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spk00: Good day and welcome to Mitty Woon's third quarter 2023 earnings call. If you need assistance during today's conference, please press star then zero to reach a conference specialist. After the prepared remarks, there will be a question and answer session. To ask a question, please press star then one. And to remove yourself from queue, please press star then two. Please note today's conference is being recorded. At this time, I would like to turn the conference over to Dan Ferry of LifeSci Advisors. Please go ahead.
spk08: Thank you, Operator, and welcome, everyone. Earlier this morning, MediWound issued a press release announcing financial results for the third quarter ended September 30, 2023. You may access this earnings press release on the company's website under the Investors tab. With us today are Ofer Gonan, Chief Executive Officer of MediWound, Honey Luxembourg, Chief Financial Officer, and Barry Wolfenson, Executive Vice President of Strategy and Corporate Development. 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 MediWomb'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 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 forecasts due to the impact of many factors beyond the control of MediWood. 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 risk factors set forth in MediWood'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. Conference call's property of MediWound and any recording or rebroadcast is expressly prohibited without the written consent of MediWound. Now, I'd like to turn the call over to Ofer Gonin, Chief Executive Officer of MediWound.
spk04: Ofer? Good morning, everyone, and thank you, Dan, for the introduction. I'm pleased to welcome you to our third quarter 2023 earnings conference call. Joining me today are Hani Luxemburg, our Chief Financial Officer, and Barry Wolfenson, our Executive Vice President of Strategy and Corporate Development. I want to start by expressing a sincere thank you from the entire Mediwound family for the overwhelming support through emails, calls, messages, that I've received from many of you since October 7th terror attack. This war has significantly impacted the lives of many of our employees and their families. We feel privileged that our product can contribute to helping victims and make a difference. Our team is working around the clock to ensure we meet the needs of our community, customers, patients, and partners. This quarter marks a pivotal period for us with significant achievements that set the stage for consistent future revenue growth. NexaBridge was successfully launched in the United States and Japan. In Europe, we expanded both our presence and the target population. Global demand has risen, fueled in part by world conflict and governmental actions. We have responded with the necessary reallocation of resources to meet this increase and continue with our plans to aggressively expand our manufacturing capabilities. Looking ahead, preparation for the phase three study of Estarex are progressing with an updated protocol shaped by both the FDA and EMA guidance. Anticipated enrollment is set to begin in the second half of 2024. A new collaboration with the industry leader 3M Healthcare further validates S-Corex's anticipated impact on the wound care market. Let's have a more detailed look at Nexobrid. It has been a very busy and productive period. Notably, at the end of the quarter, we announced United States commercial availability through our partner VeriCell. VeriCell's launch of Nexobrid is progressing swiftly. Patients started treatment soon after its commercial release. VeriCell is dedicated to securing market access, obtaining P&T committee approvals, and training staff at burn centers. Given the burn care community's positive response to Nexobrid, VeriCell expects rapid adoption and significant growth of their burn franchise in 2024 and beyond. Further supporting the commercialization efforts in the US and elsewhere, the Journal of Burn Care and Research published results from the DETECT phase three study. The study demonstrated that the treatment with NexoBridge resulted in early complete ESCA removal in more than 90% of treated burn patients and reduced the need for surgical excision compared to gel vehicle and the standard of care. With VeriCell's early success, enthusiastic reception, and strong published data, we feel quite confident about NexoBridge's future in the United States. Similarly, in Japan, another major market, NexoBridge was launched this quarter through our partner, Keken Pharmaceutical. The