MediWound Ltd.

Good day and welcome to Meadow Wounds second quarter 2022 earnings call. Today's conference is being recorded. At this time, I would like to turn the conference over to Monique Cossie of LifeSite Advisors.

Please go ahead. Thank you, operator, and welcome everyone.

Earlier today, Meadowoon issued a press release announcing financial results for the second quarter ended June 30, 2022. You may access that release on the company's website under the Investors tab. With us today are Ofer Gonen, Chief Executive Officer of Meadowoon, and Boaz Gurlevi, Chief Financial Officer. Following our 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 Meadowern'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 MetaWolf. 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 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. The conference call is the property of Metawound, and any recording or rebroadcast is expressly prohibited without the written consent of Metawound. Now I would like to turn the call over to Ofer Gonan, Chief Executive Officer of MediWound.

Ofer?

Thank you, Monique. Good morning, everyone. Welcome to our second quarter 2022 conference call to discuss our financial and operational highlights and provide you with our corporate updates. I would like to begin by saying how proud I am of the accomplishment we made this quarter and note that this is my first earning call as the new CEO of MediWound. May I add that my transition from being a board member to becoming a CEO has been very smooth. This quarter, we had positive news across all of our programs, and the company is on a strong trajectory. Before I begin my update, I would like to welcome Mr. Nahum Homi Shamir, as our new chairman of the board, Dr. Rob Snyder as our chief medical officer, and Mr. Tzvi Palash as our chief operating officer. Many of you already know Homi from his years as a CEO of Luminex and Given Imaging. He led both companies to M&A transactions valued at billions of dollars. We are honored to have him lead our board and look forward to benefiting from his valuable insights and extensive experience. Dr. Rob Snyder, our top-notch industry leader in wound care, is an outstanding addition to our team. He joined us at the optimal time as escarex becomes our primary focus. Dr. Snyder is the past president of the U.S. Association of Advancement of Wound Care and the past president of the American Board of Wound Management. He published over 165 papers in peer-reviewed journals and served as principal investigator on over 65 randomized controlled trials for innovative wound healing products. He has been instrumental in the development of Escarex, and as of January 1st, 2023, He will assume full responsibility from Professor Leo Rosenberg, who will continue to support MediWound as its medical director. Lastly on that, Steve Palash has over 35 years of proven experience in commercial operation in the healthcare industry. His notable record of seamless execution makes him the right COO for MediWound. Moving now to our performance. It was an excellent quarter for Mary Wundt as we met all of our objectives we set for ourselves. We were successful in both S-Correct Phase II clinical trials. We received FDA's acceptance of the NexoBridge BLA resubmission, and we had positive preliminary results in the MW005 US Phase I-II study. On top of that, made it one significantly enhanced the board and its leadership team. And now we are ready to advance forward, maximizing our strategic alternatives. Let's discuss the S-Correct program. Last month, we hosted a KOL Investor Day with four industry leaders highlighting the current treatment practices the unmet medical need, and the potential commercial opportunity for SCRx. We believe SCRx has the potential to be a blockbuster. The Phase II data from both clinical studies were robust and demonstrated that SCRx is safe, well-tolerated, and effective. Primary and secondary endpoints Escarex is superior to gel vehicle and to non-surgical standard of care in all the relevant parameters. It is better in the incidence of complete debridement, better in number of application needed, and much better in the time to achieve complete debridement. On average, less than four applications are required to achieve a complete debridement with Escarex compared to nearly 13 applications with non-surgical standard of care. Median time to complete debridement is nine days for patients treated with escarex, compared to 59 days for patients treated with non-surgical standard of care. These are huge differences. Additionally, its strong effect on the reduction of biofilm and bacterial burden further demonstrates SCRx superiority over the other debridement modalities. Our market research, which was conducted by a third party, suggests that based on those results, it is anticipated that SCRx will draw market share from all other debridement modalities, not just from the enzymatic and the autolytic debridement, but also from sharp debridements, which is currently considered the most effective standard of care and comprise approximately 50% of this market. As we look at the sales of the current commercial enzymatic debridement agent and drawing additional market share from other modalities, we are optimistic about the commercial opportunity. We believe that we can become a significant player in this $2 billion total debridement market. We aim to be the first choice for the millions of patients suffering from chronic wounds. I strongly encourage you to view the webinar of our KOL event, which is available on our website for an in-depth review of Escorex's capabilities and its potential markets. Since announcing our phase two data, we see growing interest from potential strategic players and we are pleased to have several options to continue advancing this therapy. We are evaluating all possibilities, including collaboration with a potential partner or developing it independently. No matter the pathway, we are moving forward. We will develop S-Corex for both VLUs and DFUs. The development cost for additional territories is marginal, Therefore, we will be developing it for the United States, for Europe, and for other international markets. We believe that global approach will also speed up our time to market. Our next step is to meet with the FDA in the second half of this year to discuss the Phase 3 protocol. We will have more to say about this once we gain clarity on the trial design and the regulatory pathway going forward. We believe that SCRF clinical development program is de-risked not only because of the robust data generated to date, but given the fact that it has the same API as NexoBridge, which is a commercial product with more than 10,000 patients successfully treated worldwide. Moving to our NexoBREAD program. We announced last week that the FDA accepted our resubmission filing and has given a PDUFA date of January 1st, 2023. We continue to have strong partnerships with BARDA and VeriCell, and together we are committed to NexoBREAD becoming a commercial success in the United States. We continue to enroll new patients in the Next Expanded Access program at 24 leading U.S. burn centers with over 165 burn patients who have already been treated successfully with NexoVrid to date. We are on track with our collaboration with the United States Department of Defense for the development of NexoVrid as a non-surgical solution for field care burn treatment for the U.S. Army. The success of this program would open the gate for armies all over the world. It is also expected to simplify our supply chain costs and administration. In Europe, we continue to see burn centers embrace Nexobrid as their standard of care and have seen consistent revenue growth. we are progressing with the pediatric level extension and expecting approval in the first half of 2023. Internationally, we continue to execute on our commercial strategy of global extension. And currently, NexoBREED is already approved in 41 countries. Later this year, we anticipate additional marketing approvals in the larger market including Japan and India. Lastly, we were pleased with the positive initial data from our U.S. Phase I-II study of MW005 for the treatment of basal cell carcinoma, BCC. The data shows MW005 to be safe and well tolerated, with a majority of patients who completed the study achieved complete histological clearance of their target lesions. These encouraging results suggest that we are on the right path to offer a topical treatment for patients with BCC that would be an alternative to a surgery. The market is definitely ready for a safe, effective, and patient-friendly topical solution for BCC. This is another validation for our technology platform. To conclude, we are fundamentally in a very strong position. We believe we have a winner with SCRx with multiple options moving forward. We have a potential approval in the United States for NexoGrid with an excellent commercial partner, and we have a pipeline of follow-on therapies with MW005 in BCC with very encouraging initial data. Let me now turn the call over to Boaz for brief review of our financial. Boaz?

