MediWound Ltd. (MDWD) Q1 2025 Earnings Report, Transcript and Summary

Good day. And welcome to the MediWound First Quarter 2025 Earnings Call. All participants will be in listen-only mode [Operator Instructions]. Please note this event is being recorded. I would now like to turn the conference over to Dan Ferry of LifeSci Advisors. Please go ahead.

Thank you, operator. And welcome, everyone. Earlier today pre-market open, MediWound issued a press release announcing financial results for the first quarter ended March 31, 2025. You may access this press release on the company's Web site 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 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. 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; and Hani Luxenburg, Chief Financial Officer. Barry Wolfenson, EVP of Strategy and Corporate Development is also participating in today's call. Following our prepared remarks, we will open the call for Q&A. Now I would like to turn the call over to Ofer Gonen, Chief Executive Officer of MediWound. Ofer?

Hey, thank you, Dan. And good morning, everyone. We entered the 2025 with strong execution across our clinical, commercial and operational priorities, maintaining the momentum we established in 2024. The VALUE Phase III study for EscharEx is on track and the addition of a collaboration with Kerecis marked a significant milestone, actually bringing nearly all the major wound care companies into our clinical research program. Meanwhile, NexoBrid continues to gain global traction as we advance long term manufacturing investments to support sustained growth. Let's begin with EscharEx, our next generation enzymatic debridement therapy for chronic wounds. Recruitment for the VALUE Phase 3 study for venous leg ulcers is progressing as planned. The global trial will enroll 216 patients across approximately 40 sites in the United States and Europe. Most of The US sites are already open and the majority of the European sites are expected to be activated in the third quarter of 2025. Our EscharEx program is strategically derisked building on the strong results of our Phase II studies. If EscharEx simply replicates those clinical outcomes, the Phase III trial would be considered a clear success with results expected to support both regulatory submissions and commercial positioning. The VALUE Phase III protocol also includes key enhancements, designed to further increase the likelihood of success. We have a larger patient population to increase statistical power and interim analysis at 65% enrollment enabling adaptive adjustments. This assessment is anticipated in mid-2026. And we have standardized treatment protocols to minimize variability and ensure consistency across sites. Finally, it is important to note that EscharEx stays the same, shares the same FDA approved active pharmaceutical ingredient as NexoBrid for nearly identical indication eschar removal. To further strengthen our BLA submission and to enhance commercial readiness, we are planning a 45 patient randomized prospective Phase II head-to-head comparison of EscharEx versus Collagenase scheduled to begin in the second half of 2025. This study will include, both SANTYL and the European Collagenase product IRUXOL, generating critical comparative data that will be instrumental in supporting our market access and pricing strategies. This quarter also marks a major milestone in our strategic research collaborations. We now have participation by almost all the leading global wound care companies across our clinical development programs. Added to the list is Kerecis, which will support our upcoming diabetic food ulcer trial by providing its tissue product, MariGen, it's a fish skin graft for active closure. With Solventum, Mölnlycke, Kerecis, MIMEDX supporting our clinical programs, EscharEx has received strong external validation from most of the key players in the industry. The growing excitement around EscharEx comes from its clear clinical advantages, particularly when we compare it to SANTYL, the only FDA approved enzymatic debridement agent. This was further reinforced by a recent peer reviewed publications in wound, which included a post hoc analysis of our Phase II chronic study in VLUs. The data there confirmed EscharEx's superiority across multiple endpoints, including faster debridement, enhanced regulation tissue formation and improved wound closure. The company has secured the EUR2.5 million grant component of the European Innovation Council Accelerator funding to support the clinical and regulatory advancement of EscharEx for the treatment of diabetic foot ulcers. Following a successful evaluation process, the company engaged in discussions for the EUR13.75 million equity investment, which may not be materialized. We don't expect this to impact our timeline. The DFU study remains on track to begin in 2026, pending alignment with both the FDA and EMA on the trial protocol. The rationale for our excitement around the DFU program was clearly demonstrated at recent major international wound care conferences, including the WHS, SAWC and Yuma. We presented DFU specific data from our first Phase II study of EscharEx. That study included patients with DFU, VLU and with trauma wounds, and the DFU results mirror the strong efficacy we have already seen in VLUs. I will mention a few key findings. Eschar achieved 58% complete debridement compared to just 14% with a gel vehicle. [Granulation] tissue was observed in 42% of EscharEx treated wound versus only 11% with the vehicle. The median time to complete debridement was just 23 days for EscharEx compared to 128 days with the gel. And the median time to wound bed preparation was 24 days for EscharEx whereas it was not achieved at all in the vehicle group. With all this momentum and assuming positive results from the VALUE Phase III study, we believe EscharEx is well positioned to become the global leader in enzymatic wound debridement. Now let's turn our attention to NexoBrid, our innovative enzymatic therapy for severe burns. US adoption of NexoBrid continues to expand with consistent ordering from nearly 60 burn centers. Our commercial partner, Vericel, reported a 207% year-over-year increase and a 31% sequential increase in NexoBrid revenue during the first quarter of 2025. In Japan and Europe, demand continues to exceed manufacturing capacity. We remain on track with the commissioning of our new manufacturing facility with operational readiness expected by year-end 2025. Commercial availability will follow regulatory approvals from the FDA and EMA, and it is anticipated in 2026. This facility will significantly expand our production capabilities, enabling us to meet growing global demand and support sustained revenue growth. NexoBrid also featured prominently in recent scientific and clinical communications. Results from a pediatric Phase III study were published in the peer-reviewed journal Burns, reinforcing NexoBrid efficacy and safety as a nonsurgical eschar removal therapy for both adults and pediatric burn patients. At the American Burn Association Annual Meeting, new data were presented on NexoBrid's emergency use during the Israel-Hamas War. NexoBrid was used to treat patients with blast injuries and complex burns. One hospital reported treating a trauma or a burn patient every minute for 24 hours, highlighting NexoBrid's vital role in mass casualty and emergency situations. Governments around the world took a note of NexoBrid impact. In particular, the US government has expressed interest in establishing a domestic backup manufacturing site. In response, we have initiated planning and site selection for a future US based facility, a project supported by BARDA. We are also seeing increased interest in stockpiling NexoBrid as part of the global emergency preparedness efforts, and we believe some of these discussions will translate into concrete opportunities once our manufacturing capacity expands. And now I would like to turn the call over to Hani to review our financial performance in more detail. Hani?