initial feedback from Keken is positive, and it is working diligently to secure contracts in key hospital systems. In Europe, two recent developments are expected to bolster our sales. The first is that the CHMP recommended NexoBread's label extension to include pediatric indication, expanding NexoBread availability to all age groups. This recommendation was based on a global phase three study evaluating NexoBREAD in hospitalized pediatric patients, as well as additional data from area trials. Pediatric patients with severe thermal burns represents approximately 30% of the total burn population. Therefore, this label extension will significantly increase NexoBREAD's addressable market. Secondly, our recently announced collaboration with Polymedics, a burn care market leader, will further the adoption of NexoBread in Europe by expanding our marketing activities in Germany, Austria, Belgium, the Netherlands, and Luxembourg. This collaboration followed NexoBread's impressive presence at the recent European Burn Association Congress, where NexoBridge was featured in 20 oral and poster presentations. In addition to these three key markets, United States, Japan, and the EU, there has been a noticeable rise in global demand for NexoBridge, driven in part by geopolitical conflicts. In Israel, the entire non-US NexoBridge inventory has been deployed to hospitals and military, to successfully treat these affected by the war. The positive outcomes achieved with Nexobrid in the field have prompted additional interest from various governments, including Ukraine, for stockpiling the product. In the United States, we secured a $6.5 million R&D budget from the Department of Defense to advance the development of a new temperature-stable formulation for Nexobrid. It is planned to be the first line non-surgical solution for field care burn treatment for the United States Army. All of these developments, major markets launches, indication expansion, DOD funding, governmental interest, all of these will accelerate the demand for NexoBREAD worldwide. It is therefore critical that we expand our operational capabilities to address this need. Our primary goal is to ensure that our new GMP-compliant state-of-the-art facility is on schedule for completion by mid-2024, reaching full-scale manufacturing capabilities in 2025. To this end, we are focused on assembling the right team and allocating the necessary resources for that. We are thrilled to welcome Dr. Shmulek Hess as our recently appointed Chief Operating Officer and Chief Commercial Officer. With his extensive experience, we are confident that Dr. Hess will play a pivotal role in ensuring the success of our upgraded production and help us refine our commercial strategy. His expertise will undoubtedly contribute to the efforts to meet the escalating market demands effectively. Now I'd like to provide an update on our SCRx program. We have received guidance from both the FDA and EMA on the protocol for the global phase three study, indicating our pathway towards approval. With the strong data from our phase two studies and with the added information we made to the protocol, we are entering the Phase III portion of our clinical development program with great confidence. The Phase III trial is a multicenter, proskeptive, randomized, placebo-controlled study evaluating the safety and efficacy of S-CAREX in patients with venous leg ulcers. The trial will enroll 216 patients equally randomized between S-CAREX and the placebo gel vehicle. The trial will focus on two co-primary endpoints, the incidence of complete debridement at the conclusion of the daily visit period and the incidence of wound closure by the end of the weekly follow-up period. An interim assessment is planned after 67% of the patients have completed the trial. We are currently finalizing the logistic aspect of the trial and anticipate submitting an updated protocol to the FDA in the first quarter of 2024 with patient enrollment to follow by the second half of 2024. At the same time, we are also advancing plans for exploratory studies, including a pharmacokinetic study and a human factor study. These are designed to support the BLA of Escarex and to improve our future commercialization and market access strategies. Much like NexoBridge's notable impact in the burn care market, Escarex is also attracting significant interest in the chronic wound care sector. This is demonstrated by the interest expressed by key market leaders to form research collaborations around our study. To tell you more about these collaborations, I will now turn the call over to Barry. Barry?
