MediWound Q4 2023 Earnings Call Transcript

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March 21, 2024

There are 9 speakers on the call.

Operator

Good day, and welcome to MediWound's 4th Quarter and Full Year 2023 Earnings Call. Today's conference is being recorded. At this time, I would like to turn the conference over to Gaia Chamath of LifeSci Advisors. Please go ahead.

Speaker 1

Thank you, operator, and welcome, everyone. Today, before the market opened, MediWound press release announcing financial results for the Q4 full year ended December 31, 2023. You may access that release on the company website under the Investors tab. With us today are Ofer Gonane, Chief Executive Officer of MediWound Hany Luxembourg, Chief Financial Officer and Barry Wolfensson, Executive Vice President of Strategy and Corporate Development. Following our prepared remarks, we will open the call for Q and A.

Speaker 1

Before we begin, I would like to remind everyone that statements made during this call, including the Q and 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 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 so many factors beyond the control of MediMun. 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 the cautionary note set forth in today's press release as well as at 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.

Speaker 1

Now I would like to turn the call over to Ofer Gonane, Chief Executive Officer of MediWound. Ofer?

Speaker 2

Thank you, Gaia, and good morning, everyone. Welcome to MediWound's 4th quarter and full year 2023 conference call. Joining me today are Hany Luxembourg, our Chief Financial Officer and Barry Boltensen, our Executive Vice President of Strategy and Corporate Development. Following our discussion of the financial results and business highlights, we will open the call for questions. I'm excited to share that we had a remarkable year.

Speaker 2

Our unwavering commitment to executing our commercial strategy of NexoBrid, coupled with our substantial operational excellence, has yielded revenue of $19,000,000 Furthermore, we are making significant progress towards initiating our Phase III trial of EscharEx, a product which targets a $2,000,000,000 market. Utilizing the same proven active pharmaceutical ingredient as NexoBrid, EscharEx has demonstrated superiority over the current market leader in Phase 2 studies. Let's begin on NexoBrid had an exciting year on a number of fronts. It generated $19,000,000 in revenue, which was primarily driven by its commercial availability in the United States, Japan and India. Additionally, it received approval for pediatric use in Europe and is currently under review by the FDA for pediatric use as well.

Speaker 2

Moreover, NexoBrid continues to benefit from federal funding in the United States, supporting both emergency preparedness and ongoing research and development activities. The demand for NexoBrid currently exceeds our production capabilities. We are actively scaling up our GMP compliant state of the art facility, which is on schedule for completion by mid-twenty 24. We anticipate achieving full production capacity in 2025. This expansion will enhance our production capabilities 6 fold, enabling us to fulfill the increasing global demand for NexoBrid.

Speaker 2

Now let's discuss each of the drivers for NexoBrid growth in further detail. NexoBrid was introduced to the U. S. Market by our partner Vericel at the end of Q3. Vericel is focused on building a strong foundation for NexoBrid by supporting P and T Committee approvals.

Speaker 2

As the end of 2023, more than 50 burn centers submitted packages to their P and T Committees, out of which over 25 centers gained committee approvals and nearly 20 centers placed initial product orders. Most notably, the clinical outcomes and the feedback from burn surgeons regarding the initial patient treated with NexoBrid have been extremely positive. This is a strong indicator of NexoBrid potential to change the standard of care in eschar removal for patients with severe burns. As for commercial access, CMS granted NexoBrid a permanent J code and transitional pass through payment status. This became effective in January 2024.

Speaker 2

NexoBrid has also successfully launched in 2 major markets, Japan through our partnership with Kaiken Pharmaceuticals and in India through BSV. Both launches have been progressing as planned and have generated further demand for NexoBrid. In Europe, we expanded our commercial activity by establishing a collaboration with Polymedix, which will further facilitate greater NexoBrid usage in Germany, Austria, Belgium, the Netherlands and Luxembourg. The transformative potential of NexoBrid as the new standard of treating of severe burns in emergency scenarios was highlighted during the war in Israel. Last October, we allocated our entire non U.

Speaker 2

S. NexoBrid inventory to meet the critical demand for treating mass casualty burn incidents. NexoBrid paved instrumental in saving lives across both military and civilian sectors. This successful development has sparked increased interest from various global governments in stockpiling NexoBrid for future emergencies. Our partnership with the U.

Speaker 2

S. Government remains solid. We have secured $13,000,000 RMT grant from the U. S. Department of Defense to develop and to manufacture a new formulation for NexoBrid that is stable at room temperature.

