MediWound Ltd.

Good day and welcome to MediWUN's fourth quarter and full year 2023 earnings call. Today's conference is being recorded. If you require operator assistance, please press star then zero. At this time, I would like to turn the conference over to Gaia Shamus of LifeSci Advisors. Please go ahead.

Thank you, operator, and welcome, everyone. Today, before the market opened, MediWound issued a press release announcing financial results for the fourth quarter and full year ended December 31, 2023. You may access that release on the company website under the Investors tab. With us today are Ofer Gonen, Chief Executive Officer of MediWound, Hani Luxemburg, Chief Financial Officer, and Barry Wolfenson, Executive Vice President of Strategy and Corporate Developments. Following our preferred 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 many ones expected future performance, future business prospects, or future events or plans are forward-looking statements as defined under the Private Securities Litigation Reform Act of 1995. Although the company believes that expectations reflected in such forward-looking statements are based upon reasonable assumptions, actual outcomes and results are subject to risks and uncertainties and could differ materially from those forecasts due to the impact of many factors beyond the control of Medimund. 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 the cautionary notes set forth in today's press release, as well as at-risk factors set forth in MediWound's annual report filed with the SEC for factors that would cause actual results to differ materially from those anticipated in the forward-looking statements. The conference call is the property of MediWound, and any recording or rebroadcast is expressly prohibited without the written consent of MediWound. Now, I would like to turn the call over to Ofer Yonen, Chief Executive Officer of MediWound.

Ofer? Thank you, Gaia, and good morning, everyone. Welcome to MediWound's fourth quarter and full year 2023 conference call. Joining me today are Hani Luxemburg, our Chief Financial Officer, and Barry Wolfenson, our Executive Vice President of Strategy and Corporate Development. Following our discussion of the financial results and business highlights, we will open the call for questions. I'm excited to share that we had a remarkable year. Our unwavering commitment to executing our commercial strategy of NexoBridge coupled with our substantial operational excellence has yielded revenue of $19 million. Furthermore, we are making significant progress towards initiating our phase three trial of Escorex, a product which targets a $2 billion market. Utilizing the same proven active pharmaceutical ingredient as Nexobrid, Escorex has demonstrated superiority over the current market leader in phase two studies. Let's begin on discussion with the major milestones we have achieved with Nexobrid in 2023. NexoBID had an exciting year on a number of fronts. It generated $19 million in revenue, which was primarily driven by its commercial availability in the United States, Japan, and India. Additionally, it received approval for pediatric use in Europe and is currently under review by the FDA for pediatric use as well. Moreover, NexoBRID continues to benefit from federal funding in the United States, supporting both emergency preparedness and ongoing research and development activities. The demand for NexoBRID currently exceeds our production capabilities. We are actively scaling up our GMP-compliant state-of-the-art facility, which is on schedule for completion by mid-2024. we anticipate achieving full production capacity in 2025. This expansion will enhance our production capabilities six-fold, enabling us to fulfill the increasing global demand for NexoBridge. Now let's discuss each of the drivers for NexoBridge growth in further detail. NexoBridge was introduced to the U.S. market by our partner, VeriCell, at the end of the third quarter. VeriCell is focused on building a strong foundation for NexoBridge by supporting P&T committee approvals. At the end of 2023, more than 50 burn centers submitted packages to their P&T committees, out of which over 25 centers gained committee approvals, and nearly 20 centers placed initial product orders. Most notably, the clinical outcomes and the feedback from burn surgeons regarding the initial patient treated with Nexobrid have been extremely positive. This is a strong indicator of Nexobrid potential to change the standard of care in ESCA removal for patients with severe burns. As for commercial access, CMS granted Nexobrid a permanent J-code and transitional pass-through payment status. This became effective in January 2024. NexoBridge has also successfully launched in two major markets, Japan through our partnership with Kaiken Pharmaceuticals and in India through BSV. Both launches have been progressing as planned and have generated further demand for NexoBridge. In Europe, we expanded our commercial activity by establishing a collaboration with Polymedics, which will further facilitate greater NexoBrit usage in Germany, Austria, Belgium, the Netherlands, and Luxembourg. The transformative potential of NexoBrit as the new standard of treating of severe burns in emergency scenarios was highlighted during the war in Israel. Last October, we allocated our entire non-US NexoBridge inventory to meet the critical demand for treating mass casualty burn incidents. NexoBridge paved instrumental in saving lives across both military and civilian sectors. This successful development has sparked increased interest from various global governments in stockpiling NexoBridge for future emergencies. Our partnership with the U.S. government remains solid. We have secured $13 million RMT grant from the U.S. Department of Defense to develop and to manufacture a new formulation for NexoBread that is stable at room temperature. This innovation is intended for the U.S. Army as a non-surgical treatment for traumatic burns on the battlefield. Additionally, We have received an extra $10 million from BARDA. This funding is designated for the replenishment of expired product previously procured for emergency readiness, along with supporting further R&D efforts. We have also received European Commission approval to broaden NexoBridge's label in Europe to include patients for all ages. Additionally, a supplemental BLA for pediatric use has been accepted for review by the FDA with a decision anticipated later this year. Considering the pediatric patients, consider that those patients represent approximately 40% of all burn victims, this approval could substantially expand Nexobrid market reach. Overall, we are very pleased with the tremendous progress we have made with Nexobrid this year. and the strong global demand we have experienced. As we enter 2024, the influx of order for the entire year has allowed us to project revenues of $24 million. Looking ahead, we anticipate significant revenue growth exceeding 40% in the coming years, with revenue projection of $30 million for 2025 and $39 million for 2026. Now I would like to discuss escarex. We are fully aligned with both FDA and EMA on the phase three protocol, evaluating escarex in patients with venous leg ulcers. The protocol submission is planned for the first half of this year, and we anticipate initiating the trial in the second half of 2024. This will be a multicenter, prospective, randomized, and placebo-controlled global trial. We aim to enroll 216 patients in over 40 sites that will be randomized one-to-one to receive either escarex or placebo. The trial will focus on two co-primary endpoints, the incidence of complete debridement and the indication of the incidence of wound closure. An interim assessment is scheduled after 67% of the patients have completed the trial. The study is estimated to take about 24 months to complete. The design of the trial is very similar to our successful Phase II studies, and the chosen sample size provides 90% statistical power. We were excited to recently report the results of a head-to-head comparative analysis of escarex versus SANTIV. And now I will hand it over to Barry, who will elaborate further. Barry?