Thank you, Ofer. And good morning. Total revenue for the first quarter of 2025 was $4 million compared to $5 million in the first quarter of 2024. The decline reflects lower revenue from BARDA-funded development services as the NexoBrid development program for both adult and pediatric population approaches completion. Gross profit for the quarter was $0.7 million, representing a gross margin of 19% compared to $0.6 million and a gross margin of 12% in the prior year period. This improvement reflects a favorable change in our revenue mix. R&D expenses totaled $2.9 million compared to $1.5 million in Q1 2024, reflecting continued investment in the EscharEx VALUE Phase III trial and associated development activities. SG&A expenses were $3.1 million compared to $2.9 million in the prior year period. Operating loss for the quarter was $5.2 million versus $3.7 million in Q1 2024. Net loss was $0.7 million or $0.07 per share compared to a net loss of $9.7 million or $1.05 per share last year. The improvement was primarily driven by noncash financial income related to warrant revaluation. Adjusted EBITDA loss for the quarter was $4 million compared to $2.9 million in the prior year period. Now turning to our balance sheet. As of March 31, 2025, we had $38.7 million in cash, cash equivalents and deposits compared to $43.6 million at year-end 2024. We used $5.1 million to fund our operations during the quarter. That concludes my financial review. Ofer, back to you.