Speaker 2

This innovation is intended for the U. S. Army as a non surgical treatment for traumatic burns on the battlefield. Additionally, we have received an extra $10,000,000 from BARDA. This funding is designated for the replenishment of expired product previously procured for emergency readiness along with supporting further R and D efforts.

Speaker 2

We have also received European Commission approval to broaden NexoBrid label in Europe to include patients for all ages. Additionally, a supplemental BLA for pediatric use has been accepted for review by the FDA with a decision anticipated later this year. Considering the pediatric patients, consider that those patients represent approximately 40% of all burn victims, this approval could substantially expand NexoBrid market reach. Overall, we are very pleased with the tremendous progress we have made with NexoBrid this year and the strong global demand we have experienced. As we enter 2024, the influx of order for the entire year has allowed us to project revenues of $24,000,000 Looking ahead, we anticipate significant revenue growth exceeding 40% in the coming years, with revenue projection of $30,000,000 for 2025 $39,000,000 for 2026.

Speaker 2

Now I would like to discuss EscharEx. We are fully aligned with both FDA and EMA on the Phase 3 protocol evaluating EscharEx in patients with venous leg ulcers. The protocol submission is planned for the first half of this year and we anticipate initiating the trial in the second half of twenty twenty four. This will be a multicenter prospective randomized and placebo controlled global trial. We aim to enroll 2 16 patients in over 40 sites that will be randomized 1 to 1 to receive either EscharEx or placebo.

Speaker 2

The trial will focus on 2 co primary endpoints: the incidence of complete debridement and the indication of the incidence of wound closure. An interim assessment is scheduled after 67% of the patients have completed the trial. The study is estimated to take about 24 months to complete. The design of the trial is very similar to our successful Phase II studies and the chosen sample size provides 90% statistical power. We were excited to recently report the results of a head to head comparative analysis of EscharEx versus SANTYL.

Speaker 2

And now I will hand it over to Barry, who will elaborate further. Barry?

Speaker 3

Thanks, Ofer. In our Phase II study, EscharEx demonstrated superior results. Tansyl collagenase ointment, approved in the 1960s, is the current leading treatment for enzymatic debridement of chronic wounds, generating over $360,000,000 in sales in the United States. EscharEx, a complex mixture of enzymes targeting different components of non viable tissue and wounds typically works within 1 to 2 weeks. In contrast, Sansil focuses solely on collagen and often needs 4 to 8 weeks of debridement, usually alongside sharp debridement.

Speaker 3

The results of the head to head analysis are compelling and were achieved with robust statistical significance. Starting with the incidence of complete debridement, 63% of patients achieved complete debridement within 2 weeks with EscharEx versus 0% with SANTYL. Importantly, the estimated median time it took for EscharEx to achieve debridement during the full 85 days of the study was 9 days, while patients treated with Santel didn't achieve the median time to complete debridement. Looking at wound bed preparation, which includes both complete debridement and also having the wound bed completely covered with granulation tissue, a critical step in wound healing, 78 0.3% of patients treated with EscharEx achieved it during the study versus only 37.5% of patients treated with SANTYL. Once again, it was very quick with EscharEx where the median time to achieve it was only 11 days versus no achievement of a median time with SANTYL.

Speaker 3

While the incidence of wound closure was favorable to EscharEx but not statistically significant in this small sample size, the average time to complete wound closure was only 48.4 days for EscharEx versus 76 days for Santal, a full month differential, which reached significance with a p value of 0.05. The safety profile was comparable between the 2. We look forward to sharing this data at 3 leading congresses in the field that are taking place in May this year: the Wound Healing Society, the Symposium on Advanced Wound Care and the European Wound Management Association. Thanks to the Phase 2 promising results, we have garnered much interest from leading companies in the wound healing space and have established research collaborations to support the EscharEx Phase 3 study with 3 ms, Molica and Mymedix. These three companies represent the top offerings in the product categories integral to venous leg ulcer care: compression therapy, advanced wound dressings and cell based products.

Speaker 3

EscharEx is a potential blockbuster and the company is focused and committed the successful execution of the clinical development program and to diligently performing all the pre commercial activities required to ensure an optimal launch. With that, Boker, back to you.

Speaker 2

Thank you, Barry. So to summarize, MediWound has made an outstanding progress in 2023. NexoBrid would launch in 3 major markets. Its indication has been expanded to include the pediatric population in Europe with further potential of pediatric use in the United States later this year. There has been continued commitment in grant funding from the U.