Thanks, Ophir. In our Phase II study, EscarX demonstrated superior results. Sancil collagenase ointment, approved in the 1960s, is the current leading treatment for enzymatic debridement of chronic wounds, generating over 360 million in sales in the United States. EscarX, a complex mixture of enzymes targeting different components of non-viable tissue and wounds, typically works within one to two weeks. In contrast, Sansil focuses solely on collagen and often needs four to eight weeks of debridement, usually alongside sharp debridement. The results of the head-to-head analysis are compelling and were achieved with robust statistical significance. Starting with the incidence of complete debridement, 63% of patients achieved complete debridement within two weeks with EscarX versus 0% with Sansil. Importantly, the estimated median time it took for EscarX to achieve debridement during the full 85 days of the study with nine days while patients treated with Santel didn't achieve the median time to complete debridement. Looking at wound bed preparation, which includes both complete debridement and also having the wound bed completely covered with granulation tissue, a critical step in wound healing, 78.3% of patients treated with EscarX achieved it during the study versus only 37.5% of patients treated with Santel. Once again, It was very quick with SCRx, where the median time to achieve it was only 11 days versus no achievement of a median time with Santal. While the incidence of wound closure was favorable to SCRx but not statistically significant in this small sample size, the average time to complete wound closure was only 48.4 days for SCRx versus 76 days for Santal, a full month differential, which reached significance with a p-value of 0.8. 0.05. The safety profile was comparable between the two. We look forward to sharing this data at three leading congresses in the field that are taking place in May this year, the Wound Healing Society, the Symposium on Advanced Wound Care, and the European Wound Management Association. Thanks to the Phase II promising results, we have garnered much interest from leading companies in the wound healing space, and have established research collaborations to support the SCRx Phase III study with 3M, Moenlica, and MyMedix. These three companies represent the top offerings in the product categories integral to venous leg ulcer care, compression therapy, advanced wound dressings, and cell-based products. SCRx is a potential blockbuster, and the company is focused and committed to the successful execution of the clinical development program and to diligently performing all the pre-commercial activities required to ensure an optimal launch. With that, Ofer, back to you.

Thank you, Barry. So, to summarize, MediWon has made an outstanding progress in 2023. NexoBreathe was launched in three major markets. Its indication has been expanded to include the pediatric population in Europe, with further potential of pediatric use in in the United States later this year. There has been continued commitment in grant funding from the US government. All of these have driven an increased global demand which we are on track to meet with the scale up of our manufacturing facility. Our promising drug candidate, Escarex, is gaining recognition for its potential in revolutionizing chronic wound care with validation from leading global wound care entities. we are eagerly anticipating the commencing of the Phase 3 study in the second half of 2024. I'll now hand it over to Hani to briefly review our financials. Hani?

