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spk15: Ladies and gentlemen, please stand by. Your conference call is scheduled to begin momentarily. Thank you for your patience and please continue to stand by. Thank you. Thank you. Thank you. Thank you. Thank you. Ladies and gentlemen, thank you for standing by, and welcome to the Q3 MediWound 2020 conference call. At this time, all participants are in a listen-only mode. After the speaker presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 1 on your telephone. Please be advised, today's conference is being recorded. If you require any further assistance, please press star 0. I would now like to hand the conference over to your speaker today, Jeremy Pfeffer. Please go ahead.
spk08: Thank you, Sydney, and good morning, everyone. Earlier today, MediWound issued a press release announcing financial results and provided a business update for the third quarter of 2020. You may access that release on the company's website under the Investors tab. With us today are Sharon Malka, Chief Executive Officer of MediWound, and Boaz Gorlavi, Chief Financial Officer. Following management's 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 Meadowood's expected future performance, future business prospects, or future events or plans are forward-looking statements as defined under the Private Security 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 MetaWars. 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 a risk factor 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. This 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 Sharon Malka, Chief Executive Officer. Sharon?
spk02: Thank you, Jeremy. Good morning and good afternoon to our listeners in Israel. Thank you everyone for joining us today on our third quarter 2020 earnings call. We are proud of our third quarter achievements as our team continued to navigate through the challenges of the COVID-19 pandemic. We are very pleased with our third quarter financial results as we generated strong revenue growth compared with prior year driven by the procurement of NexoBREAD by BARDA for emergency response preparedness. In addition, the third quarter was highlighted by several important milestones towards our goal of providing NexoBREAD as a new standard of care for eschar removal in patients with severe burns. First, the FDA accepted the NexoBREAD BLA and provided us with a PDUFA target date in mid-2021. Second, the DETECT study was completed, and the 24-month patient follow-up safety data was comparable across all arms. Third, we completed the patient enrollment stage in the NexoBridge pediatric study, and lastly, continue to enroll burn patients in the next expanded access protocol. In the Escarex program, we continue to actively recruit patients in our US Phase II study for treatment of venous leg ulcers, and we initiated pharmacology studies to explore additional clinical benefits of Escarex. We continue to address challenges associated with the COVID-19 pandemic while prioritizing the health and safety of our workforce and maintaining operational efficiency and flexibility. While COVID-19 continues to cause considerable uncertainty, we expect to maintain growth and we are optimistic that we remain on track to strengthen our company further. Let me now provide some more color on our recent achievements and review of our third quarter highlights. We are pleased to see product revenues growing and the global expansion of NexoBREED to new territories. We generated strong revenue growth in the third quarter, primarily as a result of BARDA acceptance of the first shipment of NexoBREED as part of its mission to build national preparedness for public health emergencies. The first shipment represents a major milestone in our long-standing partnership with BARDA. As a reminder, the initial BARDA procurement of NexoBREED is valued at $16.5 million, and we expect additional quarterly prorated deliveries and revenues from this procurement throughout the end of 2021. In September, the U.S. FDA accepted for review our BLA submission for NexoBREED for ESCA removal of deep partial thickness and full thickness burns and assigned a PADUFA goal date of June 29, 2021. This represents a major milestone in the path to bringing NexoBREED to market in the U.S. and we look forward to working together with BARDA, VeriCell, and the FDA during the regulatory review process. We are pleased to report that we completed the US Phase III Detect Study, including the collection and analysis of the long-term patient follow-up safety data. As a reminder, in early 2018, we announced the results of the US Phase III Detect Study which were robust across all endpoints. The study met its primary endpoint and all of its secondary endpoints. Subsequently, we reported a 12-month follow-up safety data, which was comparable across all study arms with no safety signals observed. The 24-month safety data of cosmesis, function, and quality of life was again comparable across all study arms, the NexoBREAD arm, gel vehicle, and the standard of care arm. Additionally, the overall safety profile of NexoBREAD was consistent with the previous data and no new safety signals were observed. As agreed with the FDA in our pre-BLA meeting, we plan to submit the 24-month safety data as part of a post-approval commitment. We recently announced the completion of the enrollment stage of the phase three NexoBREAD pediatric study, KIDS. Completing the enrollment stage of the KIDS study is an important step towards our goal of providing NexoBREAD as a treatment option for pediatric patients with severe burns, giving NexoBREADs potential to address the unique challenges in treating children with severe burns with the current standard of care. We anticipate reporting top-line results from this study, including the 12-month follow-up data during the second half of 2021. As we await FDA review, we continue to enroll patients in our NexoBridge Expanded Access Program next, To date, 22 U.S. burn centers were trained with a majority actively treating burn patients, and we expect to activate additional clinical sites before year-end. We see increase of the use of NexoBREED with more burn patients treated in more burn centers across the U.S. The completion of the kids' enrollment stage followed the FDA's agreement to allow the NexoBRED expanded access protocol to be expanded and to include pediatric as well as adult patients. The inclusion of pediatric patients in the next protocol will allow additional physicians to expand their experience with NexoBRED in pediatric patients and expand the national capacity of trained physicians. The next program, importantly and strategically, keeps us engaged with the key burn centers in the U.S. as our U.S. commercial partner, foreign exobreed Varicell, is actively preparing for commercial launch, as discussed in detail during the recent Analyst and Investor Day. We were encouraged by the KOL's enthusiasm for an exobreed effect, and how, upon approval by the FDA, it could change the treatment paradigm for ESCA removal of severe thermal burns. VeriCell provided an overview of the potential market opportunity in the U.S., estimating a total addressable market of over $200 million. with a target of 140 burn centers across the U.S., most of which are already VeriCell customers. In addition, VeriCell reviewed its extensive ongoing pre-launch and medical initiatives, which include significant expansion of its burn sales team, development extensive education and support plans, and cost effectiveness and pricing analysis. Let me now shift gears and update you on the escharic development program. We continue to actively recruit patients in our Phase II US study for the treatment of venous leg ulcers in compliance with applicable governmental orders and clinical site policies and procedures, as we expect an interim assessment toward mid-2021. Since the reinitiation in June, we continue to initiate new clinical sites across the U.S., and we currently have 25 clinical sites open and ready to enroll patients, with the majority having already begun enrollment. While considerable uncertainties related to COVID-19 remain, we expect to add additional clinical sites in the U.S. before year-end, and our team continues its efforts to have additional clinical sites out of the U.S. We also believe that SKRx can provide additional clinical benefits and address other areas of unmet medical needs where enzymatic debridement can be helpful, such as reduction of biofilm burden. there is a consensus among clinicians that biofilm and aggregates of microorganism encapsulated in a self-created matrix contributes to delay in wound healing and that it may be possible to use enzymatic debridement agent such as Escarex to promote improved healing. Multiple preclinical studies have reported that enzymes, including bromelain, show PROMIS as an effective treatment for reduction of the biofilm burden, independent of its debridement capabilities. As part of our initiative to explore the pharmacological effect of Escarex, we have initiated pharmacological studies to assess the effect of Escarex on biofilm burden, as well as other clinical effects associated with chronic wounds. We look forward to sharing more details with you about our development plan in this area in the near future. Let me now turn the call over to Boaz for a summary of our financials for the quarter.