Thank you, Hani. So in summary, we began 2025 with strong execution and meaningful progress across our key programs. The VALUE Phase III trial of EscharEx remains on track, supported by growing scientific evidence and engagement of virtually all major wound care players and wound care partners. We are advancing complementary studies to support market access and future commercial success. NexoBrid continues to gain traction globally with record U.S. sales, high demand in international markets and new clinical data demonstrating its value in both routine and emergency care. Operationally, we remain focused on scaling our manufacturing capabilities to support long-term growth with the new manufacturing facility progressing on schedule and the U.S. expansion plans underway. With a solid foundation, a focused pipeline and strong strategic alliances, we are well positioned to deliver long-term value. With that, I will now turn back the call to the operator to open the line for questions. Operator?

[Operator Instructions] Our first question comes from Chase Knickerbocker with Craig-Hallum.

Maybe just first on manufacturing. Can you remind us what is kind of yet to be done to kind of be ready for scale up by year-end? And then any additional feedback that you've gotten from the relevant agencies around timing of those required regulatory approvals sign-offs, particularly with the FDA?

Chase, great to have you with us today. Let me address the manufacturing question. So as I said, the demand for NexoBrid is increasing due to several factors. We have major market launches, US, Japan, growing governmental interest, expanding of indications, the pediatric indication, the military use. So we are focusing on making sure that we will be able to deliver. We completed the construction of the new facility, and we are now in the commissioning phase. Actually, we are on time, and we anticipate achieving all operational capacity by the end of 2025. After that, we are calling for inspections, EMA and FDA. EMA is easier because we -- they are -- the inspectors are Israelis, so we expect it to be quite sooner. As for the FDA, we are -- there is quite of an uncertainty about how they are doing remote inspections these days. Anyway, we are expecting that only around mid-2026, so we have time.

And then just on the potential for some US capacity. Any thoughts on kind of when investors should be expecting kind of movement there, when we could have seen kind of a site be identified, something formal with the U.S. government in place, et cetera? Do you have any thoughts on kind of timing there?

So as you know, the US government has expressed interest in establishing such a domestic backup manufacturing site. We have a project that we believe will be finished by Q3 this year. After that, we will have better understanding about the location, timing, et cetera. As I said, this project is fully supported by BARDA.

And then you had a number of posters and presentations at SAWC, and I would imagine you had an opportunity to catch up with a lot of the relevant clinicians at a lot of your sites for the VLU study. Any incremental thoughts from them? And as far as enrollment goes, are things kind of to plan as far as what you expected thus far? Anything taking longer or shorter than expected? Just kind of an update on kind of initial cadence of activations and as we look for some initial enrollment progress here in the short term?

So since I met you at this conference, so I know that you have been there. So in this conference, MediWound had a very strong performance, many, many presentations, posters, abstracts were shared. We saw -- we met the majority of the PIs from the United States and the excitement is there. This trial is the most significant and comprehensive trial in venous leg ulcer patients in the past few decades. This is why all the leading wound care companies and the top KOLs are collaborating with us in this endeavor because they know that if it is a success, this trial is going to have a huge impact on the market. So as we said, the recruitment of this study is progressing as planned. We expect the next milestone, the most important milestone is having the interim data mid-2026, and we don't see an issue in getting there.

And the next question comes from RK with H.C. Wainwright.

So a couple of quick questions. So in your prepared remarks, you started talking a little bit about stockpiling of NexoBrid. So in general terms, how are you planning for this? I know you have enough demands on you for the product. So I'm just trying to think in general terms, what could we even be thinking in dollar amounts worth of stockpiling that you could be expected to fill?