Thank you, Ofer. Let me begin with our revenue for the first quarter. In the first quarter of 2023, the company reported revenue of $5.3 million dollars a decrease from $11.6 million in the first quarter of 2022. This decrease is mainly due to the BLA approval milestone payment from VeriCell received in the previous year. Gross profit for the quarter was $0.7 million or 13.5% of total revenue compared to the $8.2 million or 70.2% of total revenue in the first quarter of 2022. The decrease in gross profit is largely attributed to the BLA approval milestone payment from VeriCell in prior year. Turning to our operating expenses, the company's research and development expenses amounted to 1.8 million, a decrease from 2.7 million in the first quarter of 2022. This reduction is primarily due to the completion of the SCRx Phase 2 study in 2022. Selling general and administrative expenses were reported at $2.8 million, slightly less than the $3 million in the same quarter of the previous year. The operating loss of the quarter was $3.9 million compared to an operating profit of $2.1 million in the first quarter of 2022. The net loss was reported at $1.7 million or $0.19 per share, which is a decrease from a net loss of $7.5 million or $1.18 per share in the first quarter of the previous year. This improvement in net loss is mainly due to a favorable adjustment from the revaluation of warrants. The non-GAAP-adjusted EBITDA for the quarter was a loss of $3.2 million compared to a profit of $3.4 million in the first quarter of 2022. This shift primarily results from the revaluation of the warrants. Now, let's discuss the full year 2023 financial highlights. For the year ended December 31, 2023, the company's revenue totaled $18.7 million, a decrease from $26.5 million for the year ended 2022. This decrease is once again primarily due to the BLA approval milestone payment from VeriCell in the previous year. Gross profit for the year was 3.6 million, or 19.1% of total revenue, a decrease from 13.2 million, or 49.7% of total revenue in prior year. The decrease in gross profit percentage reflects the absence of the significant one-time payment received in 2022. Research and development expenses for the year were 7.5 million, a decrease from $10.2 million in the previous year. This decrease reflects the completion of our Escarex Phase 2 study in 2022. Selling general and administrative expenses for the year increased slightly to $11.6 million from $10.6 million in previous year. The operating loss for the year was $15.3 million compared to an $8.3 million loss in previous year. The net loss for the year was $6.7 million or $0.75 per share compared to a net loss of $19.6 million or $3.93 per share for the year ended December 31, 2022. The non-GAAP-adjusted EBITDA showed a loss of $12.3 million compared to a loss of $4.4 million reported in the previous year. Regarding our balance sheet, as of December 31, 2023, the company's cash, restricted cash and investments stood at $42.1 million, an increase from $34.1 million reported in the end of 2022. In the first quarter of 2023, the company successfully raised $27.5 million through a public offering. Throughout the year, the company utilized $70.1 million to fund its activity. With the current financial standing, we believe the company's cash reserves are sufficient to support operations through profitability. With that, I have concluded the financial review and will turn the call back to Ofer. Ofer?

Thank you, Hani. To conclude, the company achieved significant milestones in the past quarter and in 2023 overall, and we are confident about 2024 and our future growth. We continue to prioritize increasing our manufacturing capabilities to fulfill both current and future orders and meet the rising demand for NexoBridge and thereby grow our revenue by greater than 40%. SKRx has demonstrated superior results over the dominant product in this over $2 billion potential market. As we look forward to initiating the phase three trial in the second half of 2024, we are delighted to have three research collaborations with the top wound care companies supporting us with this study. I'm excited about what the future holds for us as we stay committed to redefining the standard of care with Nexovirid and Escarex. Now, I would like to open the call for your questions. Operator?

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, 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 two. Again, it is star then one to ask a question. At this time, we will pause momentarily to assemble our roster. The first question comes from Josh Jennings with TD Cowan. Please go ahead.

Thanks, and good morning. Congratulations on all the progress and the increased demand for Nexaprid. Overall, I was just hoping to just a two-part question on Nexaprid first, but just seems like the demand is surging globally. U.S. partner with it also in multiple international markets. Capacity constraints are limiting, but Is there any way to quantify the increased demand that you're seeing here in 24 versus 2023? And we're assuming that the 24 million revenue guide would be high without capacity constraints and somewhere in between 24 and the 39 million for 2026, that target. But any way to just give some incremental details or quantification of the increased demand for an extra break currently?

Thank you, Josh, for your question. To address that, I will just repeat that currently we have three-fold demand, more than we can actually manufacture. In the first week of 2024, we already got binding orders that actually filled the capacity that we have in 2024. Assuming that this demand continues as planned, we see the 40% growth as something that is very conservative, and our expectations and guidance is only limited by our ability to manufacture. So as long as we repeat our guidance by completing the construction of the facility in 2024 and having it in full scale sometime in 2025, we can meet those demands accordingly, and I hope I answered your question.