spk06: Thanks, Ofer. This quarter, we secured an additional research collaboration partner for our Phase III study, 3M Healthcare, which is in addition to the previously announced ones, MyMedx and Monlica. Our primary goals in securing these agreements were to ensure that we minimized, as much as possible, the variability between study arms and to provide best-in-class products for patients in our study. As a reminder, we focused on three key areas of venous leg ulcer management. One, compression therapy. Two, advanced wound dressings that provide optimal moisture management. And three, a cell or tissue-based product to drive active closure, which is key to our endpoint of incidence of wound closure. Compression therapy is part of the gold standard for the management of venous leg ulcers and is an essential component in all the validated clinical practice guidelines for this indication. The superior benefits of 3M Healthcare's CoBand2 and CoBand2 Lite were confirmed in a recent real-world evidence retrospective study presented at both the Symposium on Advances in Wound Care and the European Wound Management Association Conference this year. These are the two largest annual global wound care conferences. Given the prominent position of this product in the market, we are quite pleased that 3M Healthcare will be supplying them for the patients in our study, as well as providing the investigators and their teams with the training required to use them appropriately. What happens under the compression wrap system is equally as important. Venous leg ulcers are known to have high levels of wound fluid drainage, and since systems such as Coban 2 are designed to remain in place for up to one week, managing this moisture so that it is all handled by the dressing is key For this, Monlica will provide their category-leading Mepilex foam dressings as well as their ExuFiber ExuFiber AG dressings. Mepilex is the top brand in the largest category of advanced wound dressings, which are called foam dressings. ExuFiber will be included for added moisture management and ExuFiber AG for the additional management of localized bioburden. Lastly, A key goal of our Phase III study is to demonstrate that SCAR-X significantly improves the facilitation of active closure. Due to the sheer amount of clinical data supporting its use, along with its demonstrated ease of use, the cell or tissue-based product to be used in our Phase III study will come from mimetics, who will provide EpiFix, their placental tissue allograft. EpiFix will be used on study subjects as soon as the wound is completely debrided, and has 100% granulation tissue when autografting is not an option. As a whole, these three class-leading collaborations underscore just how significant of a trial this is in the field of wound management and to the anticipation of what SCRx can mean to the market upon its approval. With that, I'll hand it back to you, Ofer.
spk04: Thank you, Barry. In summary, we're making substantial strides towards achieving our strategic goals. NexaBreathe has successfully launched in the United States and Japan and is expanding its addressable markets and commercial presence in Europe. The construction and the commissioning of our new manufacturing facility that will support this increased demand are on track. Additionally, Escorex has attracted collaborations with industry leaders, 3M, Mimetics, and Molnike, and we are well positioned for our pivotal phase three trials. Finally, our solid balance sheet with $46 million in cash is a key strategic asset that empowers us to successfully execute on our main goals, increase next-of-breed revenues, develop S-Correct through FDA approval, and reach profitability. To discuss our financials in more detail, I will now hand it over to Hani. Hani?
spk09: Thank you, Oscar. Let me begin with our revenues. In this quarter, the company reported revenues of $4.8 million, which is a decrease from the $5.8 million reported in the same quarter of the previous year. This decrease is primarily due to the absence of a non-recurring income from Baada. Gross profit for the quarter stood at $0.9 million, or 19% of total revenues. compared to the 2.4 million or 41.9% of total revenue in the third quarter of 2022. The decrease in gross profit is mainly attributed to the absence of non-recurring income from BARDA. Turning to our operating expenses, the company's R&D expenses amounted to 1.5 million a decrease from $2.9 million in the third quarter of 2022, mainly due to the completion of SCOREX Phase 2 study. SG&A expenses were reported at $2.6 million compared to the $3.1 million in the same quarter of the previous year. The operating loss for the quarter was $3 million, which shows an improvement from a $3.5 million loss in the third quarter of 2022. The net loss was reported at $2.2 million or $0.24 per share, compared to the net loss of $4.2 million or $0.88 per share in the same quarter last year. This improvement is mainly attributed to a favorable adjustment from the revaluation of warrants. The non-GAAP-adjusted EBITDA for the quarter was a loss of $2.6 million compared to $2.5 million lost in the third quarter of 2022. Now, let's look at the year-to-date financial highlights. The company's revenue for the first nine months of 2023 totaled 13.3 million, a decrease from 14.9 million in the first nine months of 2022. The operating loss for this period was 11.4 million compared to the operating loss of 10.5 million recorded in the same period last year. The net loss for the first nine months was $5 million or $0.56 per share, which is a significant improvement from a net loss of $12.1 million or $2.67 per share for the first nine months of 2022. The non-gap adjusted EBITDA showed a loss of $9 million compared to a loss of $7.9 million reported in the first nine months of 2022. And now, a few words about the balance sheet. As of September 30, 2023, the company's cash, restricted cash, and investment were at 46 million, an increase from 34.1 million reported on December 31, 2022. In the first quarter of 2023, the company successfully raised a gross amount of 27.5 million. During the third quarter of 2023, the company used 5.4 million to fund its activities. With the current financial standing, the company's cash reserves are expected to support its operation through profitability. With that, I will now turn the call back to Ofer. Ofer?