Thank you, Ofer, and good morning, everyone. Total revenues for the second quarter of 2022 were 4.7 million compared to 6.1 million for the second quarter of 2021. This was primarily due to decrease in revenues from products and licenses of $1.9 million compared to $3 million in the second quarter of 2021. This resulted from $0.7 million decrease in emergency stockpile procurement by BARDA and $0.6 million shift in revenues due to the temporary shortage in the supply chain of gel jars. We have managed to address this issue and expect to regain some of those revenues in the third quarter of 2022. Gross profit was $1.1 million, or 24% of net revenues, compared to a gross profit of $2.4 million, or 39% of net revenues for the second quarter of 2021, resulting from the decrease in revenues from products and licensing. Operating expenses were 4.8 million compared to 5.3 million in the second quarter of 2021. The decrease in expenses was primarily driven by the completion of the company's U.S. Phase II SKRS trials. Operating loss was 3.7 million compared to 2.9 million in the second quarter of 2021. Net loss was 4.4 million or 13 cents per share compared to a net loss of 3.2 million or 12 cents per share for the second quarter of 2021. Adjusted EBITDA was a loss of 2.8 million compared to a loss of 2 million for the second quarter of 2021. Moving to year-to-date 2022 financial results. Total revenues for the first half of 2022 were 9.2 1 million compared to 11.9 million in the first half of 2021. Revenues from product and licenses in the first half of 2022 were 3.2 million compared to 5.9 million for the first half of 2021. This was primarily caused by decrease in emergency stockpile procurement by Barda. Also, as stated before, it also included 0.6 million revenue shift due to the temporary supply chain shortage and we expect to regain some of the revenue in the third quarter of 2022. Operating loss was 7 million compared with an operating loss of 4.8 million in the first half of 2021. Net loss was 7.9 million or 26 cents per share compared to a net loss of 6 million or 22 cents per share for the first half of 2021. Adjusted EBITDA was a loss of 5.4 million compared to a loss of 3.3 million for the first half of 2021. Moving now to balance sheet highlights. As of June 30th, 2022, MEDIWOON had 10.4 million in cash and short-term investments compared with 11 million as of December 31st, 2021, pay no debt. MediWon utilized 6.4 million in the second quarter of 2022 for its operational activities, which was affected by 1.8 million delay in collection from customers subsequently received in July, 0.6 million shifts in revenue to the third quarter due to the temporary shortage in supply chain. In addition, Cash use for the quarter included $0.6 million in commissions related to the equity raise during the first quarter. The company is updating its cash use for 2022 to be between $13 to $15 million from the $11 to $13 million due to the impact of management changes and projected revenue shifting to 2023. With that, I have concluded my financial overview and will now turn the call back over to Oso. Oso?

