MediWound Ltd.

And welcome to Maddie Woon's fourth quarter and year-end 2022 earnings call. Today's conference is being recorded. At this time, I would like to turn the conference over to Monique Goss of LifeSci Advisors. Monique, please, go ahead.

Thank you, Operator, and welcome, everyone. Earlier today, Meadowoon issued a press release announcing financial results for the fourth quarter and year ended December 31st, 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 Meadowood'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 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 the risk factors set forth in METAWOON'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 METAWOON and any recording or rebroadcast is expressly prohibited without the written consent of METAWOON. Now I'd like to turn the call over to Ofer Gonen, Chief Executive Officer of METAWOON. Ofer?

Thank you, Monique. Good morning, everyone. It is my pleasure to welcome you to our conference call. I'm excited to be here today to discuss the remarkable company achievements in the fourth quarter and throughout 2022. We have made important achievements in all of our programs, positioning ourselves to become a global biopharmaceutical company. During my eight-month tenure as CEO, our progress has been significant, including the FDA approval of Nexobrid, which is now ready for a commercial launch in the United States with our partner VeriCell. This innovative therapy has the potential to transform treatment of severe burns and become the standard of care in the United States as it is already in Europe. Additionally, we are moving Asterix into phase three study in venous leg alters, demonstrating our commitment to advancing treatments for patients in need. Our success is due in part to our strong financial position fueled by fundraising efforts that have brought in $70 million over the past year from top quality institutional investors. Looking ahead, we are well positioned to take advantage of what we believe will be another excellent year. Our team is fully dedicated to realizing the mission of improving patient outcomes and bringing innovative therapies to the global healthcare market. Now let me discuss NexoBreathe in more detail. We were proud to see NexoBreathe approved by the FDA in December. This achievement is a testament to the hard work and dedication of our team, who left no stone unturned in developing the science, conducting the trials, analyzing the data, completing the BLA, and, of course, putting manufacturing protocols in place. We are confident that NexoBridge has the potential to change the standard of care for burn patients in the United States and around the world, and we are proud to be at the forefront of this revolution. We also know that the data and the rigorous review that supported NexoBridge approval validates our technology platform and will support the regulatory pathway for our pipeline products. We look forward to partnering with VeriCell for the U.S. commercial launch of NexoBridge, which has a market potential of $300 million. VeriCell is actively preparing for the launch in the second quarter with their sales teams, medical training, and educational sessions, and we have seen widespread interest and enthusiasm for NexoBridge from burn centers and other healthcare professionals. We are confident in VeriCell's ability to successfully launch NexoBridge and provide access to burn patients in the United States. Our ongoing NexoBreathe expanded access program has allowed physicians at leading burn centers in the United States to gain important first-hand experience using NexoBreathe. We have successfully treated 206 patients at 26 leading burn centers in the United States, and based on their feedback, We are confident that NexoGrid will be an important part of the standards of care practice. We are also pleased to collaborate with the U.S. Department of Defense for the development of NexoGrid as a non-surgical solution for the treatment of burns in the field, and we look forward to continue promoting this project and will provide additional updates this year. Globally, NexoBridge gained marketing approvals in Japan, India, and Switzerland, and we anticipate commercial launches in these large markets later this year. We also anticipate an approval of the pediatric label expansion in Europe by mid-2023, which will further broaden the market and accelerate NexoBridge revenue growth worldwide. NexoBridge generated $26.5 million in revenue last year, and it will be cash flow positive this year. We expect revenue growth to exceed 50% in 2023 due to the product launches, the global demand, and the pediatric label extension in Europe. To meet the growing demand, we are expanding our manufacturing capabilities by scaling up our facility and adding an additional manufacturing line. We are on track to complete this process. Also, in preparation for our expanding needs, we have made some important additions to our team that includes several talented executives who have experience in building world-class facilities, developing innovative wound care products, and executing on commercial operations. This includes Dr. Rob Snyder, our Chief Medical Officer, Ali Palash, our Chief Operating Officer, Barry Wolfensohn, our Executive Vice President of Strategy and Corporate Development, and Alisa Torinova, our Vice President of European Operations. These talents will be essential for expanding our global presence, supporting the increased demand of exobricks. Accelerate our blockbuster opportunity.

That's correct. Now let me turn

to our progress with Escarex, our next-generation enzymatic therapy for chronic and hard-to-heal wounds. MediWound is focused on realizing this billion-dollar market opportunity. Our Phase II results clearly demonstrated that Escarex outperformed the non-surgical standard of care in debridement of venous leg ulcers. With only eight applications over 14-day periods, study met its primary endpoint with a high degree of statistical significance. The median time to achieve complete debridement was nine days in patient treated with Escarex compared to 59 days in the non-surgical standard of care arm. On average, 3.6 treatment applications were needed to achieve complete debridement with Escarex compared to 12.8 applications of the non-surgical standard of care. Results were highly statistically significant. Additionally, our Phase II pharmacology study showed robust results with an average of 3.9 applications to achieve debridement. The study also demonstrated a reduction in biofilm and bioburden. We submitted the protocol design of the Phase III study to the FDA for review. The final trial design will be announced when the discussions with the FDA are completed. We anticipate initiating the study in the second half of 2023. We plan also to submit a request to Emma for the scientific advice on our Phase III protocol and on the clinical development plan of Estaret. This global approach should not have an impact on our timeline. Escarex has gained the attraction of wound care specialists and many important strategic players in the market. Topical debridement agents with the competitive advantages of Escarex would be a significant step forward for patients and caregivers. We are thrilled to have the funding to advance this program as quickly as possible, and are confident that F-Correct has incredible potential to unlock significant shareholder value. Finally, turning to MW005, where I'm excited to update you on our promising biological drug candidates for treating non-melanoma skin cancers. June 4, 2022, we released positive data from our Phase 1-2 study on low-risk basal cell carcinoma, demonstrating that MW005 is safe and well-tolerated. Patients in the study achieved complete clinical and histological clearance of their target regions. We are currently enrolling additional patients in this specific study to optimize dosing and application and expect results in Q3 2023. It is worth noting that MW005 shares the same active pharmaceutical ingredient as Nexovid and Estorex. This platform technology reduces many of the clinical development risks associated with MW005 as it has already been proven to be safe and effective. In conclusion, we are very well positioned for a strong 2023. There are several promising milestones in the future. NexoBridge is set to launch in the United States in the second quarter of this year. Additionally, we anticipate further key global market launches and are preparing for potential pediatric labor expansion in Europe. To support this growth, we are scaling up our manufacturing facilities. Furthermore, we plan to initiate a phase three study with S-Corect and venous leg alters in the second half of 2023 and anticipate additional data for MW005. With a strong balance sheet and nearly $66 million in cash, we are well positioned to support our development and strategic plans for 2026. I'm very optimistic about Mediwound's future and believe that we have established a solid foundation for a continued success. Before I turn the call over to Boaz for review of our financials, I want to take a moment to address the news of his departure that was announced today. Boaz has been an invaluable asset to the company and has provided strong financial and commercial leadership during his tenure. I'm grateful for his support during my transition to CEO and appreciate all that he has done for us. I'm excited to welcome Hani Luxemburg as our new Chief Financial Officer. With a proven track record of 20 years delivering business growth and profitability, I'm confident that Hani will help us continue to achieve our goals and drive our success forward. Boaz will remain with the company through July 31st to ensure a smooth and orderly transition. I want to thank him for his dedication and hard work over those years. With that said, I'll now hand it over to Boaz for a brief overview of our financials. Boaz?

