MediWound Ltd.

Good day, and welcome to the MediWound third quarter 2021 earnings conference call. Today's conference is being recorded. At this time, I would like to turn the call over to Monique Cossie of LifeSci Advisors. Please go ahead.

Thank you, Sarah, and good morning, everyone. Earlier today, MediWound issued a press release announcing financial results for the third quarter 2021. You may access that release on the company's website under the Investors tab. With us today is Sharon Malka, Chief Executive Officer of Mediwoon, 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 Mediwoon'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 many factors beyond the control of medical. The company assumes no obligation to update or supplement any forward-looking statements, whether as a result of new information, future events, or otherwise. Participants are directed to cautionary notes set forth in today's press release, as well as the risk factors set forth in MEDAWN'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 property of MEDAWN, and any recording or rebroadcast is expressly prohibited without the written consent of MEDAWN. Now I'd like to turn the call over to Sharon Malka, Chief Executive Officer of MEDAWN. Sharon.

Thank you, Monique. Good morning to our US listeners and good afternoon to our listeners in Israel. Welcome to our third quarter 2021 conference call to discuss our financial results and provide you with our business highlights. We have been very active this quarter and the subsequent weeks, making progress across our portfolio. We are nearing some very important and value-increasing events in both of our lead programs. We gained regulatory clarity on the path forward for resubmission of the NexoBREAD-BLA following a productive Type A meeting with the FDA, and we continue to advance significantly the SKRx Clinical Development Program towards data readout. Let me begin first with a review of our SKRx program followed by an update on our next OBRIT program. Starting with the SKRx, we made a significant progress in the clinical development plan. Our SKRx team has been very busy as we near completion of enrollment in our ongoing phase two adaptive design trial for the treatment of venous leg ulcers. We anticipate completing enrollment before the end of this year, and currently, expect to report top-line data from this study in the first quarter of 2022, earlier than originally planned. As a reminder, this study is a multicenter, prospective, randomized placebo-controlled study in 120 patients designed to assess safety and efficacy of SKRX in debridement of VLUs. The primary endpoint in this trial is incidence of complete debridement compared with gel vehicles. In conjunction with our Phase II adaptive design trial, our team has also been focused on executing on our Phase II pharmacology study, and we are on track for generating initial data by the end of this year. As a reminder, the pharmacology trial is an open-label, single-arm study in up to 15 patients designed to assess the pharmacological effects of S-Correct in both diabetic foot ulcers and venous leg ulcers. We aim to gain a better understanding of what is happening in the wound bed both during and after debridement with S-Correct and to assess number of clinical effects impacting wound healing. Lastly on S-Correct, we are very pleased to see our in vivo head-to-head comparator study of Escarex published in the Journal of Wound Care, a well-esteemed peer-reviewed paper. The study showed Escarex to be more effective than the commercially available collagenous product in removing the eschar in this porcine eschar model. We are very enthusiastic with this program and believe Escarex has the potential to become a game changer in the chronic wound-deprived market. We look forward to having data from both trials soon, which we believe to add much value to our growing portfolio. Moving to NexoBREED, we recently had a productive type A with the FDA, where there is agreement on the path forward to address the questions and information requests by the FDA. We continue to partner with Ferricel and BARDA, and we're currently targeting a PLA resubmission in mid-2022. We anticipate a six-month review period with a potential approval by year-end 2022. In tandem, we continue to enroll new patients at leading U.S. parent centers to the next expanded access program, which will run through approval. We remain enthusiastic about the prospects and long-term potential for NexoBREED and look forward to potentially bringing this innovative product to the U.S. market as expeditiously as possible. We are thrilled to announce earlier this quarter positive top-line results from our Phase 3 study of NexoBREED in children with severe thermal burns, which met all its primary endpoints with high degree of statistical significance, reinforcing the strong clinical safety and efficacy profile of the product. Following those results, we are planning to submit the data for label expansion in Europe and other international markets during 2022, and believe it would further enhance growth and global expansion of NexoBREED. On the commercial front, we continue to gain commercial traction in Europe and globally. BARDA's procurement for the emergency stockpile continues to drive product revenue growth, and we are expecting to recognize the remaining revenue related to the BARDA procurement by end of the first quarter 2022. In addition, we continue to execute on our global expansion strategy with sustained revenue growth, we see more and more burn centers around Europe embracing NexoBread as their standard of care. Globally, we recently received marketing approvals in Ukraine, Taiwan, and United Arab Emirates and anticipate more to come in lucrative markets such as Japan, India, and others during 2022. Lastly, we recently initiated a U.S. Phase 1-2 study of 005 products for the treatment of low-risk passive cell carcinoma, and a Phase II investigator-initiated trial in non-melanoma skin cancers is running in parallel, with data from both expected in the first half of 2022. Now, I would like to turn the call over to Boaz for a summary of our financials.