Thank you, Boaz. I'm very proud of our accomplishment this quarter. We have made significant strides across our pipeline of game-changing therapies. While we believe NexoBridge's potential FDA approval is a meaningful step forward for burn care in the United States, Escarex remains our primary focus. We believe it has the potential to be a transformative treatment option for millions of patients suffering from chronic wounds and become a best-in-class debridement preference throughout the medical community. With Escarex, we hope to capture a significant part of the billion-dollar chronic wound debridement market in the United States. I look forward to sharing continued progress throughout the second half of this year. Our anticipated milestones include meeting with the FDA in the second half of this year regarding the SCRx Phase III study, a PDUFA date of January 1st, 2023, with the potential US approval of Nexobrid, and MW005 Phase I-II clinical results for Basal Cell Carcinoma in the second half of 2022. With that, it is now my pleasure to open the call for your questions.

Operator?

At this time, I would like to remind everyone in order to ask a question, press star, then the number one on your telephone keypad. We'll pause for just a moment to compile the question and answer roster.

Your first question comes from the line of Josh Jennings from Cowan.

Your line is open.

Hi, this is Brian here for Josh. Thank you for taking my questions. I want to start on Nexabreed. Just on the prelaunch activity, can you provide an update on the next protocol and whether that will be expanded ahead of the formal launch next year? And also for the BLA itself, have the two needed facility inspections been scheduled or perhaps more broadly, how are you thinking about the completion of those in the context of the FDA's current review times?

Okay. Hi, Brian. Thank you. Thank you for all those questions. So as we said, we continue to enroll patients for the next expanded access program at 24 leading U.S. brain centers. More than 165 patients have been already enrolled. Our plan is to increase the size of the next expanded access program at least until the approval of NexoBridge. We are working with BARDA and VeriCell on that, and we will update you as soon as we have additional information about it. This is for the first question. As for the second one, interesting you asked because we just had the discussion about it. As for the pre-approval inspection, we assume that the FDA will conduct a pre-approval inspection in both facilities in Israel and in Taiwan. As far as we know, FDA schedules a few facility inspections in Israel for the next couple of months, so we don't see an issue about it, and we think it will be as planned.

Great. Thank you. And I also want to follow up on your comments regarding possible partnerships or strategic options, and specific to ASCOREX. When should investors expect a clearer indication of the decision to either independently fund the phase three program versus looking for a partner? And I guess my very specific question is, will that decision be settled by the end of the phase two meeting with the FDA and prior to the start of the phase three program? Or is this an ongoing process that could extend into phase three development itself? So thank you for taking the questions.

Thank you for that question. As I said earlier, since announcing the Phase II data, we see growing interest from potential strategic players. We have several options. We have many inbound approaches. We are evaluating all the possibilities. As you can imagine, when we meet with the FDA in the fourth quarter, we will know better about how the phase three looks like, how many patients are required, and then we will know how much money is required in order to fund this trial. So we can either sign a deal prior or after that. We don't have a decision, and we need to take such a decision soon.

Brian? Hello? Thank you. Okay, good.

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

Thank you for taking the questions. Good to connect with everyone this morning. Maybe just to follow up on a couple other topics. One, the supply chain dynamics that impacted product revenues in the third quarter It sounds like they're fully resolved, Boaz, but can you just give us a little more color there and is this something that you think shouldn't come up again in terms of just getting the appropriate products for the international sales?

First of all, good morning, Ryan, and thank you for the question. This temporary shortage in supply chain relates to gel jars, which is part of the kit of NexoBreathe and gel. That, as we indicated, affected us with approximately 0.6 million, which most of that will be regained in Q3. Last week, we got 20,000 gel jars, so we had enough now inventory for the next year and a half, so we believe that we've resolved it, and currently working on replenishment of all the orders that were pending. So we believe that's something we've overcome already, and of course look forward to continue to support our customers.

That's helpful, and 20,000 sounds like it's certainly enough. The second question I have, Ofer, is if you could just talk a little bit about BARDA's plans to support a pediatric study and just where BARDA stands in terms of continued support for Nexobrid and just how to think about the potential for BARDA revenue over the next few quarters and into 23.

Okay, it's a good question. Thank you. I will answer some things that I cannot answer.

I'm not allowed to. But as you can imagine... Hello? The speaker's line has just been disconnected. One moment while we can reconnect the line.