spk03: Boaz? Thank you, Sharon. Good morning, everyone, and good afternoon to our listeners in Israel. First, I would like to update that we are continuously monitoring the COVID-19 crisis and implementing prudent measures to reduce and control our operating expenses while maintaining flexibility for additional cost reduction in the future if necessary. We're also very satisfied with our next revenue growth driven by the deliveries to BARDA and global expansion resulting with cash inflows to further support our cash position. I would like now to provide you with an update on our financial performance for the third quarter of 2020. Revenues for the quarter-ended September 30, 2020 were $6.6 million, compared with the $5.1 million for the third quarter of 2019, an increase of 29%. Revenues from products in the quarter-ended September 30, 2020 were $3.2 million, an increase of 189% in comparison to the third quarter of 2019, primarily driven by bought-up accruements. As a result of this procurement, we expect to maintain consistent product revenue growth on a year-over-year basis. Gross profit for the quarter ended September 30th was $2.8 million compared to a gross profit of $1.2 million for the third quarter of 2019. Gross margin increased from about 23% in the third quarter of 2019 to about 42% in the third quarter ended September 30th, 2020. As a result of revenues from BARDAS procurement, gross margin from sales of products increased to about 65% from the 40% in the third quarter of 2019. Research and development expenses for the quarter ended September 30th were $2.1 million compared with the $1.6 million for the third quarter of 2019. The increase was a result of SCRX clinical development. Selling, general, and administrative expenses for the quarter ended September 30th were 2.2 million, in line with the third quarter of 2019. Operating loss for the quarter ended September 30th was 1.5 million, compared with an operating loss of 2.7 million in the third quarter of 2019. Net loss for the quarter ended September 30th was $1.9 million, or $0.07 per share, compared with a net loss of $0.2 million, or $0.01 per share, for the third quarter of 2019, which included $2.8 million profit from discontinued operation. Excluding the discontinued operation profit, net loss for the third quarter of 2019 was $3 million and $0.11 per share. Adjusted EBITDA, as defined below, for the quarter ended September 30, 2020, was a loss of $0.8 million compared with a loss of $2 million for the third quarter of 2019. I'd like now to move to year-to-date 2020 financial results. Revenues for the nine months ended September 30, 2020, were $15.1 million compared with $26.3 million in the first nine months of 2019. Revenues from products were $5 million in the nine months ended September 30th, reflecting an increase of 100% compared with the parallel period, excluding the $17.5 million upfront payment from the various licensing agreement for NextBridge. Operating loss for the nine months ended September 30th, 2020, was $6.5 million compared with an operating profit of $7.6 million in the parallel period, which included the $17.5 million upfront license payment, and $1.7 million of deal-related expenses. Excluding the upfront license payment and deal-related expenses, operating loss for the first nine months of 2019 was $8.2 million, which reflects an improvement of 21% in the first nine months of 2020 versus a parallel period. The company net loss for the nine months ended September 30th was $7.5 million, or $26 $0.08 per share compared with a net profit of $8.4 million or $0.31 per share for the first nine months of 2019, which included a $17.5 million upfront license payment, $1.7 million dealer-related expenses, and discontinued operating profit of $2.8 million. Excluding the upfront license payment, net of dealer-related cost, and discontinued profit, net loss for the first nine months of 2019 was $10.2 million, or $0.37 per share. Adjusted EBITDA for the nine-month edit September 30, 2020, was a loss of $4.7 million, compared with a profit of $10.5 million for the first nine months of 2019, which included the upfront payment of $17.5 million from the virtual licensing agreement, net of relative payment of $0.7 million. Moving now to our balance sheet. Cash and short-term investment as of September 30, 2020, was $25 million, compared with $29.5 million as of December 31, 2019, with no debt. The company remained on budget in the first nine months of 2020 for its operational activities. We reiterate our expectation of cash use for operating activities for the full year to be in the range of $8 to $10 million. With that, I have concluded our financial overview, and I will now turn the call back over to Sharon. Sharon?
spk02: Thank you, Boaz. As you can see, it was a very busy and productive third quarter for MediWand, and much to expect in the coming future. We will continue to support our partner VeriCell with the preparation for commercialization, and we look forward to working with the FDA for the regulatory review process of NexoBREAD. We are actively recruiting patients for our SCRx US Phase II study, and we're exploring the pharmacological effects of SCRx on wound healing. We are grateful to our employees, the physicians, the patients, and all of our partners as we continue to navigate through the challenges of COVID-19 pandemic. With that, we concluded our prepared remarks And it's now my pleasure to open up the call for your question. Operator?
spk15: Thank you. Ladies and gentlemen, if you have a question at this time, please press the star and the number one key on your telephone. Once again, that's star one to ask a question. And if you'd like to remove yourself from the queue, please press the pound key. Our first question comes from Ryan Zimmerman with BTIG. Your line is open.