spk04: Thank you, Connie. This quarter is marked by significant progress for many ones. Our optimism for NexoBridge global revenue growth is high, driven by its commercial launches in the United States and Japan, growing presence in the European market, and rising global governmental interest. Addressing this surging demand is our foremost priority in the coming months. we are committed to maintaining our manufacturing targets and expanding our production capabilities. We anticipate a substantial increase in NexoBridge revenue following the completion of this scale-up. In parallel, our SCRx Phase 3 global study is progressing towards the initiation, guided by the FDA and EMA, and bolstered by partnerships with three top global wound care companies, Escarex stands at the forefront of the $2 billion chronic wound debridement market. It holds the promise to enhancing the lives of millions. With that, we'll now open the call for your questions. Operator?
spk00: Thank you. We will now begin the question and answer session. To ask a question, you may press star then 1 on your telephone keypad. If you're using a speakerphone, we ask that you please pick up your handset before pressing the keys. To withdraw your question, please press star then two. Once again, ladies and gentlemen, that's star then one if you have a question. And today's first question comes from RK with H.C. Wainwright. Please go ahead.
spk03: Thank you. Good afternoon, Oprah and Hani. Hope you folks are doing well and your families are doing well. So to start off with Nexa Bread, In terms of Japan, you said you're getting good feedback, and I'm just trying to see if you can expand on that comment a little bit more, and also in terms of how does the commercialization work in Japan for a product like this. So if you can highlight on both of those, that would be helpful.
spk04: Hi, Arke. I hope you're well as well. Thank you for the question. So as I said, in Japan, Kaiken Pharmaceutical successfully launched an extrovert commercially. The Japanese market is quite substantial, and more than 6,000 patients that annually receiving the treatment of severe burns, and the majority of them undergoing ESCA removal as a critical first step. The initial feedback, as someone who licenses the product, we get periodically input from them. So the initial feedback is very positive. They're working diligently to secure contracts in key hospital systems. In Japan, There are something like 420 relevant hospitals. For instance, in the United States, the number is only 120, give or take. So there are 400 hospitals. They approached already all of them, and they exposed the product and gave training to many dozens of health professionals. After deploying them the first few batches, They increased their order, but as we say, and as we said in the last quarter or two, currently there is much more demand to NexoBridge than we can actually manufacture and supply. So we will keep our initial commitment according to the contract. But the Japanese launch is going better than expected.
spk03: Very good. Then with the with the added indication of pediatrics in Europe, and the new collaboration with paramedics, how, how is this going to work for your folks? And, you know, do you think that paramedics collaboration will give a little bit of a win? Especially since you have been in Europe for a while?
spk04: Right? So again, it's an interesting question. So the recommendation for the label extension to include also a pediatric indication is quite substantial in Europe, because around 30% of all the burn patients are considered children, and we got 100% of what we asked from Emma, The label that we got is exactly what we aim for. The collaboration with TMI, of course, the impact in the near term will not be substantial because Europe reflects what we see in other territories. We have much more demand than we can actually supply. But we are looking now to 2025, 2026. We want to have a very strong presence in Germany, Austria, Belgium, Netherlands and Luxembourg. In 2026, we're supposed to have full manufacturing capabilities. We want our spread in Europe to be as strong as we can. And PMI is quite an ideal partner. If you go to European Burn Association Congresses, you will see very few strong companies in wound care. Maybe one, by the way, is one of them, but the PMI is very strong there, and we think it will justify this collaboration.