Speaker 2

S. Government. All of these have driven an increased global demand, which we are on track to meet with the scale up of our manufacturing facility. Our promising drug candidate EscharEx is gaining recognition for its potential in revolutionizing chronic wound care with validation from leading global wound care entities. We are eagerly anticipating the commencing of the Phase III study in the second half of twenty twenty four.

Speaker 2

I'll now hand it over to Hani to briefly review our financials. Hani?

Speaker 4

Thank you, Ofer. Let me begin with our revenue for the Q1. In the Q1 of 2023, the company reported revenue of $5,300,000 a decrease from $11,600,000 in the first quarter of 2022. This decrease is mainly due to the BLA approval milestone payment from Vericel received in the previous year. Gross profit for the quarter was $700,000 or 13.5 percent of total revenue compared to the $8,200,000 or 70.2 percent of total revenue in the Q1 of 2022.

Speaker 4

The decrease in gross profit is largely attributed to the BLA approval milestone payment from Vericel in prior year. Turning to our operating expenses. The company's research and development expenses amounted to $1,800,000 a decrease from $2,700,000 in the Q1 of 2022. This reduction is primarily due to the completion of the EscharEx Phase 2 study in 2022. Selling, general and administrative expenses were reported at 2,800,000 dollars slightly less than the $3,000,000 in the same quarter of the previous year.

Speaker 4

The operating loss of the quarter was $3,900,000 compared to an operating profit of $2,100,000 in the Q1 of 2022. The net loss was reported at $1,700,000 or $0.19 per share, which is a decrease from a net loss of $7,500,000 or $1.18 per share in the Q1 of the previous year. This improvement in net loss is mainly due to a favorable adjustment from the revaluation of warrants. The non GAAP adjusted EBITDA for the quarter was a loss of $3,200,000 compared to a profit of $3,400,000 in the first quarter of 2022. This shift primarily results from the revaluation of the warrants.

Speaker 4

Now let's discuss the full year 2023 financial highlights. For the year ended December 31, 2023, the company's revenue totaled $18,700,000 a decrease from $26,500,000 for the year ended 2022. This decrease is once again primarily due to the BLA approval milestone payment from Vericel in the previous year. Gross profit for the year was 3.6 $1,000,000 or 19.1 percent of total revenue, a decrease from $13,200,000 or 49.7 percent of total revenue in prior year. The decrease in gross profit percentage reflects the absence the significant one time payment received in 2022.

Speaker 4

Research and development expenses for the year were $7,500,000 dollars a decrease from 10,200,000

Operator

of

Speaker 4

expenses for the year increased slightly to $11,600,000 from $10,600,000 in previous year. The operating loss for the year was $15,300,000 compared to an 8 point $3,000,000 loss in previous year. The net loss for the year was $6,700,000 or $0.75 per share compared to a net loss of $19,600,000 or $3.93 per share for the year ended December 31, 2022. The non GAAP adjusted EBITDA showed a loss of $12,300,000 compared to a loss of $4,400,000 reported in the previous year. Regarding our balance sheet, as of December 31, 2023, the company's cash, restricted cash and investments stood at $42,100,000 an increase from 34 $100,000 reported in the end of 2022.

Speaker 4

In the Q1 of 2023, the company successfully raised $27,500,000 through a public offering. Throughout the year, the company utilized $70,100,000 to fund its activity. With the current financial standing, we believe the company's cash reserve are sufficient to support operations through profitability. With that, I have concluded the financial review and will turn the call back to Ofer.

Speaker 2

Ofer? Thank you, Hany. To conclude, the company achieved significant milestones in the past quarter and in 2023 overall, and we are confident about 2024 and our future growth. We continue to prioritize increasing our manufacturing capabilities to fulfill both current and future orders and meet the rising demand for NexoBrid and thereby grow our revenue by greater than 40%. EscharEx has demonstrated superior results over the dominant product in this over $2,000,000,000 potential market.

Speaker 2

As we look forward to initiating the Phase III trial in the second half of twenty twenty four, we are delighted to have 3 research collaborations with the top wound care companies supporting us with this study. I'm excited about what the future holds for us as we stay committed to redefining the standard of care with NexoBrid and EscharEx. Now, I would like to open the call for your questions. Operator?

Operator

We will now begin the question and answer The first question comes from Josh Jennings with TD Cowen. Please go ahead.

Speaker 5

Thanks and good morning. Congratulations on all the progress and the increased demand for NexoBrid. Ofer, I was just hoping to just a 2 part question on NexoBrid first, but just seems like the demand is surging globally, U. S. Partner within also in multiple international markets, capacity constraints are kind of are limiting.