So RK, this is great to have you on the line today. It's a great question. Stock -- currently, we have guidance regarding our revenue, okay? We can achieve those numbers. And currently, our preference is to treat patients, not to use NexoBrid. I don't want it to be in the shelf somewhere. So even governments that we are speaking with, they are familiar with our priority, first of all, to treat real patients, and it will also support great commercial launches in specific territories. As for how much governments will buy in 2026, 2027, I can't really give you the numbers. All I can say everything is embedded in the guidance that we are giving, generating revenue of $24 million this year and generating $30 million to $33 million next year. After that, we will know better. I can just share with you that after what countries saw what NexoBrid did during the Israeli-Hamas war, there is a growing interest around many governments, United States, Europe and others, and we are just starting the discussions now.

So in terms of the EscharEx on the ongoing EscharEx Phase III trial, you are saying you have 40 centers running the trial for you. Of the 40 centers, what percentage is in the US? And would there be any reason why the study could get completed ahead of time than what you're anticipating right now?

So it's an interesting question. We are -- first of all, as for the fact, the sites, almost 50% of the sites between 17 to 20 will be in the United States. We have two to three sites in Israel and the rest will be in Europe. So this is the structure of the sites. As for enrollment pace, as you can imagine, there are 1.5 million patients in the United States that are relevant to such a treatment. We chose the most performing sites to participate in the trial. So we don't think that enrollment will be an issue. Having said that, we spend a lot of energies, a lot of money and a lot of efforts making sure that we are recruiting the right patients. I don't want a healthy patient to join the study. I don't want someone that a placebo can cure his wound to join the study. I don't want a person that by mistake, by chance, know the PI to join the study. So the screening process is something which is very, very articulated. So we plan half a patient per site per month. This is our track record of clinical trials in this indication. This is what we know from the previous clinical trials at our CRO. This is the track record that they have. So we don't see a reason that it will be quicker. And actually, we are not in a rush. The only thing that we care about is that this trial will be a success and that it will change the treatment of chronic wounds.

And last question from me, Ofer. In terms of the Phase II head-to-head study against Collagenase, which you plan to start soon, would the results of that study and the Phase III study come around the same time or one would -- the Phase II would come ahead of it? Just trying to understand so that when the whole package will be ready to be sent out to the regulators.

The plan is that the trials will finish. I think the head-to-head study since it didn't start yet, so I cannot tell for sure. But the plan is that it will be finished ahead of the Phase III study. It's a much shorter study. We are looking -- there are all kinds of parameters that will impact especially safety, market aspects, pricing aspect, et cetera. We don't need the long follow-up, the three month follow-up after the study completes in the Phase III trial. So this is much shorter and more simpler trial. As far as we are planning now, we will get the final results before the Phase III is completed.

And the next question comes from Michael Okunewitch with Maxim Group.

I guess I'd just like to follow up a little bit on the head-to-head study. And in particular, if you could help us understand what kind of considerations might go into the pricing strategy. If you're achieving faster debridement than SANTYL with fewer applications, do you have to just -- you then justify enhanced pricing to match cost per application or then do you also need to consider the reduced health care utilization with faster debridement as well? I'd just like to get a sense of kind of what factors and metrics would be relevant for those pricing determinations.

Michael, thank you for joining us today. Barry, can you please address that question?

I think the model that we have out right now with our $851 price target is merely the first component that you mentioned, which is what was the cost of the product over the duration of the treatment period, and we're comparing the average cost of SANTYL over a treatment period versus then what would be the anticipated premium for the average cost of EscharEx. The next part is what we'll be doing. We're actually doing a full market research study on market access and pricing that will get into the second component, which is the HEOR, the health economics component of it, where we do look at what are all the downstream impacts of saving 6 weeks of treatment from the time that it takes to apply the drug, the nursing time, the physician time to what happens to these patients? Do some of them end up in the hospital? Do they have infections that are needed to be treated? And once we get all of that together, if indeed, there is a good pot of dollars that the facility would save on average, then we think that we have the opportunity to take a higher premium against SANTYL.