spk03: Very good. And then the last question is on the manufacturing piece. So as you said, you have a larger demand than what you can supply. So you're saying by early 2025, you should have manufacturing from the new plant. Do you think you have enough material to support commercialization until then so that you're not losing on any contracts between now and early 2025?
spk04: So this is a tough question. We have commitments to support our clients and our partners And we also currently, our schedule to complete the GMP compliance state-of-the-art facility is by mid-2024, and we hope to reach full-scale manufacturing capability in 2025. By the way, in EMA, it can be quicker. So we need to set priorities, and I think we are very clear with that. United States and Japan are our top priorities because these are considered the most important markets. After that, we have Europe, EU5, and the rest, they need to wait. And we might lose some partners in very small countries, but it is what it is.
spk03: Very good. Thank you very much, Ofer, and talk to you soon. Thank you.
spk00: Thank you, and our next question comes from Francois Briesbach with Oppenheimer. Please go ahead.
spk07: Hi, thanks for taking the question. In terms of the SCRX trial, can you help us understand maybe the timelines? You talked about an interim assessment. You know, the start of the trial, the enrollment starts second half of next year, but Do you have an idea when that interim assessment could happen and what can we expect to see there in terms of outcomes? Is there a look on potential efficacy? Is there opportunity to end the trial early because of overwhelmingly good efficacy or just any color on timing and interim assessment expectations? Thank you.
spk04: Hi, Frank, and I appreciate your question. Yes, the phase three protocol we have been going back and forth with EMA and the FDA to make sure that they are both aligned with the same requirements because we want S-Correct to be approved globally. We managed to approve And interim assessment, this is our plan. After 67% of the participants that completed the trial, we managed to reduce the number of patients. Last time we said we will need to recruit 244 patients. But now, especially due to the fact that we have an interim analysis, we're able to do a shorter trial. So now we are guiding a shorter trial, not 24 months rather than 18 months. and the interim assessment will be something like after 15 months, and the data will be, it won't be, it will be an efficacy data, not a safety data, but there isn't a stopping rule. It's an interim assessment. If we see that we don't have enough power for succeeding in the endpoint, we might increase the number of patients, but we will not be able to decrease it. So the plan is for 216 patients. And I hope I answered your question.
spk07: Yeah, thank you. And, you know, obviously very unfortunate the reasons for why Nexabrid isn't in such high demand. But can you maybe help us quantify the maybe by a multiple or how much is the demand superior to the supply? Is it 2, 3x times? will the manufacturing capability and building be enough for this supply, or is it kind of a surge in supply? Just any comment there on manufacturing goals. Would it completely resolve the greater demand and supply, and what would that do to your balance sheet? Thank you.
spk04: Thank you for that, Frank. So as I said, our current sales are limited only by our production facility. We have almost zero inventory. As you can probably see in the financial statements, you see that they are always marginal. We have at least three-fold demand, more than we can produce. The scale-up is planned to do 6x. So currently, it seems OK. But this scale-up, if we work in two shifts, it's actually So we don't see a reason why this manufacturing facility will not be enough to manufacture everything that NexoBridge needs in the foreseen future.
spk01: Thank you.
spk04: And just answering the second part of the question, so if you look at our, if the demand today is 3x, on our ability to manufacture. We don't see a reason why in the year 2025 and 2026 when we have full manufacturing capabilities, why we're not able to sell four or five times because currently we are just limiting our sales force in order to be able to keep as many partners happy. We cannot supply everything.
spk02: Thank you. And our next question comes from Michael Okunowich with Maxim Group.
spk00: Please go ahead.
spk05: Hey, guys. Thank you for taking my questions today. I guess, first, I'd just like to follow up on the discussion around the manufacturing scale, and in particular, how this plays into your guidance for cash supporting you through profitability. I'd like to get a sense of what timelines are kind of baked into that assumption. Is this kind of the expectation here that the manufacturing scale-up, given the excess demand, could push you into profitability relatively quickly after that's fully up and running?