Yes, thanks for reviewing that. And just one follow-up on escorex, and maybe just help us think about the final steps here that are required before getting full sign-off on the Phase III study. And then also just on the manufacturing side for escorex, are there any Where are you there in terms of being able to deliver product for the full study as it kicks off in the second half? Thanks a lot for taking the questions.

So that's a very good question. So the reason that we start the trial in the second half of 2024 is primarily due to the fact that we focused on manufacturing an exobreed and in order to be able to meet the demands that we have from the United States, Japan, Europe, India, etc. The last thing that we need to do before initiating the trial is making sure that we are manufacturing enough batches of escorex. Actually, we are doing it as we speak. And then we need to wait 30 days for stability, submit the protocols that are already aligned with both the FDA and EMA, and then we can start recruiting patients. So for the clinical manufacturing, we don't see any problems. We are now getting ready for the commercial piece. We don't want to be in a position that once SCRx is approved, we are in the same situation as we are in NexoBridge. We want to be able to launch successfully SCRx, supporting a multi hundreds of millions of dollars of demand in the first one or two years of the launch. Understood. Thanks so much.

The next question comes from Francois Brisevoix with Oppenheimer. Please go ahead.

Thanks for the question. Just in terms of the design, can you remind us on SCRx if it's based on the timing of the start of the trial here in the second half? Can you remind us maybe the timing and when it would be realistic for us to expect the interim readout?

So thank you for the question, Francois. So the trial, we need to recruit 216 patients that will be randomized one-to-one, escorex versus placebo, after 67%. of the recruitment, and after those participants have completed the trial, we have an interim assessment. I would expect that something like 18 months after the study initiates.

Okay, great. Thank you. And then in terms of the, you talked about Veristel and the centers, a little bit of metrics there. 50 centers, 25, just the numbers. Can you maybe help us understand how many centers total are there for Veracel and where do we stand?

Again, Veracel is responsible for the U.S. market, so it's better to ask them that question. But what I can share with you is that there are around 100 centers that treat burn patients for adults. And once we get the approval of the podiatric population, there will be additional 30 centers that will be relevant. So all in all, in the United States, there are around 130 centers. Vericell already reported that by the end of last year, they were approached already 50, they got 50 committee engagement, 25 of them already approved. So I think that they're doing a very good job with that.

Okay, and just lastly, quickly, in terms of the shelf life, you talked about expiration and obviously demand can change depending on the expiration. How long does it take for your product to expire?

The shelf life of NexoBread currently is almost three years. It's two years and nine months. But as you can imagine, due to the fact that the demand for commercial, I'm not speaking about even stockpiling, for commercial use is such a significant, we don't expect any expiration of NexoBread product. Everything is going to be used. Everything that we ship, every vial of NexoBread that is shipped to a customer is being used in the following few months So expiration at this stage is not something that bothers us.

Thank you. Thank you.

The next question comes from RK with HC Wainwright. Please go ahead.

Thank you. Good morning, Ofer and Tani. So I'm sorry, I also have a question on capacity in Nexa Bread. Just trying to think through some of the projections you put out there for 2025 and 2026. So going to the far end in 2026 and with your projection of 39 million, what are you taking into consideration there? Are you taking that you will be able to handle all the demand that is out there at this point? Or you're also including the projected growth from all these territories, whether it is U.S., Japan, India, pediatric approval, and the governments?

Hi, RK. Well, it's a good question. We took conservatively, when we looked at the 39, we didn't plan on a very significant growth of demand. We are looking at the current demand. We are looking at the performance on specific markets that we are already in. For instance, in Japan, their expectation was that we can increase quite substantially our shipments to them after one quarter of being in the market. So the product was accepted there extremely well. So as for 2026, the 39 million, we do not include all kind of growth and unexpected positive surprises. It's only based on our ability to know that in 2026, we can meet all the demand that we currently have now. If we have surprises, this specific facility we'll be able to support more than $80 million in revenue. So we are okay with the scenario of unexpected growth.

Fantastic.

And then in terms of on the escrow side, Barry was saying there's going to be data presented in three different conferences in May. I just want to understand why, you know, if there will be any updates in these conferences, which can help us kind of figure out how, what to expect in the pivotal study, in the 216 patient study, which we probably will see some data, as I said, 18 months from the start of the program. It's probably more than 26, I would think.