spk04: Good morning and good afternoon. Thanks for taking the questions. So, Maybe I could ask one on buyer's procurement on Nexobrid. And, you know, certainly encouraging to see the procurement revenue this quarter. Can you just talk a little bit about your expectations for cadence through 21 on the Nexobrid revenue? Is it generally consistent quarter to quarter? Is there some lumpiness? Maybe just some color there. And then, you know, my follow-up question is just around the agreement with Verasol and how you're helping Veracel prepare for their launch, or conversely, how they're helping you prepare for the launch of NexoBread in the U.S. Any color there would be appreciated. Thanks for taking the questions.
spk02: Thank you, and good morning, Ryan. So we were indeed excited with the first delivery of NexoBread to BARDA this quarter as part of its effort for emergency response preparedness. The second delivery to BARDA, the seventh quarterly delivery to BARDA is expected to take place in this quarter, followed by subsequent quarterly deliveries throughout 2021 on a prorated basis. Currently, we are expecting to recognize revenues of approximately 3.7 million in 2020 from BARDA procurement and the balance throughout 2021, again, prorated. Overall, The gross initial procurement of BAR, the gross revenues is 16.5 million, of which about 10.5 million is our portion, and the balance is VeriCell's portion. Regarding your second question, regarding the activity and the support with VeriCell, So VeriCell is responsible as a U.S. commercial partner. VeriCell is responsible for commercializing the product in the U.S. As reflected in the recent analyst day, they are currently conducting an extensive pre-launch and medical initiative. which includes significant expansion of their sales team. It includes development of educational and support plans and, of course, cost-effectiveness and pricing analysis. Our support is mainly focused on the following. One, we are running the next program in the U.S., and the next program, as we mentioned before, is importantly and strategically and keep us both VeriCell and MediWound engaged with the key burn centers in the U.S. while they are treating on a routine basis with NexoBread. And two, the cost-effectiveness and pricing analysis is conducted together with BARDA, VeriCell, and IQVIA as our lead vendor for that. And we provide them with additional scientific tools peer-reviewed paper and publication from Europe and globally to support the expected launch upon BLA approval. Thank you.
spk05: Thank you for taking the questions.
spk15: Thank you. And our next question comes from Raj Denhoi with Jefferies. Your line is open.
spk09: Hi. Good morning. Maybe just following up a little on that last question, you know, when you think about the $3.2 million you did of product revenue in the quarter, can you tell us what percentage of that or how much of that was tied to the procurement of Nexabrid by Bard and how much was your sales of Nexabrid outside the United States?
spk02: Sure.
spk03: I will turn the call to Brad, please. Hi, Raj. Good morning, and thank you for the question. So, Bard procurement for the quarter was $2.1 million. And 1 million to 3.2 is from sales outside of the U.S.
spk09: Okay. And to that point, you know, as you think about, you know, Nexabrid getting commercial in the United States over the next year or so, you know, is there any potential for that to have sort of a bit of a halo effect or any impact on your sales outside the United States, you know, as it gets FDA approval and sort of gets that stamp of approval? Could it have an impact on what you're doing at OUS?
spk02: Thank you for the question, Raj. First, we do think that, first of all, the key market or the focused market for NexoBridge is, of course, the U.S. market, which represents a major opportunity for NexoBridge. Having said that, we do have an expectation to growth in other territories as a result of two main things. the launch and takeoff of NexoBrit in the U.S. market can support other international markets such as the EU. And two, we do expect to get additional marketing approval in some territories where our distributor submitted the file for marketing approval, and following the approval, we expect launch in these territories.
spk09: Okay, that's helpful. And maybe just one quickly on escorex. So you mentioned, you know, the trial is enrolling again, and you have this mid-2021 timeline for the interim assessment. What I'm trying to get at is how risk-adjusted that is. You know, when you think about the path between here and what you'll need for that interim assessment in the VLU study, is that a firm date in your mind at this point? And when you say mid-2021, is there anything more you can tell us about when that interim look might come?
spk02: Yes, so thank you for this question. First, I would like to say that we are pleased with our site initiation since the reinitiation of this study in last June. We're currently having 25 active sites participating in the study, primarily in the U.S., with the majority of them having already begun enrollment of patients. We do expect to add additional clinical sites in the U.S. before year-end, and our team continue its effort to have additional clinical sites out of U.S. as part of our efforts to address the COVID-19 challenges. We plan to have eventually around 30 to 35 clinical sites, active sites, as part of our plan for interim assessment towards mid-2021. And while considerable global uncertainties related to COVID-19 remains and recently increasing with the second wave of the pandemic, we believe that more time is required to evaluate the pace going forward of the recruitment, which is subject to governmental policies, individual clinical facilities policies, and, of course, the willingness and ability of patients to arrive to clinical sites to get these treatments.
spk09: Okay, so it sounds like you're confident at this point, but there is a healthy amount of uncertainty, I suppose, in that mid-21.
spk02: Exactly. Today we are comfortable with our plan, but as we're all facing now the second wave worldwide, let's see what will be the result. We are actively taking some measurement and activities to address potential disruption, but currently we are on plan.
spk16: Great. Thank you. Thank you.
spk15: Thank you. Our next question comes from the line of Kevin DeGieter with Oppenheimer. Your line is open.
spk07: Hey, guys. Thanks for taking my question. Thanks for the detailed updates. With regard to the expansion of clinicians being targeted under the next study to include pediatrics, should we think of those as additional surgeons substantially within you know, the same, you know, hospitals, you know, as the adult population, or is this, you know, increase, you know, the range and the footprint of institutions that you're able to get into prior to launch, you know, those that are strictly pediatric or those for whom you'll be targeting pediatrics but where, you know, previously they were not enrolling as, you know, for adult patients?