spk04: I think... Hi, Michael. I think Hany will take that question.
spk09: Hi, Michael. I appreciate your question. So our cash, restricted cash and investment, totaled to 46 million as of the end of the quarter. As you know, we have two major expenses going forward. The first one is the Phase 3 program, which will probably cost approximately 30 million. And the second is the remaining cost of the facility scale-up, which totals to about 6 million. And we accept about 1 million to be covered by BARDA. So assuming we meet the scale-up timeline according to plan, which means that the construction by mid will be end by mid-2024 and full scale-up manufacturing in 2025, so the next sub-lead is expected to generate meaningful revenue in 2025 and going forward. Accordingly, we anticipate that the profitability in 2026, 2027.
spk01: All right. Thank you very much.
spk05: And then I'd also like to ask a little bit deeper about the research partnerships in particular now that we have 3M joining in. Do research partners get earlier access to the data or get to follow the trial more closely? I'd like to get a sense if there's some benefit here for partnering or even potential acquisition discussions. And the reason I ask is because S-Correct seems like it could be a really attractive platform compound for someone, especially like 3M, if they're looking to compete with Santel.
spk04: Right. So that's a very important question. And Barry, can you please provide more detail on that?
spk06: Sure. Thank you. Thanks for the question. As far as the data that they're going to get, they won't have any early look. At the time that we file the BLA, they will get a package of information that focuses on their specific product, and how it fared across the couple of arms in the study. For them, they get a solid amount of data. There's not too many phase three studies that are done in this space, certainly not too many studies at all with the rigor with which this study is being done. So they'll get a good set of data in an actual controlled study. And they'll have the marketing capability to say that in the, you know, most important phase three study to come around and wound care for decades that their product was used as standard of care. That's kind of what they get out of it. As to the question about M&A licensing, any kind of business development activities, you're right. I would add, you know, just as a little bit of flavor, That 3M, as you probably know, is splitting off its healthcare division into a listed entity sometime, I believe, in 2024. They just announced the new name of this entity the past week, so it's becoming a reality. And the intent of that spinoff is to really unlock innovation in that area. in that division, which does about $8 billion, I think, in sales a year. So would they be a potential good acquirer or licensor of SCRX? Absolutely. Obviously, our stated intention at this point is to not only bring SCRX across the finish line, but to commercialize it as well, as we believe that that is what will maximize value for our shareholders. But of course, When we get there, you know, we'll always be open to see what the prevailing wins are and what the market bears.
spk05: All right. Thank you very much. And then just one more, and I'll hop back in the queue. I'd like to see if you could expand a little bit on the exploratory studies for S-Corrects. Would you be more geared towards generating additional marketing data in VLUs or potentially towards layering in additional indications?
spk04: So when we are speaking about exploratory studies at this stage, we're speaking about guidance that we got from the FDA. FDA is interested in us showing the PK profile of the drug. This study is relatively a small one, 20 patients. And also there is, since Escarex is a drug which is going to be used at home FDA also wants us to do something which is called human factor study, just making sure that the patients are able to read the information of use. Again, a very small study, even without patients, only healthy volunteers. We might, and we are thinking about it, do additional one or two studies that will serve the market access, making sure that we are able to charge as maximum as we can after SLX is approved. But when we know exactly what we do, we will share it with you and the public.
spk05: All right. Thank you very much, and congrats on all the progress you've made this past quarter. Thank you.
spk00: And, ladies and gentlemen, as a reminder, if you'd like to ask a question, please press star then 1 at this time. We'll pause for just a moment to assemble our roster.
spk02: And, ladies and gentlemen, this concludes our question and answer session. I'd like to turn the conference back over to Ofer Gonen for any closing remarks.
spk04: Thank you, everyone, for joining us today. We look forward to updating you again on our next calls.
spk00: Thank you. This concludes today's conference call. We thank you all for attending today's presentation. You may now disconnect your lines and have a wonderful day.
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