Speaker 5

But is there any way to quantify the increased demand that you're seeing here in 2024 versus 2023? And we're assuming that the $24,000,000 revenue guide would be high without capacity constraints and somewhere in between $24,000,000 $39,000,000 for 2026 at that target. But any way to just give us some incremental details or quantification of the increased demand for an extra rate currently?

Speaker 2

Thank you, Josh, for your question. To address that, I will just repeat that currently, we have 3 fold demand more than we can actually manufacture. In the 1st week of 2024, we already got binding orders that are that continues as planned, we see the 40% growth as something that is very conservative. And our expectations and guidance is only limited by our ability to manufacture. So as long as we repeat our guidance by completing the construction of the facility in 2024 and having it in full scale sometime in 2025, we can meet those demands accordingly.

Speaker 2

And I hope I answered your question.

Speaker 5

Yes. Thanks for reviewing that. And just one follow-up on EscharEx. And maybe just help us think about the final steps here that are required before getting full sign off on the Phase 3 study? And then also just on the manufacturing side for EscharEx, is there any where are you there in terms of being able to deliver product for the full study as it kicks off in the second half?

Speaker 5

Thanks a lot for taking the questions. So that's

Speaker 2

a very good question. So the reason that we start the trial in the second half of twenty twenty four is primarily due to the fact that we focused on manufacturing NexoBrid and in order to be able to meet the demand that we have from United States, Japan, Europe, India, etcetera. The last thing that we need to do before initiating the trial is making sure that we're manufacturing enough batches of EscharEx. Actually, we are doing it as we speak. And then we need to wait 30 days for stability, submit the protocols that are already aligned with both the FDA and EMA, and then we can start recording patients.

Speaker 2

So this is the first so for the clinical manufacturing, we don't see any problems. We are now getting ready for the commercial piece. We don't want to be in a position that once EscharEx is approved, we are in the same situation as we are in NexoBrid. We want to be able to launch successfully EscharEx, supporting a multi 100 of 1,000,000 of dollars of demand in the first 1 or 2 years of the launch.

Speaker 5

Understood. Thanks so much.

Operator

The next question comes from Francois Brisebois with Oppenheimer. Please go ahead.

Speaker 6

Thanks for the question. Just in terms of the design, can you remind us on EscharEx, if it's based on the timing of the start of the trial here in the second half, can you remind us maybe the timing and when it'd be realistic for us to expect the interim readout?

Speaker 2

So thank you for the question, Francois. So the trial, we need to recruit 216 patients that will be randomized 1 to 1 EscharEx versus placebo after 67% of the recruitment and after those participants have completed the trial, we have an interim assessment. I would expect that something like 18 months after the study initiates.

Speaker 6

Okay, great. Thank you. And then in terms of the you talked about Vericel and the centers, a little bit of metrics there. 50 centers, 25, just the numbers. Can you maybe help us understand how many centers total are there for Vericel and where do we stand?

Speaker 6

So

Speaker 2

again, Vericel is responsible for the U. S. Market. So it's better to ask them that question. But what I can share with you that there are around 100 centers that treat burn patients for adults.

Speaker 2

And once we get the approval of the podiatric population, there will be additional 30 centers that will be relevant. So all in all, in the United States, there are around 130 centers. Vericel already reported that by the end of last year, they were approached already 50 they got 50 committee engagement, 25 of them already approved. So I think that we have they're doing a very good job with that.

Speaker 6

Okay. And just lastly, quickly, in terms of the shelf life, you talked about expiration and obviously demand can change depending on the expiration. How long does it take for your product to expire?

Speaker 2

The shelf life of NexoBrid currently is almost 3 years. It's 2 years 9 months. But as you can imagine, due to the fact that the demand for commercial I'm not speaking about even stockpiling for commercial use is such a significant. We don't expect any expiration of NexoBrid product. Everything is going to be used.

Speaker 2

Everything that we ship, every vial of NexoBrid that is shipped to a customer is being used in the following few months. So exploration at this stage is not something that bothers us.

Speaker 6

Thank you.

Speaker 2

Thank you.

Operator

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

Speaker 7

Thank you. Thanks. Good morning, Ofer and Tani. So I'm sorry, I also have a question on capacity in NexoBrid. Just trying to think through some of the projections you put out there for 2025 and 26.

Speaker 7

So going to the far end in 2026 and with your projection of $39,000,000 what are you taking into consideration there? Are you taking that you will be able to handle all the demand that is out there at this point? Or you're also including the projected growth from all these territories, whether it is U. S, Japan, India, pediatric approval and the governments?