Boaz? Thank you, Sharon, and good morning, everyone. I'd like to reiterate our continued product revenue growth from both the U.S. and the ex-U.S. markets as NexoBrit continues to gain traction into new territories. We're expecting to increase our outreach and revenues outside of the U.S., supporting our balance sheet with the growing profitability of NexoBrit. Moving to our third quarter and first nine months of 2021 financial results. Total revenues for the third quarter decreased 4% to $6.4 million, compared to $6.6 million for the third quarter of 2020, and up 5% sequentially. Total revenue this quarter included product revenues of $3.1 million, and development services revenues provided to BARDA of $3.3 million, a slight reduction compared to the $3.5 million for the same period last year. Product revenues this quarter were primarily driven by BARDA's procurement of NEXO-REIT for emergency response preparedness and an increase in sales outside of the U.S. Total revenues year-to-date increased 21% to $18.3 million compared to $15.1 million in the same period of 2020. Product revenues for the first nine months of 2021 were $9 million, an increase of 81% compared to the product revenues of $5 million for the first nine months of 2020. Revenue growths were primarily related to part-up recruitment, increasing sales in Europe, and expansion of next rebate into new territories. Gross profit for the third quarter was $2.5 million, with a gross margin of 39% compared to a gross profit of $2.8 million and gross margin of 42% for the third quarter of last year. Gross margin for the first nine months increased from 35% in 2020 to 40% in 2021. Research and development expenses for the third quarter were 2.9 million compared to 2.1 million for the third quarter last year. The increase was primarily due to clinical development program of SCRx. Selling general administrative expenses for the third quarter were 2.4 million compared to 2.2 million in the third quarter of 2020. Operating loss for the third quarter was $2.9 million compared to a loss of $1.5 million in the third quarter last year. For the first nine months of 2021, operating loss was $7.7 million compared to a loss of $6.5 million in the first nine months of 2020, primarily due to increase in research and development expenses. Net loss for the quarter was $3.3 million, or $0.12 per share, compared to a net loss of $1.9 million, or $0.07 per share, for the third quarter of 2020. For the first nine months of 2020, net loss was $9.4 million, or $0.34 per share, compared to a net loss of $7.5 million, or $0.27 per share, for the following period. Adjusted EBITDA for the quarter was a loss of $2.2 million, compared to a loss of $0.8 million for the third quarter last year. For the first nine months of 2021, adjusted EBITDA was a loss of 5.5 million compared to a loss of 4.7 million for the first nine months of 2020. Moving to the balance sheet highlights, as of September 30th, 2021, cash and short-term investments were 13.9 million compared to 21.6 million as of December 31st, 2020. We remained on budget, utilizing 7.7 million in the first nine months of 2021. We reiterate our cash use guidance for 2021 to be in the range of $9 to $11 million. With revenues growth, barter procurement, and expected cash inflow upon BLI approval, and based on our current operating plan, we believe that existing cash and cash equivalent will be sufficient to fund currently anticipated operating expenses through mid-year of 2023. With that, I have concluded my financial overview and will now turn the call back over to Sharon. Sharon?

Thank you, Boaz. As we approach the end of the year, we remain optimistic about our programs as we move towards important milestones in the coming quarters. We look forward to keeping you updated as we continue to execute. With that, it is now my pleasure to open the call for your questions. Operator?

Thank you. To ask a question, you will need to press star then 1 on your telephone. To withdraw your question, please press the pound key. Please stand by while we compile the Q&A roster. Our first question comes from the line of Josh Jennings with Cowan and Company. Your line is now open.