Good morning, everyone, and thank you all for your kind words. I would also like to express my gratitude to all of you, our investors and analysts, for your support and collaboration throughout my time as CFO at MediWood. As Ofer mentioned, I will be stepping down from my role at the end of July. It has been an honor and a pleasure to lead such a talented team of individuals and to spearhead the financial and commercial accomplishments that we have achieved together. I'm proud to have played a key role in driving our growth and success, and I'm confident that the company is in a strong financial position to continue executing its clinical and commercial programs under the new leadership of Ofer as CEO. It was important for me to assist with Ofer's transition as CEO at MediWood and to contribute to the recent fundraising round, as well as to develop and execute on our European operations and our global expansion strategies. With these efforts, I'm confident that MediWound is well positioned for continued success. Not less, it was fun working together. Once again, thank you for the great communication and collaboration over the years. It has been a wonderful journey and it's time for me to move on. Moving to the financial statements. Total revenues for the full year were $26.5 million compared to $23.8 million for the year ended December 31st, 2021, an increase of 12% year-over-year. License revenues were $8.2 million, driven by the $7.5 million of BLA approval milestone from Veristel. Revenues from products were $5.3 million, a decrease of 44% compared to the $9.6 million in 2021, due to bar this procurement completion for emergency stockpiles. Total revenues for the first quarter of 2022 were $11.6 million compared to $5.5 million in the parallel period, primarily driven by the BLA approval milestone of $7.5 million from Verizon. Revenues from products were $1.2 million compared to $1.9 million in the first quarter of 2021 due to $1 million decrease in emergency stockpile procurement by BARDA, partially offset by our European and international sales increase. Gross profit for the year was $13.2 million, or 50% of net revenues, compared to a gross profit of $8.8 million, or 37% of net revenues for the same period in 2021. Gross profit for the quarter was $8.2 million, or 70% of net revenues, compared to a gross profit of $1.5 million, or 28% of net revenues, for the first quarter of 2021. Both for the full year and the quarter, gross margin improvements were driven by the $7.5 million milestone payment from Vericell upon the DLA approval. Total operating expenses for the full year of 2022 were $21.5 million versus $20 million in 2021. Total operating expenses for the fourth quarter were $6 million compared to $5.1 million in the fourth quarter of 2021. Both for the full year and the fourth quarter of 2022, the increase in total expenses was primarily driven by one-time expense related to the BLA approval and the management change. Operating loss for the full year was $8.3 million, compared to an operating loss of $11.2 million for the year ended December 31, 2021. Operating profit for the quarter was $2.1 million, compared to a loss of $3.5 million in the fourth quarter of 2021. The improvement was primarily driven by the $7.5 million milestone payment from Vericel upon the BLA approval. Net loss for the full year was $19.6 million, or $3.93 per share, compared to a net loss of $13.6 million, or $3.5 per share for the year ended December 31, 2021. Net loss for the quarter was $7.5 million, or $1.18 per share, compared to a net loss of $4.2 million, or $1.07 per share, for the fourth quarter of 2021. The increase in loss for the full year and the quarter was due to non-cash financial expenses derived from the September and October fundraising warrants evaluation. The projected EBITDA for the full year was a loss of $4.4 million compared to a loss of $8.3 million for the year ended December 31, 2021. The projected EBITDA for the first quarter was a profit of $3.4 million, compared to a loss of $2.9 million for the first quarter of 2021. Moving now to the balance sheet highlights. As of December 31, 2022, MediWon has $34.1 million in cash and short-term investments, compared with $11 million as of December 31, 2021. MediWon utilized $11.9 million to fund its operating activities and $3.1 million for continuous liabilities and capital expenditure during 2022. In February 2023, the company received a $7.5 million milestone payment from its partner, Vericel, for U.S. FDA approval of Nexobrid in December 2022. February 7, 2023, the company completed a public offering which provided the company with additional $27.5 million in gross proceeds. The company expects cash use for 2023 to be in the range of $16 to $18 million. Based on the company's current operating plan, it believes that existing cash and cash equivalent will support its operations through 2023. With that, I have concluded my financial overview and will now turn the call back to Oso. Oso?

Thank you, Boaz. Our positive momentum continues, and we expect 2023 to be driven by several significant catalysts. Strong growth and meaningful revenue for Nexoprid, fueled by commercial launches in key markets such as the United States, India, and Japan. Scaling up our manufacturing facility to ensure we can meet the growing global demand for our products. Initiating a Phase III pivotal trial for Escorex targeting a billion-dollar market opportunity. And finally, we look forward to sharing more about our MW005 development plans for BCC. With that, we would now like to open the call for any questions you may have.

Operator?

We will now begin the question and answer session. To ask a question, you may press star. then 1 on your touchtone phone. If you are using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question, please press star, then 2. At this time, we will pause momentarily to assemble our roster.

And our first question comes from Josh Jennings from TD Colwyn.

Josh, please go ahead.

Hi, good morning. Thanks for taking the questions. And congratulations on all the progress in 2022. Boaz, good luck in your next chapter. I was hoping to just start with asking a couple on escorex. And first, just on the back and forth with the FDA and finalizing the program, the clinical development program from here, clinical trial design. Anything you can share just in terms of incremental color or are there any sticking points or any other details you can provide would be helpful to understand. I know that you set the timelines for when you expect the finalization of the design, but was wondering if there's anything more you could share on that.

Hi, Josh. Thank you for the question. So as I said, we submitted the protocol design for the FDA for the review. The final trial design will be announced once the discussions are done. We don't anticipate any issues. I think we've got very good answers from the FDA. And I think that we are in the last stages of having their understanding in how the phase three will look like. As I said that in parallel, We plan to submit a request to Emma for scientific advice and also to understand how the clinical development plan of SCRx looks in Europe. This global approach should not have an impact on the timeline, so we still estimate that the trial will start in 2023. As for how the trial will look like, I reiterate what I said in the previous call. We will try to make it as close as possible to the Phase II study. in order for all the investors and strategic players understand that we are going to meet the end point with no issues.

Excellent. Thanks for reviewing that again. I appreciate it. And I wanted to ask just about partnership opportunities for escorex and MW005. How should investors be thinking about that? future partnership opportunities? It sounds like you're moving forward with S-Corrects independently, but should we think that down the line there could still be partnership opportunities?