Let me elaborate a little bit on that. So as you can all figure out, the strength of this data of escorex versus Santil were extremely robust. They positioned escorex to become the market leader in enzymatic agents for the treatment of chronic wounds. There is a lot of interest in the industry around this specific data that we have. But the FDA, I want to remind you all, the FDA is focused on the performance of Escarex versus placebo. So we will issue additional data, and there is a lot of strategic interest about what we are going to present at the Wound Healing Society, at the Symposium of Advanced Wound Care, and at the European Wound Management Association. but it will not give you more color regarding our probability of succeeding in our phase three trial, which is supposed to be easier because it is versus placebo.

Thanks. Thanks for taking all my questions.

Talk to you later. Thank you.

The next question comes from Michael C. Okunowich with Maxim Group. Please go ahead.

All right. Thank you very much for taking my questions today and congratulations on all the progress. I guess the first thing I wanted to ask is just with the acceptance of the pediatric SPLA, is there a similar thesis here for pediatric patients in the U.S. as you had with Europe where you could see outsized utilization due to the nature of the pediatric burns market, or is that a unique feature of the European market?

I hope that I understand you correctly. We received the European Commission approval and brought in the Nexaway label in Europe last quarter, and now it is for all ages. it will not impact our immediate financial outcome because of the limitation of our capacity. So maybe the proportion between the treatments of adults and pediatrics will change a little bit, but it won't impact our bottom line. In the United States, we expect the same. We had a very robust Phase III study with pediatric patients we believe that the FDA will not have different requirements than the European had. So as we guided, we expect to get this approval later this year. Again, the impact on future revenue is quite extensive because the number, the proportion of pediatric population in the United States is approximately 30 to 40% of the overall population. Therefore, this label extension should significantly increase the addressable markets.

I was asking more in terms of the greater degree of utilization because Nexabrit is more gentle and provides less scarring, as you said, with the European population, not in terms of immediate revenue.

I believe that if you look at how the standard of care in the United States was until a quarter ago. It is even painful to watch, very aggressive, a lot of pain and blood associated. We believe that we have an ideal partner in the United States to take over this market quite swiftly, and it will be also adopted the same in Europe. Children are... I don't see parents... prefers that his child will go through a painful operation instead of being applied with a topical drug.

All right. Thank you for that. And then I also wanted to see if you could give me any additional color on the timeline you're expecting for the DOD stabilized formulation and then Would this be limited to DOD sales on the program, or could this be applicable to foreign governments or first responders in more result regions or NGOs? Are there other organizations that might also seek to utilize a temperature-stabilized formulation?

So, Michael, this is a very good question. So, as I mentioned, we got $13 million R&D funding from the DOD to advance this project. We believe it can open the gate for us for additional armies, as well as simplify our supply chain costs and administration, moving from cool chain to room temperature. So the project is well underway. We have all kinds of very successful or encouraging results, and we are hoping to see the U.S. Army embracing the fruits of our collaborations in the next few years. We plan to have a meeting with the FDA next quarter to discuss the development path and to get some guidance of what is required in order to approve this product. I should also mention here that this product is of course under the license agreement with VeriCell, so any any implication or any commercial activity in the United States, of course, it's subject to agreement with them.

All right. Thank you very much. And once again, congrats on all the progress you've made.

Thank you, Michael.

At this time, these are all the questions we will be taking today. I would like to now turn the conference back over to management for closing remarks.

Thank you everyone for joining us today. We look forward to updating you again on our next call.

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect. Thank you. Music Playing music music Thank you. music music you you Good day and welcome to MediWUN's fourth quarter and full year 2023 earnings call. Today's conference is being recorded. If you require operator assistance, please press star then zero. At this time, I would like to turn the conference over to Gaia Shamus of LifeSci Advisors. Please go ahead.

Thank you, operator, and welcome, everyone. Today, before the market opened, MediWound issued a press release announcing financial results for the fourth quarter and full year in December 31, 2023. You may access that release on the company website under the Investors tab. With us today are Ofer Gonen, Chief Executive Officer of MediWound, Hani Luxemburg, Chief Financial Officer, and Barry Wolfenson, Executive Vice President of Strategy and Corporate Developments. Following our preferred 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 Mediwound's expected future performance, future business prospects, or future events or plans are forward-looking statements as defined under the Private Securities Litigation Reform Act of 1995. Although the company believes that expectations reflected in such forward-looking statements are based upon reasonable assumptions, actual outcomes and results are subject to risks and uncertainties and could differ materially from those forecasts due to the impact of many factors beyond the control of Medimund. 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 the cautionary notes set forth in today's press release, as well as at-risk factors set forth in MediWound's annual report filed with the SEC for factors that would cause actual results to differ materially from those anticipated in the forward-looking statements. The conference call is the property of MediWound, and any recording or rebroadcast is expressly prohibited without the written consent of MediWound. Now, I would like to turn the call over to Ofer Yonen, Chief Executive Officer of MediWound.