spk02: Thank you for the question, Kevin. Currently, we have 22 active sites across the U.S. that are actively treating burn patients with NexoBREAD, while additional sites are in activation process with the goal to have about 30 sites participating in the expanded access program by year-end. To date, about 51 patients were treated successfully with NexoBREAD, while the protocol, the original protocol, enables up to 150 patients to be treated. Now, with the completion of the pediatric study enrollment stage, and the FDA has agreed to allow the next program to be expanded and include also pediatric, and it will impact as follows. One, we will have additional sites that can treat. There are some sites, limited number of sites, that are dedicated for pediatric population. Most of the sites are treating both adults and pediatrics, but you correctly asked, in most of the cases it's different clinicians or different physicians, different teams within the burn centers. So we for sure anticipate to expand the experience of additional clinicians with Nexobrid and also to expand the number of burn centers that will treat with Nexobrid.
spk07: Yeah, and following up on that, you know, I appreciate the granularity with regard to, you know, potential TAM for the pediatric, you know, subsegment in the U.S. I think you called out around 5,000 patients. How should we think about, you know, the relative concentration of the pediatric patients in terms of, you know, sites? And, you know, of those 5,000, you know, how many in general terms, you know, or portion do you think – or typically treated by some of the centers, you'll be able to gain access through the next protocol?
spk02: I don't have the exact number, but I can just give you a rough estimation. I assume that 80% of the overall pediatric population is treated on the same burn centers that treat also adults, in some cases by other teams. And the balance is treated in specific burn centers for pediatrics, dedicated for pediatrics. We saw it also in the pediatrics study that we conducted, and we also see it now in the next study of protocol where we are now opening or in the process of activation of additional sites and expanding the population of the study.
spk07: Super helpful. Thank you for taking my questions.
spk15: Thank you, and our next question comes from the line of Josh Jennings with Cohen. Your line is open.
spk01: Hi, good morning. Good afternoon, Sharon and Boaz. Thanks for all the updates and the details here. I wanted to just focus a couple questions on escorex, you know, the exploration of the pharmacological effects on biofilm burden. I know it's still early days, but is there any more color you can use in terms of what these actions may entail? and when you may update the investment community on those results.
spk02: Thank you for your question, and good morning, Josh. As discussed in the preparatory mark, we believe that ESCA can provide additional clinical benefits and address other areas of unmet medical needs on top of debridement of chronic wounds. One of them is the reduction of the biofilm burden. As you probably know, there is a consensus among clinicians about the delay of wound healing because of the biofilm. And since there are multiple clinical studies that demonstrated that enzyme and bromelain, which is the key component of our product, of our API, show promise as an effective treatment of reduction, so we have now initiated a pharmacological studies to assess and explore the pharmacological effect of S-Corex. And we look forward to sharing more details with you in the first quarter of Q1 regarding the development plan and the status of those pharmacology studies.
spk01: No, that's great. And then we just think about some of the value-creating events in the S-Corex program and the inner analysis mid-next year. seems to be a potential big deal as long as things work out and this trial continues after that assessment, you'll have this other details around escorex and the effect on biofilm burden. When do you see the potential to open up a strategic process again, similar to what you did with Nexabreed? Is there anything in your mind where you would unlock enough value where that second strategic process could commence. Thanks a lot for taking the questions.
spk02: Thank you for the question. So this is something to see in the future, but I assume that the positive interim assessment can accelerate the potential process. but definitely final results or top-line results of this study. We are a data-driven company, and we believe that the data of this Phase II study will support, one, discussion with the FDA regarding the next stage of development or next step of development towards PLA, and two, may potentially support any further discussion or reach out of potential wound care players in the market.
spk10: Great. Thanks, Sharon. Thank you.
spk15: Thank you. Our next question comes from the line of Swayam Pakula from Ramakhan with HC Rainright. Your line is open.
spk13: Thank you. Good afternoon, Sharon and Boaz. Most of my questions have been answered. Just a couple of them. In terms of the next study that, you know, you're conducting in the U.S., you said there are, I think, 21 or 22 centers open at this point. How many, you know, for you to reach your... your time point of data analysis in the second half of 21, how many additional centers do you think you need to add so that it's an optimal number to reach your goal? That's question number one. And the other question is, do you have an idea of when you would publish the complete analysis of the DTAC study?
spk02: Thank you for your question. So I'll start with the second question. We now have the study completed and the data analyzed. I assume that in the first quarter of 2021, we will have a final CSR so we can have the full data set of the DTEC study. As agreed with the FDA, the 24-month safety data will be submitted as a post-approval commitment, unless during the review process they will ask for this data because it's already available. Regarding your second question, for the next, so you correctly described that we currently have 22 active sites in the U.S. treating patients with Nexobrid, and we plan to have about 30 sites. we will keep enrolling patients to the next study until the BLA will be approved and the product will be launched two, three months following the approval of such a BLA. And from this point in time, we will keep treating pediatric population under this protocol going forward.
spk13: Thank you. One last question, if I may. You know, talking about the pediatric population, population that you want to include in this. If you can expand the label to the pediatric patient, can you give us an idea of what sort of a market expansion we are looking at once we have that patient group also included?
spk02: Thanks for the question. So first of all, the completion of the enrollment stage of the pediatric study is an important step towards our goal of providing next-of-breed for treatment for this specific population, giving the potential of Nexopri to address the unique challenges of treating children. We anticipate reporting top-line results from this study, including the follow-up data, the 12-month follow-up data in the second half of 2021. Based on our experience with the DETECT study and the BLA, we believe that we can submit the pediatric indication expansion of NexoBREAD to the FDA based on the 12-month follow-up data, while the 24-month follow-up data will be a post-marketing submission. And so we plan to have a pre-BLA meeting with the FDA in the first half of 2021, and if the FDA accepts our submission plan. We anticipate submission in the second half of 2022.
spk13: Thank you. Thank you for all that color.
spk17: Thank you very much.
spk15: Thank you. And I'm not showing any further questions at this time. I'd now like to turn the conference back to management for further remarks.
spk02: Thank you, operator. Thank you, everyone, for joining us today. We look to continuing to execute on our strategy and bringing new therapies to market. And to update you again on our next 2020 full-year update call. Thank you and have a great day. Bye-bye. Bye-bye.