It's a very good question. As you can imagine, we discussed it internally. S-Corrects has gained the attention of all the wound care specialists and many important strategic players in the market. Everyone is looking these days for a topical debriding agent with the advantages of Esterex being able to debride a wound in one week. We are very lucky to have the funding and flexibility to discuss a deal that will be very favorable for many wounds. Having said that, we are not speaking about North America licensing because this is the big market and it's going to stay with us. Having said that, we are in discussion with several potential partners regarding a collaboration in the phase three study. Our cash position and our track record in succeeding in trials, I will remind you that we succeeded in 14 out of 14 clinical trials in a few indications. the cash position that the track record enables us to have stability in those discussions, but I can tell you that there is a lot of interest. As for MW005, big pharma companies are interested in that. We are waiting patiently to Q3 2023, and we are going to see if MW005 has the same qualities as Nexabrid has with Barron's and Escarex for chronic wounds. If the results remain positive, I believe we will have a strong collaboration for that.

Excellent. Appreciate that. And then last question is on Nexabrid. It sounds like Baracel is expecting somewhere between $4 to $8 million in Nexabrid revenues once they launch that product in the U.S. in sounds like second quarter of 2023. Can you just remind us of kind of the royalty flow through and how that could impact the revenue line for MediWound in 2023? Thanks for taking all the questions.

So first of all, Joe, thank you for your comment in the beginning. It definitely was a real pleasure working with you and your team. So regarding the question for various sales, so the economics going forward, after the $7.5 million was received in February, is three kind of streamlines for the revenue. One is the transfer pricing, you know, the product and the cost of that basis. Second stream of revenue is royalties, which is a high single-digit royalty upon sales of various self-designed customers. And the third would be the tiered sales milestones, that upon reaching a certain threshold of revenues, then they get a certain percentage. And I think to that you can take around 20-25% of the economic conversions that would be in our P&M.

Thanks, Boaz.

It's been a pleasure working with you as well. Any additional questions, Josh?

We have... Yes, we have a question now from Francois from Oppenheimer. Francois, please, go ahead.

Hi, thanks for taking the questions and best of luck on my next venture here. On my side, I just wanted to touch on, in terms of SCRx, you talked about keeping it to yourself in the U.S. just based on its massive opportunity. Can you just maybe help us understand how many physicians are out there and what kind of sales force would be necessary, what kind of maybe numbers-wise to be able to target the physician?

So thank you for the question, Frank. So first of all, the reason for us to keep S-Correct, the North American right, and the reason that it is our top priority priority to have it approved is, first of all, that we target a market of $2 billion. I think we made that very clear in our previous presentation. Our first priority is to have it approved. Currently, we look at the Stentil sales. Stentil sales are between $300 and $400 million annually. According to market research that was done by an external policy we saw that not only that we draw a significant share from the current enzymatic debriding agents, but also we draw a significant share from the other modalities, mainly the sharp debridement, which is used by 50% of the physicians. It's a very big market. Maybe we'll get ready for that commercially in the next few years. Since I see the interest from the big players, I don't believe that in the end of the story, maybe we'll be the one that will approach the final users. Having said that, we are preparing for that.

Okay, thank you very much for that. And then in terms of SKRX, and you talked about approaching the EMA, any reason here in terms maybe historically in this space that, EMA and FDA would require different things for trial design, or is there any weight from the U.S. maybe on what the EMA does, or are these completely independent and there shouldn't be much impact here?

So it's a very interesting question since I tackled that basically in the first couple of months that I became a CEO. So many one has... a history of developing a drug for severe burns. It was approved by EMA. Only a few years later, it was approved by the FDA. The requirements were quite different. Even the endpoints were different. Having said that, when a pediatric label extension was discussed, both agencies, EMA and FDA, agreed that the company will do the same trial for both agencies. We are following EMA guidelines, and we are looking closely at the FDA guidelines, and we also, of course, as we communicated, we also spoke with the FDA a couple of times. So we know what is required from the FDA. We think we know how to adjust it to EMA's requirement as well, but these are not identical requirements for a phase three study. Having said that, the bar for the FDA is considered higher. Therefore, I think that we're in a good shape, and this is the reason that we estimated that approaching EMA regarding our phase three study will not change the timeline.

Understood, okay. And then lastly, the pediatric label expansion, hopefully in the middle of this year in Europe. Can you just maybe help us understand how much, you know, how big the pediatric footprint in the market commercially, and then just maybe any thoughts about, you know, label expansion into pediatrics in the U.S.

Thank you.

Okay, so let's start with the first question. Pediatric patients represent about 25 to 30 percent of the total burn population. Having said that, the market is a little bit smaller than 25 to 30% because the people, the children are smaller than adult patients. Pediatric population often face painful surgery, and it can be very traumatic for the young patients and their families, so we believe that approval will allow the pediatric patients and their family a much better of experience. So we think that it will have a big impact on the demand of NexoBreathe in Europe once it is approved. As for the United States, we have also a plan to submit for a pediatric label extension. It's the same clinical trial. We did the same clinical trial for EMMA and the FDA. Therefore, we don't think that we don't see any issues with approval. Having said that, the timeline will be a little bit shifted because we started with you all first.

That's it for me. Thank you. Thank you.

We now have a question from Swayampakula Ramakath from HC Wayright. Swayampakula, please, go ahead.

Thank you. This is RK from Hit Save Inred. Boaz, it's been a great pleasure working with you. Certainly we'll miss you. Good luck. Thank you. As you move and progress. So, a couple of questions from me. On the NextUpGrid Expanded Access Program, you stated that about 200 patients have been treated so far. I'm just trying to understand what your learnings are from that, and how are you and where is utilizing that information as you prepare for the commercial launch?

So, hi, RK. Good to hear from you. So, as I said, we have successfully treated 206 patients at 26 leading burn centers in the United States. At some point, we will release some data from those treatments, but what I can share is that they are very consistent with the clinical trial. When we said that the patients were treated successfully, we mean successfully. Nexoblade is very effective. 95, 96% of the applications are a success in four hours. So we just see it as a kind of an education for the U.S. burn centers and specialists. I think this expanded access trial will support various cells launch because, I don't know, something like 20% of the centers in the United States are treating patients with that drug regularly. Having said that, don't forget that The approval currently is only for adults, and in the Expanded Access Program, we are also treating pediatric population. So I think it will support, if I go back to the question that Frank asked me earlier, it will also support the pediatric indication expansion because we will keep on recruiting patients in this study, although the Nexovoid will be approved in the United States, will be available in the United States commercially very soon.

Fantastic. Then regarding your obligation to BARDA, if there's any, can you kind of tell us or highlight for 23?

Can you repeat the question? You said obligation to BARDA?

Do you have any obligation to BARDA in 23?

Yes, we have, as you know, BARDA has a kind of a replenishment program, $16.5 million done in the previous two years. We are currently negotiating 2023 and 2024. BARDA also supports our sulfur master program. As you know, after NexoBridge was approved, we started pushing the $43 million grant that we got from them in order to have a debriding agent also for sulfur mastered gas injuries. So if we look at 2023, I would expect for additional stockpile commitments, a little bit more of fundraising, of financing of the R&D staff and especially the Sulphur Master program.