I really appreciate that additional clarity. And then when thinking about the potential for new stockpiling programs for NexoBrid, would you expect that fees would come from your expanded new manufacturing facility? Or could there be more agreements similar to the U.S. domestic program to set up a dedicated manufacturing for those?

We are planning to have some flexibilities here. We have the current manufacturing facility. We are going to have available the new scale-up manufacturing facility. We are planning a new manufacturing facility in the United States. And we have another facility to support the Department of Defense program, another facility that will be completed by the end of 2025, actually will be completed this year. For MediWound, those facilities significantly expand our manufacturing capacity. We don't want to be in a position three years from now, launching EscharEx telling the analysts again, hey, there is a huge demand, but we cannot support that. So those facilities significantly expand our manufacturing capacity and will provide us with critical support to -- first of all, to a successful launch of EscharEx and to be able to satisfy the demand for all the countries that will be interested in stockpiling.

So there is an expectation that this new US backup manufacturing could be used to help support demand commercially as well, not just stockpiling?

The current facility that we are building in Israel is enough to support the demand we anticipate. Adding a facility in the United States can be not only backup, also to expand manufacturing of NexoBrid and maybe to support us with the manufacturing of EscharEx as well.

And the next question comes from Scott Henry with Alliance Global Partners.

First question, the NIH funding environment is certainly challenging, which could impact BARDA, Department of Defense. It seems like that revenue was down a little bit in Q1. Are you expecting that to rebound significantly in the coming quarters, or how should we think about that overhang even though that's not a main priority, obviously, the product sales are more important? Just trying to get a sense of how to model that development services line.

It's great to having you with us today. Maybe, Hani, do you want to answer this question?

So our guidance for 2024 remains with no change. Actually, we anticipate $24 million in total revenue. As you're all aware, the change in the U.S. administration caused a brief delay in the approval of both BARDA and DoD funded activity during the transition. However, all programs now appear to be back on track, and we do not anticipate any material impact on our revenue -- on our 2025 funding outlook. And the outcome is that the revenue will not change for this year.

So it sounds like we should expect that to rebound, if not the second quarter, certainly the second half of the year.

Let me step here and clarify. In the first 60 days, the administration, they didn't know what they can approve, what they cannot approve, then it was a kind of uncertainty. The feedback that we are getting is everything, at least for our programs is back on track, and we anticipate the $24 million guidance to remain as it is and the program that they are funding as program with a priority that we will keep on getting the US government funds.

And Hani, since I have you there, could you talk a little bit about the below the line, below the operating income, that financial income expense line has been pretty volatile, certainly very positive in this quarter, more of a negative -- not negative, but more of an expense in the prior quarter. How should we think about that below-the-line expense -- financial income expenses going forward? What's a representative number? Is there any noise in there?

I wish I knew the representative number. If I knew it, I wouldn't be here because it's very much influenced by our share price for each -- in the end of each quarter, okay? So the below-the-line expenses is mainly from the financial income or expenses from revaluation of our warrants. So at the end of each quarter, we are doing a revaluation. And if it depends -- it very much depends on the share price. If it was increased or decreased from the beginning of the quarter, and this set the direction of the income or expense, okay? So at the end of this quarter, the share price was $15.52, much below what it is now, okay? So it is very much dependent, and I cannot tell you what to expect. It depends on the market. And I hope we'll see a good transition in our share price, and it will set the opposite way because if it increases, there are expenses, financial expenses. If it decreases, there are financial income. I hope I answered.

I'll just take a look at the filings where we'll get the greater detail. But that is helpful.

If I may add, those options expire in November 2026. These are $34 million of warrants that are way below the money. If you want to look at next quarter, you will see that there was a significant increase in the share price. Probably there will be financial expenses related to that, but we are okay with that. Hopefully, after November 2026, this company will remain with no warrants and this issue will be -- will disappear.

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

Okay. So thank you, everyone, for joining today. We look forward to updating you again in our next quarterly call.

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