Hi, this is Brian here for Josh. Thank you for taking my questions. To start on Nexabri, did the scope of the additional work change as part of your recent meeting with the FDA review team? You had previously cited three areas to address and your intention to provide a safety update. Is that still the outstanding work to be done, or has the required work changed in any way? And I have a follow-up on AskRx, if I may.

Sure. Good morning, Brian, and thank you for the question. So the short answer is no. And the more extensive answer is that there are the four things that we communicated before. One is the additional CMC info requested. Next is the inspection required by the FDA at our facilities in Israel and Taiwan. Third, FDA reference observation on the GCP inspection in certain detect sites. And finally, a routine safety update which we are preparing to include as part of the resubmission. So overall, there are four elements that are all moving forward with the support and funding of BARDA. And again, we had a productive meeting with the FDA and agreement on how we were going to respond to their questions and information requests. So with the work that is being done and completed, then it will be assembled into the resubmission package and submitted at this point. Our anticipation, as said, is by mid-year, 2022. And we anticipate a six-month review period with potential approval by year-end 2022.

Okay, thank you for that. And on escorex, do you have a sense of the size and timing of either a second study in VLU or a trial in DFU? And if the upcoming phase two results in VLU are positive, do you have clarity yet on whether these can stand as one of the two pivotal data sets you'll need for FDA approval? Thank you again.

Sure. So I think it's premature at this point to provide some data or expectation for the next stage. First, we need to complete the ongoing phase two study and, of course, the pharmacological study. The next step will be to discuss with the FDA once we have the results of the ongoing Phase II data and the pharmacology Phase II data. We plan to have an end-of-Phase II meeting with the FDA in the second half of 2022, once we have the CSR, the complete study report, to discuss the pivotal stage, which includes, of course, the indications, the sample size required, study design, etc., Once we have this clarity, once we have the data, and then the meeting, we will be able to share much more information with you.

Okay. Makes sense. Thank you.

Our next question comes from the line of Ryan Zimmerman with BTIG. Your line is now open.

Good afternoon, Sharon. Good afternoon, Boaz. Thank you for taking the questions. Just to follow up on a couple things. One, within NexoBrit, what components is VeriCell taking the lead on versus maybe what you guys are taking the lead on for the NexoBrit resubmission? And then I have a follow up on NexoBrit as well. Sure.

So bringing NexoBridge into the U.S. market is a joint collaboration, as you know, which VeriCell as a commercial partner, BARDA as the supporting organization, and of course MediWound with its extensive experience and expertise with NexoBridge in the last 20 years. As to the resubmission itself, we have vast experience with the product given the 20 years of history. VeriCell have a clinical regulatory and operation teams with a great deal of experience and a great deal of success on the regulatory front. So we believe we are in a great position to leverage VeriCell track record, leading the regulatory front. Our years of experience with NextObrid and BARDA's special matter consultants supporting us will bring their personal experience. And we believe that this joint collaboration is providing us with the confidence that we have the best team to achieve the BLA approval.

Okay. As far as usage in Europe goes, Sharon, what types of burns are you seeing as more sites do start to use Nexabrid? Maybe you could just talk a little bit about kind of how the utilization and usage is looking and whether we should view that as an example for how burn surgeons in the U.S. think about use of Nexabrid. Thank you.

Thank you for the question. So I think that what we see now in the last, let's say, one and a half year in Europe is that all leading burn centers that we are targeting and working with basically turn NexoBREED as the standard of care. And if at the beginning they started with specific burns, it sometimes can be small burns, it can be some specific areas like hands, currently it's the standard of care in those leading burn centers. Moving to the U.S. and our expectation, we have to remember that we're currently running an expanded access program in the U.S., in which about 20 to 25 burn centers, leading burn centers in the U.S., keep treating burn patients with NexoBREAD, almost without limitation, up to 30%. All areas, it's less restricted protocol than the DETECT study. So I believe... that the fact they generate more confidence, more hands-on experience with NexoBread will enable them to be more tolerant towards kind of burns to be used once approved. And hopefully it will be also reflected in the uptake of NexoBread in the U.S. market.

Got it. Thank you.

Sure.

Our next question comes from the line of Kevin DeGieter with Oppenheimer. Your line is now open.