Ofer? Thank you, Gaia, and good morning, everyone. Welcome to MediWound's fourth quarter and full year 2023 conference call. Joining me today are Hani Luxemburg, our Chief Financial Officer, and Barry Wolfenson, our Executive Vice President of Strategy and Corporate Development. Following our discussion of the financial results and business highlights, we will open the call for questions. I'm excited to share that we had a remarkable year. Our unwavering commitment to executing our commercial strategy of NexoBridge, coupled with our substantial operational excellence, has yielded revenue of $19 million. Furthermore, we are making significant progress towards initiating our phase three trial of Escorex, a product which targets a $2 billion market. Utilizing the same proven active pharmaceutical ingredient as Nexobrid, Escorex has demonstrated superiority over the current market leader in phase two studies. Let's begin on discussion with the major milestones we have achieved with Nexobrid in 2023. NexoBID had an exciting year on a number of fronts. It generated $19 million in revenue, which was primarily driven by its commercial availability in the United States, Japan, and India. Additionally, it received approval for pediatric use in Europe and is currently under review by the FDA for pediatric use as well. Moreover, NexoBRID continues to benefit from federal funding in the United States, supporting both emergency preparedness and ongoing research and development activities. The demand for NexoBRID currently exceeds our production capabilities. We are actively scaling up our GMP compliant state of the art facility, which is on schedule for completion by mid 2024. we anticipate achieving full production capacity in 2025. This expansion will enhance our production capabilities six-fold, enabling us to fulfill the increasing global demand for NexoBridge. Now let's discuss each of the drivers for NexoBridge growth in further detail. NexoBridge was introduced to the U.S. market by our partner, VeriCell, at the end of the third quarter. Varicel is focused on building a strong foundation for NexoBridge by supporting P&T committee approvals. At the end of 2023, more than 50 burn centers submitted packages to their P&T committees, out of which over 25 centers gained committee approvals, and nearly 20 centers placed initial product orders. Most notably, the clinical outcomes and the feedback from burn surgeons regarding the initial patient treated with Nexobrid have been extremely positive. This is a strong indicator of Nexobrid potential to change the standard of care in ESCA removal for patients with severe burns. As for commercial access, CMS granted Nexobrid a permanent J-code and transitional pass-through payment status This became effective in January 2024. NexoBridge has also successfully launched in two major markets, Japan through our partnership with Kaiken Pharmaceuticals and in India through BSV. Both launches have been progressing as planned and have generated further demand for NexoBridge. In Europe, we expanded our commercial activity by establishing a collaboration with Polymedics, which will further facilitate greater NexoBrit usage in Germany, Austria, Belgium, the Netherlands, and Luxembourg. The transformative potential of NexoBrit as the new standard of treating of severe burns in emergency scenarios was highlighted during the war in Israel. Last October, we allocated our entire non-US NexoBridge inventory to meet the critical demand for treating mass casualty burn incidents. NexoBridge paved instrumental in saving lives across both military and civilian sectors. This successful development has sparked increased interest from various global governments in stockpiling NexoBridge for future emergencies. Our partnership with the U.S. government remains solid. We have secured $13 million RMT grant from the U.S. Department of Defense to develop and to manufacture a new formulation for NexoBread that is stable at room temperature. This innovation is intended for the U.S. Army as a non-surgical treatment for traumatic burns on the battlefield. Additionally, We have received an extra $10 million from BARDA. This funding is designated for the replenishment of expired product previously procured for emergency readiness, along with supporting further R&D efforts. We have also received European Commission approval to broaden NexoBridge's label in Europe to include patients for all ages. Additionally, a supplemental BLA for pediatric use has been accepted for review by the FDA with a decision anticipated later this year. Considering the pediatric patients, consider that those patients represent approximately 40% of all burn victims, this approval could substantially expand Nexobrid market reach. Overall, we are very pleased with the tremendous progress we have made with Nexobrid this year. and the strong global demand we have experienced. As we enter 2024, the influx of order for the entire year has allowed us to project revenues of $24 million. Looking ahead, we anticipate significant revenue growth exceeding 40% in the coming years, with revenue projection of $30 million for 2025 and $39 million for 2026. Now I would like to discuss escarex. We are fully aligned with both FDA and EMA on the phase three protocol, evaluating escarex in patients with venous leg ulcers. The protocol submission is planned for the first half of this year, and we anticipate initiating the trial in the second half of 2024. This will be a multicenter, prospective, randomized, and placebo-controlled global trial. We aim to enroll 216 patients in over 40 sites that will be randomized one-to-one to receive either escarex or placebo. The trial will focus on two co-primary endpoints, the incidence of complete debridement and the indication of the incidence of wound closure. An interim assessment is scheduled after 67% of the patients have completed the trial. The study is estimated to take about 24 months to complete. The design of the trial is very similar to our successful Phase II studies, and the chosen sample size provides 90% statistical power. We were excited to recently report the results of a head-to-head comparative analysis of escarex versus SANTIL. And now I will hand it over to Barry, who will elaborate further. Barry?