spk15: Ladies and gentlemen, this concludes today's conference call. Thank you for your participation. You may now disconnect. Everyone have a good day. you Thank you. Thank you. Ladies and gentlemen, thank you for standing by and welcome to the Q3 MediWound 2020 conference call. At this time, all participants are in a listen-only mode. After the speaker presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 1 on your telephone. Please be advised, today's conference is being recorded. If you require any further assistance, please press star 0. I would now like to hand the conference over to your speaker today, Jeremy Pfeffer. Please go ahead.
spk08: Thank you, Sydney, and good morning, everyone. Earlier today, MediWound issued a press release announcing financial results and provided a business update for the third quarter of 2020. You may access that release on the company's website under the Investors tab. With us today are Sharon Malka, Chief Executive Officer of MetaWound, and Boaz Gurlevi, Chief Financial Officer. Following management's 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 Meadowood's expected future performance, future business prospects, or future events or plans are forward-looking statements as defined under the Private Security 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 MetaWound. 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 a risk factor set forth in MetaWound'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. This 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 Sharon Malka, Chief Executive Officer. Sharon?
spk02: Thank you, Jeremy. Good morning and good afternoon to our listeners in Israel. Thank you, everyone, for joining us today on our third quarter 2020 earnings call. We are proud of our third quarter achievements as our team continued to navigate through the challenges of the COVID-19 pandemic. We are very pleased with our third quarter financial results as we generated strong revenue growth compared with prior year driven by the procurement of NexoBreed by BARDA for emergency response preparedness. In addition, the third quarter was highlighted by several important milestones towards our goal of providing NexoBREAD as a new standard of care for eschar removal in patients with severe burns. First, the FDA accepted the NexoBREAD BLA and provided us with a PDUFA target date in mid-2021. Second, the DETECT study was completed and the 24-month patient follow-up safety data was comparable across all arms. Third, we completed the patient enrollment stage in the next pediatric study, and lastly, continued to enroll burn patients in the next expanded access protocol. In the S-CAREX program, we continue to actively recruit patients in our US Phase II study for treatment of venous leg ulcers, and we initiated pharmacology studies to explore additional clinical benefits of Escarex. We continue to address challenges associated with the COVID-19 pandemic while prioritizing the health and safety of our workforce and maintaining operational efficiency and flexibility. While COVID-19 continues to cause considerable uncertainty, we expect to maintain growth and we are optimistic that we remain on track to strengthen our company further. Let me now provide some more color on our recent achievements and review of our third quarter highlights. We are pleased to see product revenues growing, and the global expansion of NexoBREED to new territories. We generated strong revenue growth in the third quarter, primarily as a result of BARDA acceptance of the first shipment of NexoBREED as part of its mission to build national preparedness for public health emergencies. The first shipment, represent a major milestone in our long standing partnership with BARDA. As a reminder, the initial BARDA procurement of NexoBREED is valued at $16.5 million and we expect additional quarterly prorated deliveries and revenues from this procurement throughout the end of 2021. In September, the U.S. FDA accepted for review our BLA submission for NexoBREED for ESCA removal of deep partial thickness and full thickness burns and assigned a PADUFA goal date of June 29, 2021. This represents a major milestone in the path to bringing NexoBREED to market in the U.S. and we look forward to working together with BARDA VeriCell, and the FDA during the regulatory review process. We are pleased to report that we completed the U.S. Phase III Detect Study, including the collection and analysis of the long-term patient follow-up safety data. As a reminder, in early 2018, we announced the results of the U.S. Phase III Detect Study, which were robust across all endpoints. the study met its primary endpoint and all of its secondary endpoints. Subsequently, we reported a 12-month follow-up safety data, which was comparable across all study arms with no safety signals observed. The 24-month safety data of cosmesis, function, and quality of life was again comparable across all study arms, the next hybrid arm, gel vehicle, and the standard of care arm. Additionally, the overall safety profile of NexoVrid was consistent with the previous data and no new safety signals were observed. As agreed with the FDA in our pre-BLA meeting, we plan to submit the 24-month safety data as part of a post-approval commitment. We recently reviewed announced the completion of the enrollment stage of the Phase III Nexobred Pediatric Study, KIDS. Completing the enrollment stage of the KIDS study is an important step towards our goal of providing Nexobred as a treatment option for pediatric patients with severe burns, giving Nexobreds potential to address the unique challenges in treating children with severe burns with the current standard of care. We anticipate reporting top-line results from this study, including the 12-month follow-up data during the second half of 2021. As we await FDA review, we continue to enroll patients in our NexoBridge Expanded Access Program next. To date, 22 U.S. burn centers were trained with a majority actively treating burn patients, and we expect to activate additional clinical sites before year end. We see increase of the use of NexoBREAD with more burn patients treated in more burn centers across the U.S. The completion of the kids enrollment stage followed the FDA's agreement to allow the NexoBRED expanded access protocol to be expanded and to include pediatric as well as adult patients. The inclusion of pediatric patients in the next protocol will allow additional physicians to expand their experience with NexoBRED in pediatric patients and expand the national capacity of trained physicians. The next program, importantly and strategically, keeps us engaged with the key burn centers in the U.S. as our U.S. commercial partner for NexoBread, Verisail, is actively preparing for commercial launch, as discussed in detail during the recent Analyst and Investor Day. We were encouraged by the KOL's enthusiasm for NexoBread effects and how, upon approval by the FDA, it could change the treatment paradigm for ESCA removal of severe thermal burns. VeriCell provided an overview of the potential market opportunity in the U.S., estimating a total addressable market of over 200 million, with a target of 140 burn centers across the U.S., most of which are already VeriCell's customers. In addition, VeriCell reviewed its extensive ongoing pre-launch and medical initiatives, which include significant expansion of its burn cell theme, development extensive education and support plan, and cost-effectiveness and pricing analysis. Let me now shift gears and update you on the escharic development program. We continue to actively recruit patients in our Phase II US study for the treatment of venous leg ulcers in compliance with applicable governmental orders and clinical site policies and procedures, as we expect an interim assessment toward mid-2021. Since the reinitiation in June, we continue to initiate new clinical sites across the U.S., and we currently have 25 clinical sites open and ready to enroll patients, with the majority having already begun enrollment. While considerable uncertainties related to COVID-19 remain, we expect to add additional clinical sites in the U.S. before year-end, and our team continue its efforts to have additional clinical sites out of the US. We also believe that SKRx can provide additional clinical benefits and address other areas of unmet medical needs where enzymatic debridement can be helpful, such as reduction of biofilm burden. There is a consensus among clinicians that biofilm, and aggregates of microorganisms encapsulated in a self-created matrix contributes to delay in wound healing and that it may be possible to use enzymatic debridement agents such as Escarex to promote improved healing. Multiple preclinical studies have reported that enzymes, including bromelain, show PROMIS as an effective treatment for reduction of the biofilm burden, independent of its debridement capabilities. As part of our initiative to explore the pharmacological effect of Escarex, we have initiated pharmacological studies to assess the effect of Escarex on biofilm burden, as well as other clinical effects associated with chronic wounds. We look forward to sharing more details with you about our development plan in this area in the near future. Let me now turn the call over to Boaz for a summary of our financials for the quarter.
