for that. Hopefully, by the end of this year, we will know exactly what is required in order to finalize building such a facility. I would expect a three-year effect. It will not have any impact on our revenue guidance because we are speaking now on 2027, 2028. But we will have a lot of additional capacity either to manufacture more EscharEx or to manufacture the military use indication, et cetera. So, it's a project which is very important for us, but it won't have any impact on the next four years other than getting funding from the U.S. government.

And our next question today comes from Chase Knickerbocker with Craig Hallum. Please go ahead.

Good morning. Thanks for taking my questions. Just a couple on the VLU study around enrollment. So, can you just queue us in on what you're hearing from prospective centers as far as what they think enrollment rates that are feasible are? And then, how are the early site activation activities going, everything is planned so far? And then along those lines and with the LCD, there's a number of skin sub trials going on as a result of the clinical evidence requirements in that LCD we were referencing. Are you watching out for any competition for patients or what are you hearing from these centers? Sorry for the multiparter. Thanks.

Hi, Chase. And I hope I remember all the thought of the question. Let's start with the end because this is how my memory works. When we did the feasibility study, feasibility testing about which sites to pick, we chose sites that do not have competing trials. Having said that, we might have one trial or two competing in specific sites, but none of them can compete financially in our trial. We are much complicated trial. We are paying much more money for each patient per center around $100,000 per patient, which is at least three or four times more than they are getting from simpler CTP trials. So, we do not identify it as an issue. This is the last part of your question. As for the rates, we are aiming for the same rates that we had in the previous Phase 2 chronic study, which is half a patient per center per month. Very feasible, it is also based on the experience of the CRO that we are working on in this Phase 3 study. And it looks something that all our calculations are based on these numbers. It can be a little bit quicker, but as I said as I answered to, I think, RK, I don't -- we are not pushing to we are not -- we are focusing on the quality of the trial and not in trying to record as many patients as possible quicker because the patients are there. Did I miss any part of the patient, Chase?

Yes. And then just on the site activation side, that was all very helpful. And just on the site activation side, has everything happened to plan, anything that's going better or anything that's taken a little bit longer? I know it's early days.

Currently, we were well prepared to start the study. So, we have the agreements in place and the sites are very enthusiastic, and we don't see any delays. On the contrary, we are again, we started -- we just started in the United States. So at least something 50% of the site will open only in the next couple of months. But we are in a very good place. And in the United States, there is a lot of enthusiasm around this specific trial.

Good. And then just maybe one for Hani. If we think about R&D spend this year as the VLU trial ramps up, is that per patient as they're enrolled the right way for us to think about it and model R&D? Or are there other startup expenses we should be thinking about? Maybe just any way you can help us think about R&D spend in ‘25? Thank you.

Yes. I think that in 2025, our R&D expenses will increase compared to 2024. Of course, it derives from as Ofer said per patient, the cost will be around $100,000. So, as we aiming to enroll around 100 patients this year. You can do the calculation and the result is that we will -- the R&D cost will increase substantially compared to 2024.

Thank you. And our next question comes from Michael Okunewitch with Maxim Group. Please go ahead.

I guess first off, I'd just to ask a little bit about, on the DFU study, could you talk about the rationale for partnering with Kerecis? And does this replace the MIMEDX grafts? Or is it a different type of grafts?

So, the rationale is that we want to work with the best products, and we don't want to be associated with a specific advanced wound care company. So, if you look at the CTP, the best data as far as we know in venous leg ulcers are MIMEDX, and this is why we signed with them. And the best result that we see in diabetic foot ulcers are of Kerecis, Coloplast. This is why we picked them. As you can imagine and based on the environment and the CTP and the LCD and the reimbursement, all of them are interested to participating in such trial to generate more data and to be used by as many sites as possible. So, we have the ability to choose and we are happy with those specific two partners that we picked.

Okay. And then, when we look to your 2025 revenue guidance, could you help us understand where that $4 million in incremental growth comes from? If we are expecting the EMA approval on the facility to come in early 2026?

Yes. So, as I'm saying, we do not expect to sell more NexoBrid units, not substantial more NexoBrid units in 2025. There are a couple of two or three weeks more that we can manufacture due to all kinds of activation effort that we had last year. So, we have a few more weeks of manufacturing. And also, we increased the price a little bit where we could, and we are shifting territories. There are more profitable territories. So, the numbers according to the current plan, the math shows that the revenue will increase quite substantially. But again, it is still based on the same capacity, maybe another two or three weeks more and higher prices.

Thank you. This concludes our question-and-answer session. I'd like to turn the conference back over to management for closing remarks.

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

Thank you. This concludes today's conference call. We thank you all for your participation and you may now disconnect your lines. Have a wonderful day.