Okay. My last question is on the manufacturing facility. You said that it's progressing well, but can you give us a little bit on the timeline for commissioning it and also Is that a needed step for a successful launch of Nexa Blade or these are independent events?

Okay. First of all, it's an independent event. We are working in order to meet the timelines that we communicated to the market of the Q2 U.S. launch.

But you are right.

I'm sorry, I think we lost a line here. Let me check back with the presenters. Please hold on.

Thank you.

Hello, operator?

Yes, we have the speakers back. Sorry for that glitch.

Yeah, sorry about that.

Yeah, please go ahead. Let me put the questioner back as well. Okay, everybody is live now. Go ahead, please.

Okay, I'm sorry about that. I think it's Boaz's phone. I'm going back to speak about the manufacturing. As I said, our current sales are limited by our production capacity. Having said that, we are going to meet the launch requirement. VeriCell is a very important partner for us. This year is going to be a special one because On top of the demand that we have from the market, we also need to manufacture SKRX for our Phase 3 tribe. So we have initiated the scale-up of the manufacturing facility immediately after we raised the capital in September 2022. The total cost is something like $10 to $12 million, but we expect 30% to be covered by all kinds of grants. Since it's a steroid manufacturing facility, The process of the scaling up will take approximately 24 months. It's not something that you can do in five months because there are a lot of regulatory affairs that are involved. But we are working very hard in order to execute and make sure that we are doing it on time. And then all the gaps will be recovered.

Thank you, Ofer. Thanks for taking the question.

And we have a question coming up here, but let me remind everyone that if you would like to pose a question, press star and one. The question now comes from Michael Okunowich from Maxine Group. Michael, please go ahead.

Thank you for taking my questions and congrats on the great progress over the last couple of months. And also, Boaz, I'd like to wish you luck with the next steps in your career. Thank you. So you guys have done a lot to shore up your balance sheet. You have three years or three to four years of cash at this point. Can you talk a bit about how you plan to leverage that balance sheet? Is there anything in your portfolio that would benefit from increased funds to accelerate programs? Are you looking at any potential projects?

m a targets or is this best used to just keep your balance sheet strong and provide funding through that phase three for escorex thank you uh thank you for your question maybe i'll start and boaz will uh will add if if needed so if you asked me uh two months ago uh i would have told you that we have enough cash to do the phase three study and enough cash for the scale-up manufacturing facility because these were our requirements and we communicated that we have cash to go through 2025. Having said that, we got a reverse inquiry from a very strong investor for an additional investment and making sure that we are able to accelerate the S-Corex effort and the reason for accelerating it because if we are aiming a very significant market for many hundreds of millions of dollars in sales, let's make sure that we get there quicker. So if you look at the numbers, $66 million reduced from that to 25 for a phase three trial, ballpark. and another $10 million for the scale-upping efforts, you will see that we have enough capital to do whatever is required. We feel very comfortable these days in these markets to have a cushion of a few tens of millions of dollars. We will not run for adventures buying assets now because we think that we have a very strong product, which is SKRX. and which will generate a significant value for our shareholders. And next of all, it is profitable, and we will make sure that we increase the revenues quite substantially. I think if we focus on those two efforts, the value of MediWood will increase substantially. Of course, if something opportunistic will arise, we can discuss it.

And maybe just, Mark, you know, from a numbers perspective, you know, on top of 34 million that we had at the end of 2022, we already received the 7.5, and then we have the recent fundraising. So you're talking about 66 million, which should, you know, suffice us through 2026. And also on top of that, we have the commercial sale of Nexobit, definitely given the recent marketing approvals in India, in Japan, and in the U.S. now. we believe that there's going to be an increase of 50% in the product revenues, which, of course, would stressen our balance sheet. And just to maybe summarize on top of that, once you have the facility scale-up, we'll be able to meet the growing demand, and, of course, that, I think, will take us hopefully through profitability in the future years.

All right.

Thank you for that. I'd like to follow up on the SGRX development plans. Obviously, BLUs are the immediate opportunity. We've discussed why that's a particularly attractive market, but how are you looking at the potential use in DFUs? Is that something where you think about a parallel Phase III program?

Again, it's a very good question. As I mentioned, I think, early in this Q&A session, our top priority is to get an approval of SCRx. We look at the current enzymatic agent. We see our superiority compared to it, and we want to get an approval ASAP. Unfortunately, FDA says that a heart-wield wound or a chronic wound is not an indication. The indication of VLUs, DFUs, pressure ulcers, We know we chose venous leg ulcers because the unmet need there is much bigger. Some of the discussions that we are doing with strategic players is trying to broaden our efforts around additional wound types. We are looking into it. I don't think that we will need to do another phase three study. Maybe we will need to do another bridging study or something like that. But our top priority currently is to get an approval, making sure that we collect data that justifies a very high pricing for our drug. And after we are there, we think we can broader the indication for additional type of wounds.

All right, thank you very much. And then just one final one for me, and I'll hop back in the queue. I'd like to ask a little bit about the opportunities for NexoBrit in Japan and India. Obviously, Japan's a major market and doesn't need much introduction, but in India, we might expect lower pricing. Is that offset by the massive population? Can you just give a bit more color on how those markets look for burn debridement?

Yeah, thank you for the question. So, Japanese market definitely, you know, one of the biggest healthcare markets in the world. Probably, if you want to look at the numbers, so we see that probably around one and a half million. We see as the first year and then definitely we're very excited with the enthusiasm of Keikin, which is a global pharmaceutical company and our distributor in Japan from the launch. The launch is expected by mid-year. And, of course, we expect it to grow in 2024 and 2025. Regarding India, this is a partnership that we have with BSC, which is also an Indian global pharmaceutical company. I agree or hear you about the size of population, but I think India is a little bit more complex picture because Much of the population is not covered under any kind of public health care insurance. So we're still kind of learning this market. It's the biggest market, by the way, by the number of severe bone patients by far. And I think we're still learning. I would expect it around half a million in the first year. And then I think we'll be able to provide more details about this market.

I will just add one trivia information. India is the only market in the world in which NexoV didn't get the orphan indication. The number of burn patients there are extremely unproportional to the size of the population, which is higher regardless. But as was said, half a million dollars this year and we are learning the market and we will be able to give some more guidance later this year. And again, we are limited by our capacity to manufacture. So this year, we do not plan to sell more to India, more than half a million dollars.

All right. Thank you very much. Thank you.

Michael, we will take another question from you if you so desire.

It was because I got bumped off the call before, so you might have two in the queue for me.

Okay. All right. At this time, we have no further questions then, and I would like to turn the call back over to management for some closing remarks. Thank you.

Okay. So thank you, everyone, for joining us today. We look forward to updating you again in our next call or speaking to you offline. Bye-bye.