spk03: Boaz? Thank you, Sharon. Good morning, everyone, and good afternoon to our listeners in Israel. First, I would like to update that we are continuously monitoring the COVID-19 crisis and implementing prudent measures to reduce and control our operating expenses, while maintaining flexibility for additional cost reduction in the future, if necessary. We are also very satisfied with our next hybrid revenue growth, driven by the deliveries to BARDA and global expansion, resulting with cash inflows to further support our cash position. I would like now to provide you with an update on our financial performance for the third quarter of 2020. Revenues for the quarter-ended September 30, 2020 were $6.6 million, compared with the $5.1 million for the third quarter of 2019, an increase of 29%. Revenues from products in the quarter-ended September 30, 2020 were $3.2 million, an increase of 189% in comparison to the third quarter of 2019, primarily driven by bought-up accruements. As a result of this procurement, we expect to maintain consistent product revenue growth on a year-over-year basis. Gross profit for the quarter ended September 30th was $2.8 million compared to a gross profit of $1.2 million for the third quarter of 2019. Gross margin increased from about 23% in the third quarter of 2019 to about 42% in the third quarter. quarter ended September 30th, 2020. As a result of revenues from BARDAS procurement, gross margin from sales of products increased to about 65% from the 40% in the third quarter of 2019. Research and development expenses for the quarter ended September 30th were $2.1 million compared with the $1.6 million for the third quarter of 2019. The increase was a result of SCRX clinical development. Selling, general, and administrative expenses for the quarter ended September 30th were $2.2 million in line with the third quarter of 2019. Operating loss for the quarter ended September 30th was $1.5 million compared with an operating loss of $2.7 million in the third quarter of 2019. Net loss for the quarter ended September 30th was $1.9 million, or $0.07 per share, compared with a net loss of $0.2 million, or $0.01 per share, for the third quarter of 2019, which included $2.8 million profit from discontinued operation. Excluding the discontinued operation profit, net loss for the third quarter of 2019 was $3.011 per share. Adjusted EBITDA, as defined below, for the quarter ended September 30, 2020, was a loss of $0.8 million compared with a loss of $2 million for the third quarter of 2019. I'd like now to move to year-to-date 2020 financial results. Revenues for the nine months ended September 30, 2020, were $15.1 million compared with $26.3 million in the first nine months of 2019. Revenues from products were $5 million in the nine months ended September 30th, reflecting an increase of 100% compared with the parallel period, excluding the $17.5 million upfront payment from the various licensing agreements for NextBridge. Operating loss for the nine months ended September 30th, 2020, was $6.5 million compared with an operating profit of $7.6 million in the parallel period, which included the $17.5 million upfront license payment, and $1.7 million of deal-related expenses. Excluding the upfront license payment and deal-related expenses, operating loss for the first nine months of 2019 was $8.2 million, which reflects an improvement of 21% in the first nine months of 2020 versus a parallel period. The company net loss for the nine months ended September 30th was $7.5 million, or $26. $0.08 per share compared with a net profit of $8.4 million, or $0.31 per share, for the first nine months of 2019, which included a $17.5 million upfront license payment, $1.7 million dealer-related expenses, and discontinued operating profit of $2.8 million. Excluding the upfront license payment, net of dealer-related cost, and discontinued profit, net loss for the first nine months of 2019 was $10.2 million, or $0.37 per share. Adjusted EBITDA for the nine months added September 30, 2020, was a loss of $4.7 million, compared with a profit of $10.5 million for the first nine months of 2019, which included the upfront payment of $17.5 million from the various licensing agreements, net of royalty payment of $0.7 million. Moving now to our balance sheet. Cash and short-term investment as of September 30, 2020, was $25 million, compared with $29.5 million as of December 31, 2019, with no debt. The company remained on budget in the first nine months of 2020 for its operational activities. We reiterate our expectation of cash use for operating activities for the full year to be in the range of $8 to $10 million. With that, I have concluded our financial overview, and I will now turn the call back over to Sharon. Sharon? Thank you, Boaz.
spk02: As you can see, it was a very busy and productive third quarter for MediWand, and much to expect in the coming future. We will continue to support our partner VeriCell with the preparation for commercialization, and we look forward to working with the FDA for the regulatory review process of NexoBREAD. We are actively recruiting patients for our SCRx US Phase II study, and we're exploring the pharmacological effects of SCRx on wound healing. We are grateful to our employees, the physicians, the patients, and all of our partners as we continue to navigate through the challenges of COVID-19 pandemic. With that, we concluded our prepared remarks And it's now my pleasure to open up the call for your question. Operator?
spk15: Thank you. Ladies and gentlemen, if you have a question at this time, please press the star and the number one key on your telephone. Once again, that's star one to ask a question. And if you'd like to remove yourself from the queue, please press the pound key. Our first question comes from Ryan Zimmerman with BTIG. Your line is open.