Thanks, Oprah. In our Phase 2 study, EscarX demonstrated superior results. Sancil collagenase ointment, approved in the 1960s, is the current leading treatment for enzymatic debridement of chronic wounds, generating over 360 million in sales in the United States. EscarX, a complex mixture of enzymes targeting different components of non-viable tissue and wounds, typically works within one to two weeks. In contrast, Sansil focuses solely on collagen and often needs four to eight weeks of debridement, usually alongside sharp debridement. The results of the head-to-head analysis are compelling and were achieved with robust statistical significance. Starting with the incidence of complete debridement, 63% of patients achieved complete debridement within two weeks with EscarX versus 0% with Sansil. Importantly, the estimated median time it took for EscarX to achieve debridement during the full 85 days of the study with nine days while patients treated with Santel didn't achieve the median time to complete debridement. Looking at wound bed preparation, which includes both complete debridement and also having the wound bed completely covered with granulation tissue, a critical step in wound healing, 78.3% of patients treated with EscarX achieved it during the study versus only 37.5% of patients treated with Santel. Once again, It was very quick with SCRx, where the median time to achieve it was only 11 days versus no achievement of a median time with Santal. While the incidence of wound closure was favorable to SCRx but not statistically significant in this small sample size, the average time to complete wound closure was only 48.4 days for SCRx versus 76 days for Santal, a full month differential, which reached significance with a p-value of 0.8. 0.05. The safety profile was comparable between the two. We look forward to sharing this data at three leading congresses in the field that are taking place in May this year, the Wound Healing Society, the Symposium on Advanced Wound Care, and the European Wound Management Association. Thanks to the Phase II promising results, we have garnered much interest from leading companies in the wound healing space, and have established research collaborations to support the SCRx Phase III study with 3M, Molnlika, and MyMedx. These three companies represent the top offerings in the product categories integral to venous leg ulcer care, compression therapy, advanced wound dressings, and cell-based products. SCRx is a potential blockbuster, and the company is focused and committed to the successful execution of the clinical development program and to diligently performing all the pre-commercial activities required to ensure an optimal launch. With that, Ofer, back to you.

Thank you, Barry. So, to summarize, MediWon has made an outstanding progress in 2023. Next, Obrey was launched in three major markets. Its indication has been expanded to include the pediatric population in Europe, with further potential of pediatric use in the United States later this year. There has been continued commitment in grant funding from the US government. All of these have driven an increased global demand, which we are on track to meet with the scale up of our manufacturing facility. Our promising drug candidate, Escarex, is gaining recognition for its potential in revolutionizing chronic wound care with validation from leading global wound care entities. we are eagerly anticipating the commencing of the Phase 3 study in the second half of 2024. I'll now hand it over to Hani to briefly review our financials. Hani?

Thank you, Ofer. Let me begin with our revenue for the first quarter. In the first quarter of 2023, the company reported revenue of $5.3 million dollars a decrease from $11.6 million in the first quarter of 2022. This decrease is mainly due to the BLA approval milestone payment from VeriCell received in the previous year. Gross profit for the quarter was $0.7 million or 13.5% of total revenue compared to the $8.2 million or 70.2% of total revenue in the first quarter of 2022. The decrease in gross profit is largely attributed to the BLA approval milestone payment from VeriCell in prior year. Turning to our operating expenses, the company's research and development expenses amounted to 1.8 million, a decrease from 2.7 million in the first quarter of 2022. This reduction is primarily due to the completion of the SCRx Phase 2 study in 2022. Selling general and administrative expenses were reported at $2.8 million, slightly less than the $3 million in the same quarter of the previous year. The operating loss of the quarter was $3.9 million compared to an operating profit of $2.1 million in the first quarter of 2022. The net loss was reported at $1.7 million or $0.19 per share, which is a decrease from a net loss of $7.5 million or $1.18 per share in the first quarter of the previous year. This improvement in net loss is mainly due to the favorable adjustment from the revaluation of warrants. The non-GAAP-adjusted EBITDA for the quarter was a loss of $3.2 million compared to a profit of $3.4 million in the first quarter of 2022. This shift primarily results from the revaluation of the warrants. Now, let's discuss the full year 2023 financial highlights. For the year ended December 31, 2023, the company's revenue totaled $18.7 million, a decrease from $26.5 million for the year ended 2022. This decrease is once again primarily due to the BLA approval milestone payment from VeriCell in the previous year. Gross profit for the year was 3.6 million or 19.1% of total revenue, a decrease from 13.2 million or 49.7% of total revenue in prior year. The decrease in gross profit percentage reflects the absence of the significant one-time payment received in 2022. Research and development expenses for the year were 7.5 million a decrease from $10.2 million in the previous year. This decrease reflects the completion of our Escarex Phase 2 study in 2022. Selling general and administrative expenses for the year increased slightly to $11.6 million from $10.6 million in previous year. The operating loss for the year was $15.3 million compared to an $8.3 million loss in previous year. The net loss for the year was $6.7 million or $0.75 per share compared to a net loss of $19.6 million or $3.93 per share for the year ended December 31, 2022. The non-GAAP-adjusted EBITDA showed a loss of $12.3 million compared to a loss of $4.4 million reported in the previous year. Regarding our balance sheet, as of December 31, 2023, the company's cash, restricted cash and investments stood at $42.1 million, an increase from $34.1 million reported in the end of 2022. In the first quarter of 2023, the company successfully raised $27.5 million through a public offering. Throughout the year, the company utilized $70.1 million to fund its activity. With the current financial standing, we believe the company's cash reserves are sufficient to support operations through profitability. With that, I have concluded the financial review and will turn the call back to Ofer. Ofer?