Thank you everyone for joining us today.

We look forward to updating you again.

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Good day and welcome to Maddie Woon's fourth quarter and year-end 2022 earnings call. Today's conference is being recorded. At this time, I would like to turn the conference over to Monique Goss of LifeSci Advisors. Monique, please, go ahead.

Thank you, Operator, and welcome, everyone. Earlier today, Meadowoon issued a press release announcing financial results for the fourth quarter and year ended December 31st, 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 Meadowood'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 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 MediWound. 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 the 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 Ofer Gonen, Chief Executive Officer of MEDAWN. Ofer?

Thank you, Monique. Good morning, everyone. It is my pleasure to welcome you to our conference call. I'm excited to be here today to discuss the remarkable company achievements in the fourth quarter and throughout 2022. We have made important achievements in all of our programs, positioning ourselves to become a global biopharmaceutical company. During my eight-month tenure as CEO, our progress has been significant, including the FDA approval of Nexobrid, which is now ready for a commercial launch in the United States with our partner VeriCell. This innovative therapy has the potential to transform treatment of severe burns and become the standard of care in the United States as it is already in Europe. Additionally, we are moving Asterix into phase three study in venous leg alters, demonstrating our commitment to advancing treatments for patients in need. Our success is due in part to our strong financial position fueled by fundraising efforts that have brought in $70 million over the past year from top quality institutional investors. Looking ahead, we are well positioned to take advantage of what we believe will be another excellent year. Our team is fully dedicated to realizing the mission of improving patient outcomes and bringing innovative therapies to the global healthcare market. Now let me discuss NexoBreathe in more detail. We were proud to see NexoBreathe approved by the FDA in December. This achievement is a testament to the hard work and dedication of our team, who left no stone unturned in developing the science, conducting the trials, analyzing the data, completing the BLA, and, of course, putting manufacturing protocols in place. We are confident that NexoBridge has the potential to change the standard of care for burn patients in the United States and around the world, and we are proud to be at the forefront of this revolution. We also know that the data and the rigorous review that supported NexoBridge approval validates our technology platform and will support the regulatory pathway for our pipeline products. We look forward to partnering with VeriCell for the U.S. commercial launch of NexoBridge, which has a market potential of $300 million. VeriCell is actively preparing for the launch in the second quarter with their sales teams, medical training, and educational sessions, and we have seen widespread interest and enthusiasm for NexoBridge from burn centers and other healthcare professionals. We are confident in VeriCell's ability to successfully launch NexoBridge and provide access to burn patients in the United States. Our ongoing NexoBreathe expanded access program has allowed physicians at leading burn centers in the United States to gain important first-hand experience using NexoBreathe. We have successfully treated 206 patients at 26 leading burn centers in the United States, and based on their feedback, We are confident that NexoGrid will be an important part of the standard of care practice. We are also pleased to collaborate with the U.S. Department of Defense for the development of NexoGrid as a non-surgical solution for the treatment of burns in the field, and we look forward to continue promoting this project and will provide additional updates this year. NexoBridge gained marketing approvals in Japan, India, and Switzerland, and we anticipate commercial launches in these large markets later this year. We also anticipate an approval of the pediatric label expansion in Europe by mid-2023, which will further broaden the market and accelerate NexoBridge revenue growth worldwide. NexoBridge generated $26.5 million in revenue last year, and it will be cash flow positive this year. We expect revenue growth to exceed 50% in 2023 due to the product launches, the global demand, and the pediatric label extension in Europe. To meet the growing demand, we are expanding our manufacturing capabilities by scaling up our facility and adding an additional manufacturing line. We are on track to complete this process. Also, in preparation for our expanding needs, we have made some important additions to our team that includes several talented executives who have experience in building world-class facilities, developing innovative wound care products, and executing on commercial operations. This includes Dr. Rob Snyder, our Chief Medical Officer, Ali Palash, our Chief Operating Officer, Barry Wolfensohn, our Executive Vice President of Strategy and Corporate Development, and Alisa Torinova, our Vice President of European Operations. These talents will be essential for expanding our global presence, supporting the increased demand of exobricks. Accelerate our blockbuster opportunity, that's correct.

Now let me turn

to our progress with Escarex, our next-generation enzymatic therapy for chronic and hard-to-heal wounds. MediWound is focused on realizing this billion-dollar market opportunity. Our Phase II results clearly demonstrated that Escarex outperformed the non-surgical standard of care in debridement of venous leg ulcers. With only eight applications over 14-day periods, study met the primary endpoint with a high degree of statistical significance. The median time to achieve complete debridement was nine days in patients treated with Escarex, compared to 59 days in the non-surgical standard of care arm. On average, 3.6 treatment applications were needed to achieve complete debridement with Escarex, compared to 12.8 applications of the non-surgical standard of care. Results were highly statistically significant. Additionally, our Phase II pharmacology study showed robust results with an average of 3.9 applications to achieve debridement. The study also demonstrated a reduction in biofilm and bioburden. We submitted the protocol design of the Phase III study to the FDA for review. The final trial design will be announced when the discussions with the FDA are completed. We anticipate initiating the study in the second half of 2023. We plan also to submit a request to Emma for the scientific advice on our Phase III protocol and on the clinical development plan of Estaret. This global approach should not have an impact on our timeline. Escarex has gained the attraction of wound care specialists and many important strategic players in the market. Topical debridement agents with the competitive advantages of Escarex would be a significant step forward for patients and caregivers. We are thrilled to have the funding to advance this program as quickly as possible, and are confident that F-Correct has incredible potential to unlock significant shareholder value. Finally, turning to MW005, where I'm excited to update you on our promising biological drug candidates for treating non-melanoma skin cancers. In June 4, 2022, we released positive data from our Phase 1-2 study on low-risk basal cell carcinoma, demonstrating that MW005 is safe and well-tolerated. Patients in the study achieved complete clinical and histological clearance of their target regions. We are currently enrolling additional patients in this specific study to optimize dosing and applications and expect results in Q3 2023. It is worth noting that MW005 shares the same active pharmaceutical ingredient as Nexovid and Estorex. This platform technology reduces many of the clinical development risks associated with MW005 as it has already been proven to be safe and effective. In conclusion, we are very well positioned for a strong 2023. There are several promising milestones in the future. NexoBridge is set to launch in the United States in the second quarter of this year. Additionally, we anticipate further key global market launches and are preparing for potential pediatric labor expansion in Europe. To support this growth, we are scaling up our manufacturing facilities. Furthermore, we plan to initiate a phase three study with S-Corect and venous leg alters in the second half of 2023 and anticipate additional data for MW005. With a strong balance sheet and nearly $66 million in cash, we are well positioned to support our development and strategic plans for 2026. I'm very optimistic about Mediwound's future and believe that we have established a solid foundation for a continued success. Before I turn the call over to Boaz for review of our financials, I want to take a moment to address the news of his departure that was announced today. Boaz has been an invaluable asset to the company and has provided strong financial and commercial leadership during his tenure. I'm grateful for his support during my transition to CEO and appreciate all that he has done for us. I'm excited to welcome Hani Luxemburg as our new Chief Financial Officer. With a proven track record of 20 years delivering business growth and profitability, I'm confident that Hani will help us continue to achieve our goals and drive our success forward. Boaz will remain with the company through July 31st to ensure a smooth and orderly transition. I want to thank him for his dedication and hard work over those years. With that said, I'll now hand it over to Boaz for a brief overview of our financials.