spk04: Good morning and good afternoon. Thanks for taking the questions. So, Maybe I could ask one on buyer's procurement on Nexobrid. And, you know, certainly encouraging to see the procurement revenue this quarter. Can you just talk a little bit about your expectations for cadence through 21 on the Nexobrid revenue? Is it generally consistent quarter to quarter? Is there some lumpiness? Maybe just some color there. And then, you know, my follow-up question is just around the agreement with Veriso and how you're helping Veracel prepare for their launch, or conversely, how they're helping you prepare for the launch of NexoBridge in the U.S. Any color there would be appreciated. Thanks for taking the questions.
spk02: Thank you, and good morning, Ryan. So we were indeed excited with the first delivery of NexoBridge to BARDA this quarter as part of its effort for emergency response preparedness. The second delivery to BARDA, the seventh quarterly delivery to BARDA is expected to take place in this quarter, followed by subsequent quarterly deliveries throughout 2021 on a prorated basis. Currently, we are expecting to recognize revenues of approximately 3.7 million in 2020 from BARDA procurement and the balance throughout 2021, again, prorated. Overall, The gross initial procurement of BAR, the gross revenue is 16.5 million, of which about 10.5 million is our portion, and the balance is VeriCell's portion. Regarding your second question, regarding the activity and the support with VeriCell, So VeriCell is responsible, as a U.S. commercial partner, VeriCell is responsible for commercializing the product in the U.S. As reflected in the recent analyst day, they are currently conducting an extensive pre-launch and medical initiative which includes significant expansion of their sales team. It includes development of educational and support plans and, of course, cost-effectiveness and pricing analysis. Our support is mainly focused on the following. One, we are running the next program in the U.S., and the next program, as we mentioned before, is importantly and strategically and keep us both VeriCell and MediWound engaged with the key burn centers in the U.S. while they are treating on a routine basis with NexoBread. And two, the cost-effectiveness and pricing analysis is conducted together with BARDA, VeriCell, and IQVIA as our lead vendor for that. And we provide them with additional scientific tools peer-reviewed paper and publication from Europe and globally to support the expected launch upon BLA approval. Thank you.
spk05: Thank you for taking the questions.
spk15: Thank you. And our next question comes from Raj Denhoi with Jefferies. Your line is open.
spk09: Hi. Good morning. Maybe just following up a little on that last question, you know, when you think about the $3.2 million you did of product revenue in the quarter, can you tell us what percentage of that or how much of that was tied to the procurement of Nexabrid by Bart and how much was your sales of Nexabrid outside the United States?
spk03: Sure.
spk02: I will turn the call to Bart, please.
spk03: Hi, Raj. Good morning, and thank you for the question. So, Bart, our procurement for the quarter was $2.1 million. And 1 million to 3.2 is from sales outside of the U.S.
spk09: Okay. And to that point, you know, as you think about, you know, Nexabrid getting commercial in the United States over the next year or so, you know, is there any potential for that to have sort of a bit of a halo effect or any impact on your sales outside the United States, you know, as it gets FDA approval and sort of gets that stamp of approval? Could it have an impact on what you're doing at OUS?
spk02: Thank you for the question, Raj. First, we do think that, first of all, the key market or the focused market for NexoBridge is, of course, the U.S. market, which represents a major opportunity for NexoBridge. Having said that, we do have an expectation to growth in other territories as a result of two main things. the launch and takeoff of NexoBrit in the U.S. market can support other international markets such as the EU. And two, we do expect to get additional marketing approval in some territories where our distributor submitted the file for marketing approval, and following the approval, we expect launch in these territories.
spk09: Okay, that's helpful. And maybe just one quickly on escorex. So you mentioned, you know, the trial is enrolling again, and you have this mid-2021 timeline for the interim assessment. What I'm trying to get at is how risk-adjusted that is. You know, when you think about the path between here and what you'll need for that interim assessment in the VLU study, is that a firm date in your mind at this point? And when you say mid-2021, is there anything more you can tell us about when that interim look might come?
spk02: Yes, so thank you for this question. First, I would like to say that we are pleased with our site initiation since the reinitiation of this study in last June. We're currently having 25 active sites participating in the study, primarily in the U.S., with the majority of them having already begun enrollment of patients. We do expect to add additional clinical sites in the U.S. before year-end, and our team continue its effort to have additional clinical sites out of U.S. as part of our efforts to address the COVID-19 challenges. We plan to have eventually around 30 to 35 clinical sites, active sites, as part of our plan for interim assessment towards mid-2021. And while considerable global uncertainties related to COVID-19 remains and recently increasing with the second wave of the pandemic, we believe that more time is required to evaluate the pace going forward of the recruitment, which is subject to governmental policies, individual clinical facilities policies, and of course the willingness and ability of patients to arrive to clinical sites to get this treatment.
spk09: Okay, so it sounds like you're confident at this point, but there is a healthy amount of uncertainty, I suppose, in that mid-21.
spk02: Exactly. Today we are comfortable with our plan, but as we're all facing now the second wave worldwide, let's see what will be the result. We are actively taking some measurement and activities to address potential disruption, but currently we are on plan.
spk16: Great. Thank you. Thank you.
spk15: Thank you. Our next question comes from the line of Kevin DeGieter with Oppenheimer. Your line is open.
spk07: Hey, guys. Thanks for taking my question. Thanks for the detailed updates. With regard to the expansion of clinicians being targeted under the next study to include pediatrics, should we think of those as additional surgeons substantially within you know, the same, you know, hospitals, you know, as the adult population, or is this, you know, increase, you know, the range and the footprint of institutions that you're able to get into prior to launch, you know, those that are strictly pediatric or those for whom you'll be targeting pediatrics but where, you know, previously they were not enrolling as, you know, for adult patients?