Hey, guys. Thanks for taking my questions. I guess as we prepare for the Phase 2 VLU update for XRX, how should we think about sort of the scope of at least the initial top line disclosure? Should we expect to get relatively significant tolerability and safety data alongside of of wound healing, or will you look to potentially hold some data for future presentation or publication?

Thank you for the question, Kevin. As we communicate, we expect to report top-line data from this study in the first quarter of 2022, which is one quarter earlier than originally planned. This will be referring, of course, to the primary endpoint and safety data from this study, and it will be followed with additional, later on it will be followed with additional secondary endpoints and long-term safety analysis, which will come through in the second quarter.

Great. And then just to follow up on the next reverted VLA resubmission, how should we think about, you know, the timeline defined here in the context of the facility inspections, I guess, you know, particularly, you know, Taiwan. I mean, that's a question, at least currently, I'm not sure many of us have a lot of visibility on, you know, what steps will even sort of, you know, enable that process. So how, you know, at what level of detail can you kind of provide some perspective on how that question is currently being handled?

Yeah, so as you know, there are some still some travel restriction worldwide. It's a little premature at this point to estimate what will happen once resubmitted, given the dynamic of the pandemic. And that's something we will discuss with the FDA upon resubmission. But we do know that those inspections outside the U.S. are now occurring. So hopefully we will be in a position that following the resubmission, we will be able to to schedule an inspection in both facilities.

Thanks for taking my questions.

Thank you. As a reminder to ask a question, you will need to press star then one on your telephone. Our next question comes from the line of Swayam Pakola with Ramacamp with HC Wainwright. Your line is now open.

Thank you. Good afternoon, Sharon and Boaz. A couple of quick questions next. You were talking about the EAP program. Just trying to understand, you know, how many patients have kind of either undergone this program or enrolled into this? And, you know, how could you utilize this data, especially when you're going into the resubmission phase?

Thanks, RK, for the question. So the Expanded Access Program, as I said, runs through approval and includes both pediatric and adult population. We continue to actively enroll new patients into this next protocol at leading U.S. burn centers across the U.S. with over 120 burn victims already treated with Nexobrit to date. And, of course, we plan to generate data from this protocol. This is the goal of this protocol from the perspective of the FDA, BARDA, Veritel, and ourselves. Both cost-effectiveness data, usage data, and safety data that can support discussion with the FDA. Of course, the safety analyses of the first 100 patients or something like that will be captured as part of the safety update that will be part of the resubmission, but also other hopefully data that we'll get from this study will support the discussion with the FDA.

Perfect, thank you. So talking about the pediatric study, you said that you would have data from that in 22. So what sort of, you know, where would you publish that data? Is it going to be a publication or would you be presenting at some conference so that we see additional details from that analysis?

Yes. So I believe that the data will be presented in the next ABA, which is anywhere around April next year, 2022. Not less important than just publish the data because we share this data in NPR. We are planning to use this data, leverage this data, and submit it. this data for label expansion in Europe and other international markets, and if accepted, we will be able to submit it during 2022 for label expansion in these territories, and we believe it would further enhance growth and global expansion of NexoBridge Worldwide.

Okay, so the last question from me is, you're talking about a couple of expansion geographies like UAE, I think it was Spain that was other areas that you talked about. Do you have distribution partners already in these geographies, or you are establishing them now? And also, what sort of market are these? Like, what's the market size in these geographies for you?

Yeah, so generally speaking on the international market, I can show you that we continue to execute on our global expenses strategy with sustained revenue growth. As a reminder, our focus is Latin America, CEE countries, Asia Pacific, and EMEA, the Middle East. We recently received marketing approvals in Ukraine, in Taiwan, in the United Emirates, and we anticipate more to come in some lucrative markets. And when we're referring to lucrative markets, we refer specifically to Japan, where the distributor already filed contracts for an approval. We are looking for India, where they distributed the last mile of getting it approved and launched it, and other territories during 2022.

Thank you. Thank you, Sharon and Boaz.

Thank you. There are no further questions. I will now turn the call back to Sharon Malka, CEO of MediWoon, for closing remarks.

Thank you, Sarah, and thank you, everyone, for joining us today. We look forward to updating you again on our next call. Thank you, and have a great day.

Ladies and gentlemen, this concludes today's conference call. Thank you for your participation. You may now disconnect.