Boaz? Good morning, everyone, and thank you all for your kind words. I would also like to express my gratitude to all of you, our investors and analysts, for your support and collaboration throughout my time as CFO at MediWood. As Ofer mentioned, I will be stepping down from my role at the end of July. It has been an honor and a pleasure to lead such a talented team of individuals and to spearhead the financial and commercial accomplishments that we have achieved together. I'm proud to have played a key role in driving our growth and success, and I'm confident that the company is in a strong financial position to continue executing its clinical and commercial programs under the new leadership of Ofer as CEO. It was important for me to assist with Ofer's transition as CEO at MediWood and to contribute to the recent fundraising round, as well as to develop and execute on our European operations and our global expansion strategies. With these efforts, I'm confident that MediWound is well positioned for continued success. Not less, it was fun working together. Once again, thank you for the great communication and collaboration over the years. It has been a wonderful journey and it's time for me to move on. Moving to the financial statements. Total revenues for the full year were $26.5 million compared to $23.8 million for the year ended December 31st, 2021, an increase of 12% year-over-year. License revenues were $8.2 million, driven by the $7.5 million of BLA approval milestone from Veristel. Revenues from products were $5.3 million, a decrease of 44% compared to the $9.6 million in 2021, due to bar this procurement completion for emergency stockpiles. Total revenues for the first quarter of 2022 were $11.6 million compared to $5.5 million in the parallel period, primarily driven by the BLA approval milestone of $7.5 million from Verizon. Revenues from products were $1.2 million compared to $1.9 million in the first quarter of 2021 due to $1 million decrease in emergency stockpile procurement by BARDA, partially offset by our European and international sales increase. Gross profit for the year was $13.2 million, or 50% of net revenues, compared to a gross profit of $8.8 million, or 37% of net revenues for the same period in 2021. Gross profit for the quarter was $8.2 million, or 70% of net revenues, compared to a gross profit of $1.5 million, or 28% of net revenues, for the first quarter of 2021. Both for the full year and the quarter, gross margin improvements were driven by the $7.5 million milestone payment from VeriCell upon the BLA approval. Total operating expenses for the full year of 2022 were $21.5 million versus $20 million in 2021. Total operating expenses for the fourth quarter were $6 million compared to $5.1 million in the fourth quarter of 2021. Both for the full year and the fourth quarter of 2022, the increase in total expenses was primarily driven by one-time expense related to the BLA approval and management change. Operating loss for the full year was $8.3 million, compared to an operating loss of $11.2 million for the year ended December 31, 2021. Operating profit for the quarter was $2.1 million, compared to a loss of $3.5 million in the fourth quarter of 2021. The improvement was primarily driven by the $7.5 million milestone payment from Vericel upon the BLA approval. Net loss for the full year was $19.6 million, or $3.93 per share, compared to a net loss of $13.6 million, or $3.5 per share for the year ended December 31, 2021. Net loss for the quarter was $7.5 million, or $1.18 per share, compared to a net loss of $4.2 million, or $1.07 per share, for the fourth quarter of 2021. The increase in loss for the full year and the quarter was due to non-cash financial expenses derived from the September and October fundraising warrants evaluation. Rejected EBITDA for the full year was a loss of $4.4 million compared to a loss of $8.3 million for the year ended December 31, 2021. Rejected EBITDA for the first quarter was a profit of $3.4 million compared to a loss of $2.9 million for the first quarter of 2021. Moving now to the balance sheet highlights. As of December 31st, 2022, MediWon has $34.1 million in cash and short-term investment compared with $11 million as of December 31st, 2021. MediWon utilized $11.9 million to fund its operating activities and $3.1 million for continuous liabilities and capital expenditure during 2022. In February 2023, the company received a $7.5 million milestone payment from its partner, Vericel, for U.S. FDA approval of Nexobrid in December 2022. February 7, 2023, the company completed a public offering which provided the company with an additional $27.5 million in gross proceeds. The company expects cash use for 2023 to be in the range of $16 to $18 million. Based on the company's current operating plan, we believe that existing cash and cash equivalent will support its operations through 2023. With that, I have concluded my financial overview and will now turn the call back to Oso. Oso?

Thank you, Boaz. Our positive momentum continues, and we expect 2023 to be driven by several significant catalysts. Strong growth and meaningful revenue for NexoBridge, fueled by commercial launches in key markets such as the United States, India, and Japan. Scaling up our manufacturing facility to ensure we can meet the growing global demand for our products. Initiating a Phase III pivotal trial for S-Correct targeting a billion-dollar market opportunity. And finally, we look forward to sharing more about our MW005 development plans for BCC. With that, we would now like to open the call for any questions you may have.

Operator?

We will now begin the question and answer session.

To ask a question, you may press star. then 1 on your touchtone phone. If you are using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question, please press star, then 2. At this time, we will pause momentarily to assemble our roster.

And our first question comes from Josh Jennings from TD Colwyn.

Josh, please go ahead.

Hi, good morning. Thanks for taking the questions. And congratulations on all the progress in 2022. Boaz, good luck in your next chapter. I was hoping to just start with asking a couple on escorex. And first, just on the back and forth with the FDA and finalizing the program, the clinical development program from here, clinical trial design. Anything you can share just in terms of incremental color or are there any sticking points or any other details you can provide would be helpful to understand. I know that you set the timelines for when you expect the finalization of the design, but was wondering if there's anything more you could share on that.

Hi, Josh. Thank you for the question. So as I said, we submitted the protocol design for the FDA for the review. The final trial design will be announced once the discussions are done. We don't anticipate any issues. I think we've got very good answers from the FDA. And I think that we are in the last stages of having their understanding in how the phase three will look like. As I said that in parallel, We plan to submit a request to Emma for scientific advice and also to understand how the clinical development plan of SCRx looks in Europe. This global approach should not have an impact on the timeline, so we still estimate that the trial will start in 2023. As for how the trial will look like, I reiterate what I said in the previous call. We will try to make it as close as possible to the Phase II study. in order for all the investors and strategic players understand that we are going to meet the end point with no issues.

Excellent. Thanks for reviewing that again. I appreciate it. And I wanted to ask just about partnership opportunities for S-Corrects and MW005. How should investors be thinking about that? future partnership opportunities? It sounds like you're moving forward with S-Corrects independently, but should we think that down the line there could still be partnership opportunities?