spk02: Thank you for the question, Kevin. Currently, we have 22 active sites across the U.S. that are actively treating burn patients with NexoBREAD, while additional sites are in activation process with the goal to have about 30 sites participating in the expanded access program by year-end. To date, about 51 patients were treated successfully with NexoBREAD, while the protocol, the original protocol, enables up to 150 patients to be treated. Now, with the completion of the pediatric study enrollment stage and the FDA has agreed to allow the next program to be expanded and include also pediatric, and it will impact as follows. One, we will have additional sites that can treat. There are some sites, limited number of sites, that are dedicated for pediatric population. Most of the sites are treating both adults and pediatrics, but you correctly asked, in most of the cases it's different clinicians or different physicians, different teams within the burn centers. So we for sure anticipate to expand the experience of additional clinicians with Nexobrid and also to expand the number of burn centers that will treat with Nexobrid.
spk07: And following up on that, you know, I appreciate the granularity with regard to, you know, potential TAM for the pediatric, you know, subsegment in the U.S. I think you called out around 5,000 patients. How should we think about, you know, the relative concentration of the pediatric patients in terms of, you know, sites and, you know, of those 5,000, you know, how many in general terms, you know, or portion do you think, you know, or typically treated by some of the centers, you'll be able to gain access through the next protocol?
spk02: I don't have the exact number, but I can just give you a rough estimation. I assume that 80% of the overall pediatric population is treated on the same burn centers that treat also adults, in some cases by other teams. And the balance is treated in specific burn centers for pediatrics, dedicated for pediatrics. We saw it also in the pediatrics study that we conducted, and we also see it now in the next study of protocol where we are now opening or in the process of activation of additional sites and expanding the population of the study.
spk07: Super helpful. Thank you for taking my questions.
spk15: Thank you, and our next question comes from the line of Josh Jennings of Cohen. Your line is open.
spk01: Hi, good morning. Good afternoon, Sharon and Boaz. Thanks for all the updates and the details here. I wanted to just focus a couple questions on escorex, you know, the exploration of the pharmacological effects on biofilm burden. I know it's still early days, but is there any more color you can use in terms of what these actions may entail? and when you may update the investment community on those results.
spk02: Thank you for your question, and good morning, Josh. As discussed in the Preparatory Mark, we believe that ESCA can provide additional clinical benefits and address other areas of unmet medical needs on top of debridement of chronic wounds. One of them is the reduction of the biofilm burden. As you probably know, there is a consensus among clinicians about the delay of wound healing because of the biofilm. And since there are multiple clinical studies that demonstrated that enzyme and bromelain, which is the key component of our product, of our API, show promise as an effective treatment of reduction, so we are now initiated pharmacological studies to assess and explore the pharmacological effect of S-Corex. And we look forward to sharing more details with you in the first quarter of Q1 regarding the development plan and the status of those pharmacology studies.
spk01: No, that's great. And then let me just think about some of the value-creating events in the S-Corex program and the inner analysis mid-next year. seems to be a potential big deal as long as things work out and this trial continues after that assessment, you'll have this other details around escorex and the effect on biofilm burden. When do you see the potential to open up a strategic process again, similar to what you did with Nexabreed? Is there anything in your mind where you would unlock enough value where that second strategic process could commence. Thanks a lot for taking the questions.
spk02: Thank you for the question. So this is something to see in the future, but I assume that the positive interim assessment can accelerate the potential process. but definitely final results or top-line results of this study. We are a data-driven company, and we believe that the data of this Phase II study will support, one, discussion with the FDA regarding the next stage of development or next step of development towards PLA, and two, may potentially support any further discussion or reach out of potential wound care players in the market.
spk10: Great. Thanks, Sharon. Thank you.
spk15: Thank you. Our next question comes from the line of Swayam Pakula from Ramakhan with HC Rainright. Your line is open.
spk13: Thank you. Good afternoon, Sharon and Boaz. Most of my questions have been answered. Just a couple of them. In terms of the next study that, you know, you're conducting in the U.S., you said there are, I think, 21 or 22 centers open at this point. How many, you know, for you to reach your... your time point of data analysis in the second half of 21, how many additional centers do you think you need to add so that it's an optimal number to reach your goal? That's question number one. And the other question is, do you have an idea of when you would publish the complete analysis of the DTACT study?
spk02: Thank you for your question. So I'll start with the second question. We now have the study completed and the data analyzed. I assume that in the first quarter of 2021, we will have a final CSR so we can have the full data set of the DETECT study. As agreed with the FDA, the 24-month safety data will be submitted as a post-approval commitment, unless during the review process they will ask for this data because it's already available. Regarding your second question, for the next, so you correctly described that we currently have 22 active sites in the U.S. treating patients with Nexobrid, and we plan to have about 30 sites. we will keep enrolling patients to the next study until the BLA will be approved and the product will be launched two, three months following the approval of such a BLA. And from this point in time, we will keep treating pediatric population under this protocol going forward.
spk13: Thank you. One last question, if I may. You know, talking about the pediatric population, population that you want to include in this. If you can expand the label to the pediatric patient, can you give us an idea of what sort of a market expansion we are looking at once we have that patient group also included?
spk02: Thanks for the question. First of all, the completion of the enrollment stage of the pediatric study is an important step towards our goal of providing next-of-breed for treatment for this specific population, giving the potential of Nexopri to address the unique challenges of treating children. We anticipate reporting top-line results from this study, including the follow-up data, the 12-month follow-up data in the second half of 2021. Based on our experience with the DETECT study and the BLA, we believe that we can submit the pediatric indication expansion of Nexobrid to the FDA based on the 12-month follow-up data, while the 24-month follow-up data will be a post-marketing submission. And so we plan to have a pre-BLA meeting with the FDA in the first half of 2021, and if the FDA accepts our submission plan. We anticipate submission in the second half of 2022.
spk13: Thank you. Thank you for all that color.
spk17: Thank you very much.
spk15: Thank you. And I'm not showing any further questions at this time. I'd now like to turn the conference back to management for further remarks.
spk02: Thank you, operator. Thank you, everyone, for joining us today. We look to continuing to execute on our strategy and bringing new therapies to market. And to update you again on our next 2020 full year update call. Thank you and have a great day. Bye-bye. Bye-bye.
spk15: Ladies and gentlemen, this concludes today's conference call. Thank you for your participation. You may now disconnect. Everyone have a good day.
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