Speaker 2

Hi, RK. Well, it's a good question. We took conservatively when we looked at the 39, we didn't plan on very significant growth of demand. We are looking at the current demand. We are looking at the performance on specific markets that we are already in.

Speaker 2

For instance, in Japan, their expectation was that we can increase quite substantially our extremely well. So as for 2026, the €39,000,000 we do not include all kind of growth and unexpected positive surprises. It's only based on our ability to know that in 2026, we can meet all the demand that we currently have now. If we have surprises, this specific facility will be able to support more than $80,000,000 in revenue. So we are okay with scenario of unexpected growth.

Speaker 7

Fantastic. And then in terms of on the EscharEx side, Barry was saying there's going to be data presented in 3 different conferences in May. Just want to understand if there will be any updates in these conferences, which can help us kind of figure out how what to expect in the pivotal study in the 216 patient study, which we probably will see some data, as I said, 18 months from the start of the program, which probably is more than 20 6, I would think.

Speaker 2

Let me elaborate a little bit on that. So as you can all figure out the strength of this data of EscharEx versus SANTYL were extremely robust. They position EscharEx to become the market leader in enzymatic agents for the treatment of chronic wounds. There is a lot of interest in the industry allowing this specific data that we have. But the FDA, I want to remind you all, the FDA is focused on the performance of EscharEx versus placebo.

Speaker 2

So we will issue additional data and there is a lot of strategic interest about what we are going to present at the Wound Healing Society, at Symposium of Advanced Wound Care and at the European Wound Management Association. But it will not give you more color regarding our probability of succeeding in our Phase III trial, which is supposed to be easier because it is versus placebo.

Speaker 7

Thanks for taking all my questions. Talk to you

Speaker 2

very much. Thank you, Ashley.

Operator

The next question comes from Michael Okanowich with Maxim Group. Please go ahead.

Speaker 8

All right. Thank you very much for taking my questions today and congratulations on all the progress.

Operator

I guess the first thing

Speaker 8

I wanted to ask is just with the acceptance of the pediatric SBLA, is there a similar thesis here for pediatric patients in the U. S. As you had with Europe where you could see outsized utilization due to the nature of the pediatric burns market or is that a unique feature of the European market?

Speaker 2

I hope that I understand you correctly. We got we received the European Commission approval and brought in the way label in Europe last quarter and now it is for all ages. It will not impact our immediate financial outcome because of the limitation of our capacity. So maybe the proportion between the treatments of adults and pediatric will change a little bit, but it won't impact our bottom line. In the United States, we expect the same.

Speaker 2

We had a very robust Phase III study with podiatric patients. We believe that the FDA will not have different requirements than the European had. So as we guided, we expect to get this approval later this year. Again, the impact on future revenue is quite extensive because the number, the proportion of pediatric population in the United States is approximately 30% to 40% of the overall burn population. Therefore, this label extension should significantly increase the addressable markets.

Speaker 8

I was asking more in terms of the greater degree of utilization because NexoBrid is more gentle and provides less scarring, as you said, with the European population, not in terms of immediate revenue?

Speaker 2

I believe that if you look at how the standard of care in the United States was until a quarter ago. It is even painful to watch, very aggressive, a lot pain and blood associated. We believe that we have an ideal partner in the United States to take over this market quite swiftly, and it will be also adopted the same in Europe. Children are I don't see a parent prefer that his child will go through a painful operation instead of being applied with a topical drug.

Speaker 8

All right. Thank you for that. And then I also wanted to see if you could give me any additional color on the timelines you're expecting for the DoD stabilized formulation? And then would this be limited to DoD sales in the program? Or could this be applicable to foreign governments or first responders in more regions or NGOs?

Speaker 8

Are there other organizations that might also seek to utilize a temperature stabilized formulation?

Speaker 2

So, Michael, this is a very good question. So as I mentioned, we got $13,000,000 R and D funding from the DoD to advance this project. We believe it can open the gate for us for additional armies as well as simplify our supply chain cost and administration moving from cool chain to room temperature. So the project is well underway. We have all kind of very successful or encouraging results, And we are hoping to see the U.

Speaker 2

S. Army embracing the fruits of our collaborations in the next few years. We plan to have a meeting with the FDA next quarter to discuss the development path and to get some guidance of what is required in order to approve this product. I can I should also mention here that this product is, of course, under the license agreement with Vericel? So any implication or any commercial activity in the United States, of course, it's subject to agreement with them.

Operator

At this time, these are all the questions we will be taking today. I would like to now turn the conference back over to management for closing remarks.

Speaker 2

Thank you everyone for joining us today. We look forward to updating you again on our next call.

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