It's a very good question. As you can imagine, we discussed it internally. S-Corrects has gained the attention of all the wound care specialists and many important strategic players in the market. Everyone is looking these days for a topical debriding agent with the advantages of Esterex being able to debride a wound in one week. We are very lucky to have the funding and flexibility to discuss a deal that will be very favorable for many wounds. Having said that, we are not speaking about North America licensing because this is the big market and it's going to stay with us. Having said that, we are in discussion with several potential partners regarding a collaboration in the phase three study. Our cash position and our track record in succeeding in trials, I will remind you that we succeeded in 14 out of 14 clinical trials in a few indications. the cash position that the track record enables us to have stability in those discussions, but I can tell you that there is a lot of interest. As for MW005, big pharma companies are interested in that. We are waiting patiently to Q3 2023, and we are going to see if MW005 has the same qualities as Nexabrid has with Barron's and Escarex for chronic wounds. If the results remain positive, I believe we will have a strong collaboration for that.

Excellent. Appreciate that. And then last question is on Nexabrid. It sounds like Barracel is expecting somewhere between $4 to $8 million in Nexabrid revenues once they launch that product in the U.S., and in sounds like second quarter of 23. Can you just remind us of kind of the royalty flow through and how that could impact the revenue line for many women in 2023? Thanks for taking all the questions.

So first of all, Joe, thank you for your comment in the beginning. And definitely it was a real pleasure working with you and your team. So regarding the question for various sales, so the economics going forwards, after the $7.5 million was received in February, is three kind of streamlines for the revenue. One is the transfer pricing, you know, the product and the cost plus basis. Second stream of revenue is royalties, which is a high single digit royalty upon sale of very self-designed customers.

And third,

would be the tiered sales milestones, that upon reaching a certain threshold of revenues, then they get a certain percentage. And I think to that you can take around 20-25% of the economics from various sales that would be in our P&M.

Thanks, Boaz.

It's been a pleasure working with you as well.

Any additional questions, Josh?

Yes, we have a question now from Francois Bisbois from Oppenheimer. Francois, please, go ahead.

Hi, thanks for taking the questions, and best of luck on my next venture here. On my side, I just wanted to touch on, in terms of SKRX, you talked about keeping it to yourself in the U.S., just based on its massive opportunity. Can you just maybe help us understand how many physicians are out there and what kind of sales force would be necessary, what kind of maybe numbers-wise to be able to target the physicians?

So thank you for the question, Frank. So first of all, the reason for us to keep S-Correct, the North American rights, And the reason that it is our top priority to have it approved is, first of all, that we target a market of $2 billion. I think we made that very clear in our previous presentation. Our first priority is to have it approved. Currently, we look at the centil sales. Centil sales are between $300 and $400 million annually. According to market research that was done by an external party, we saw that not only that we draw a significant share from the current enzymatic debriding agents, but also we draw a significant share from the other modalities, mainly the sharp debridement, which is used by 50% of the physicians. It's a very big market. Maybe one should We'll get ready for that commercially in the next few years. Since I see the interest from the big players, I don't believe that in the end of the story, maybe we'll be the one that will approach the final users. Having said that, we are preparing for that.

Okay, thank you very much for that. And then in terms of SKRX, and you talked about approaching the EMA, any reason here in terms maybe historically in this space that EMA and FDA would require different things for trial design? Or is there any weight from the U.S. maybe on to see what the EMA does? Or are these completely independent and there shouldn't be much impact here?

So it's a very interesting question since I tackled that basically in the first couple of months that I became a CEO. So MediWood has a history of developing a drug for severe burns. It was approved by EMA. Only a few years later it was approved by the FDA. The requirements were quite different. Even the endpoints were different. Having said that, when a pediatric label extension was discussed, both agencies, EMA and FDA, agreed that the company will do the same trial for both agencies. We are following EMA guidelines, and we are looking closely at the FDA guidelines. And we also, of course, as we communicated, we also spoke with the FDA a couple of times. So we know what is required from the FDA. We think we know how to adjust it to Emma's requirement as well, but these are not identical requirements for a Phase III study. Having said that, the bar for the FDA is considered higher. Therefore, I think that we're in a good shape, and this is the reason that we estimated that approaching Emma regarding a Phase III study will not change the timeline.

Understood. Okay. And then lastly, the pediatric label expansion, hopefully in the middle of this year in Europe. Can you just maybe help us understand how much, you know, how big the pediatric footprint in the market commercially? And then just maybe any thoughts about, you know, label expansion into pediatrics in the U.S.?

Thank you.

Sure.

Okay, so let's start with the first question. Pediatric patients represent about 25 to 30% of the total burn population. Having said that, the market is a little bit smaller than 25 to 30% because the people, the children are smaller than adult patients. Pediatric population often face painful surgery and it can be very traumatic for the young patients and their families, so we believe that approval will allow the pediatric patients and their family a much better of experience. So we think that it will have a big impact on the demand of NexoBreathe in Europe once it is approved. As for the United States, we have also a plan to submit for a pediatric label extension, It's the same clinical trial. We did the same clinical trial for Emma and the FDA. Therefore, we don't think that we don't see any issues with approval. Having said that, the timeline will be a little bit shifted because we started with you all first.

That's it for me. Thank you. Thank you.

We now have a question from Swayampakula Ramakath from HC Wayrise. Swayampakula, please, go ahead.

Thank you. This is RK from HC Wayrise. Boaz, it's been a great pleasure working with you. Certainly will miss you. And good luck as you move and progress. So, a couple of questions from me. On the NextUpGrid Expanded Access Program, you stated that about 200 patients have been treated so far. I'm just trying to understand what your learnings are from that and how are you and where is utilizing that information as you prepare for the commercial launch?

So, hi, Alke. Good to hear from you. So, as I said, we have successfully treated 206 patients at 26 leading birth centers in the United States. At some point, we will release some data from those treatments, but what I can share is that they are very consistent with the clinical trials. When we said that the patients were treated successfully, we mean successfully. NexoBreathe is very effective. 95, 96% of the applications are successful in four hours. So we just see it as a kind of an education for the U.S. burn centers and specialists. I think this expanded access trial will support various cells launch because, I don't know, something like 20% of the centers in the United States are treating patients with that drug regularly. Having said that, don't forget that the approval currently is only for adults. And in the Expanded Access Program, we are also treating pediatric population. So I think it will support If I go back to the question that Frank asked me earlier, it will also support the pediatric indication expansion because we will keep on recruiting patients in this study, although the NexoBREAD will be approved in the United States, will be available in the United States commercially very soon.

Fantastic. Then regarding your obligation to BARDA, if there's any, can you kind of tell us or highlight for 23?

Can you repeat the question? You said obligation to BARDA?

Do you have any obligation to BARDA in 23?

Yes. We have, as you know, BARDA has a kind of replenishment program $16.5 million done in the previous two years. We are currently negotiating 2023 and 2024. BARDA also supports our sulfur master program. As you know, after NexoBridge was approved, we started pushing the $43 million grant that we got from them in order to have a debriding agent also for Sulphur Master gas injuries. So if we look at 2023, I would expect for additional stockpile commitment, a little bit more of fundraising, of financing of R&D staff, and especially the Sulphur Master program.

Okay. My last question is on the manufacturing facility. You said that it's progressing well, but can you give us a little bit on the timeline for commissioning it, and also is that a needed step for a successful launch of NexaBraid, or these are independent events?

Okay, first of all, it's an independent event. We are working in order to meet the timelines that we communicated to the market of the Q2 U.S. launch. But you are right.

Hello? I lost you.

I'm sorry.

I think we lost a line here. Let me check back with the presenters.

Please hold on.

Thank you.

Hello, operator?

Yes, we have the speakers back. Sorry for that glitch.

Yeah, sorry about that.

Yeah, please go ahead. Let me put the questioner back as well. Okay, everybody is live now. Go ahead, please.

Okay, I'm sorry about that. I think it's Boaz's folks. I'm going back to speak about the manufacturing. As I said, our current sales are limited by our production capacity. Having said that, we are going to meet the launch requirement. VeriCell is a very important partner for us. This year is going to be a special one because On top of the demand that we have from the market, we also need to manufacture SCRX for our Phase III tribe. So we have initiated the scale-up of the manufacturing facility immediately after we raised the capital in September 2022. The total cost is something like $10 to $12 million, but we expect 30% to be covered by all kinds of grants. Since it's a sterile manufacturing facility, The process of the scaling up will take approximately 24 months. It's not something that you can do in five months because there are a lot of regulatory affairs that are involved. But we are working very hard in order to execute and make sure that we are doing it on time. And then all the gaps will be recovered.

Thank you, Ofer. Thanks for taking the question.

And we have a question coming up here, but let me remind everyone that if you would like to pose a question, press star and one. The question now comes from Michael Okunowich from Maxine Group. Michael, please go ahead.

Thank you for taking my questions and congrats on the great progress over the last couple of months. And also, Boaz, I'd like to wish you luck with the next steps in your career.

Thank you.

So you guys have done a lot to shore up your balance sheet. You have three years or three to four years of cash at this point. Can you talk a bit about how you plan to leverage that balance sheet? Is there anything in your portfolio that would benefit from increased funds to accelerate programs? Are you looking at any potential projects? M&A targets, or is this best used to just keep your balance sheet strong and provide funding through that phase three for escorex?

Thank you. Thank you for your question. Maybe I'll start and Boaz will add if needed. So if you asked me two months ago, I would have told you that we have enough cash to do the phase three study and enough cash for the scale-up manufacturing facility because these were our requirements and we communicated that we have cash to go through 2025. Having said that, we got a reverse inquiry from a very strong investor for an additional investment and making sure that we are able to accelerate the S-Corex And the reason for accelerating it, because if we are aiming a very significant market for many hundreds of millions of dollars in sales, let's make sure that we get there quicker. So if you look at the numbers, $66 million, reduced from that to 25 for a phase three trial, ballpark. and another $10 million for the scale-up efforts, you will see that we have enough capital to do whatever is required. We feel very comfortable these days in these markets to have a cushion of a few tens of millions of dollars. We will not run for adventures buying assets now because we think that we have a very strong product, which is SKRX. which will generate a significant value for our shareholders. And next of all, it is profitable, and we will make sure that we increase the revenues quite substantially. I think if we focus on those two efforts, the value of MediWood will increase substantially. Of course, if something opportunistic will arise, we can discuss it.

And maybe just to add, Mark, you know, from a numbers perspective, you know, on top of $34 million that we had at the end of 2022, we already received the $7.5 million, and then we have the recent fundraising. So you're talking about $66 million, which should, you know, suffice us through 2026. And also on top of that, we have the commercial sale of NexoBid, definitely given the recent marketing approvals in India and Japan and in the U.S. now. we believe that there's going to be an increase of 50% in the product revenues, which, of course, would stress on our balance sheet. And just to maybe to summarize on top of that, once you have the facility scale up, we'll be able to meet the growing demand. And, of course, that, I think, will take us hopefully to profitability in the future years.

All right. Thank you for that. I'd like to follow up on the SGRX development plans. Obviously, BLUs are the immediate opportunity. We've discussed why that's a particularly attractive market, but how are you looking at the potential use in DFUs? Is that something where you think about a parallel Phase III program?

Again, it's a very good question. As I mentioned, I think, early in this Q&A session, our top priority is to get an approval of SCRx. We look at the current enzymatic agent. We see our superiority compared to it, and we want to get an approval ASAP. Unfortunately, FDA says that a hard-heeled wound or a chronic wound is not an indication. The indication are VLUs, DFUs, pressure ulcers, We know we chose venous leg ulcers because the unmet need there is much bigger. Some of the discussions that we are doing with strategic players is trying to broaden our efforts around additional wound types. We are looking into it. I don't think that we will need to do another phase three study. Maybe we will need to do another bridging study or something like that. But our top priority currently is to get an approval, making sure that we collect data that justifies a very high pricing for our drug. And after we are there, we think we can broader the indication for additional type of wounds.

All right. Thank you very much. And then just one final one for me, and I'll hop back in the queue. I'd like to ask a little bit about the opportunities for NexoBrit in Japan and India. Obviously, Japan's a major market and doesn't need much introduction, but in India, we might expect lower pricing. Is that offset by the massive population? Can you just give a bit more color on how those markets look for burn debridement?

Yeah. Thank you for the question. So, Japanese market definitely, you know, one of the biggest healthcare markets in the world. Probably, if you want to look at the numbers, so we see that probably around one and a half million. We see it as the first year and then definitely we're very excited with the enthusiasm of Keikin, which is a global pharmaceutical company and our distributor in Japan from the launch. The launch is expected by mid-year. And, of course, we expect it to grow in 2024 and 2025. Regarding India, this is a partnership that we have with BSC, which is also an Indian global pharmaceutical company. I agree or hear you about the size of the population, but I think India is a little bit more complex picture because Most of the population is not covered under any kind of public health care insurance. So we're still kind of learning this market. It's the biggest market, by the way, by the number of severe bone patients by far. And I think we're still learning. I would expect it around half a million in the first year. And then I think we'll be able to provide more details about this market.

I will just add one trivia information. India is the only market in the world in which NexoV didn't get the orphan indication. The number of burn patients there are extremely unproportional to the size of the population, which is higher regardless. But as was said, half a million dollars this year and we are learning the market and we will be able to give some more guidance later this year. And again, we are limited by our capacity to manufacture. So this year, we do not plan to sell more to India, more than half a million dollars.

All right. Thank you very much. Thank you.

Michael, we will take another question from you if you so desire.

It was because I got bumped off the call before, so you might have two in the queue for me.

Okay. All right. At this time, we have no further questions then, and I would like to turn the call back over to management for some closing remarks. Thank you.

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

Bye-bye. Thank you everyone for joining us today.

We look forward to updating you again.