Thank you, Hani. To conclude, the company achieved significant milestones in the past quarter and in 2023 overall, and we are confident about 2024 and our future growth. We continue to prioritize increasing our manufacturing capabilities to fulfill both current and future orders and meet the rising demand for NexoBridge and thereby grow our revenue by greater than 40%. SKRx has demonstrated superior results over the dominant product in this over $2 billion potential market. As we look forward to initiating the phase three trial in the second half of 2024, we are delighted to have three research collaborations with the top wound care companies supporting us with this study. I'm excited about what the future holds for us as we stay committed to redefining the standard of care with Nexovirid and Escarex. Now, I would like to open the call for your questions. Operator?

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, 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 two. Again, it is star then one to ask a question. At this time, we will pause momentarily to assemble our roster. The first question comes from Josh Jennings with TD Cowan. Please go ahead.

Thanks, and good morning. Congratulations on all the progress and the increased demand for Nexabrit. Overall, I was just hoping to just a two-part question on Nexabrit first, but just seems like the demand is surging globally. U.S. partner with it also in multiple international markets. Capacity constraints are kind of limiting, but Is there any way to quantify the increased demand that you're seeing here in 2024 versus 2023? And we're assuming that the $24 million revenue guide would be high without capacity constraints and somewhere in between 2024 and the $39 million for 2026, that target. But any way to just give some incremental details or quantification of the increased demand for an extrovert currently?

Thank you, Josh, for your question. To address that, I will just repeat that currently we have three-fold demand, more than we can actually manufacture. In the first week of 2024, we already got binding orders that actually filled the capacity that we have in 2024. Assuming that this demand continues As planned, we see the 40% growth as something that is very conservative, and our expectations and guidance is only limited by our ability to manufacture. So as long as we repeat our guidance by completing the construction of a facility in 2024 and having it in full scale sometime in 2025, we can meet those demands. accordingly, and I hope I answered your question.

Yes, thanks for reviewing that, and just one follow-up on escorex, and maybe just help us think about the final steps here that are required before getting full sign-off on the Phase III study, and then also just on the manufacturing side for escorex. Are there any Where are you there in terms of being able to deliver a product for the full study as it kicks off in the second half? Thanks a lot for taking the questions.

So that's a very good question. So the reason that we start the trial in the second half of 2024 is primarily due to the fact that we focused on manufacturing an exobreed and in order to be able to meet the demands that we have from the United States, Japan, Europe, India, etc. The last thing that we need to do before initiating the trial is making sure that we are manufacturing enough batches of escorex. Actually, we are doing it as we speak. And then we need to wait 30 days for stability, submit the protocols that are already aligned with both DFDA and EMA, and then we can start recruiting patients. So for the clinical manufacturing, we don't see any problems. We are now getting ready for the commercial piece. We don't want to be in a position that once SCRX is approved, we are in the same situation as we are in NexoBridge. We want to be able to launch successfully SCRX, supporting a multi-hundreds of millions of dollars of demand in the first one or two years of the launch. Understood. Thanks so much.

The next question comes from Francois Brisevoix with Oppenheimer. Please go ahead.

Thanks for the question. Just in terms of the design, can you remind us on SCRX if it's based on the timing of the start of the trial here in the second half. Can you remind us maybe the timing and when it'd be realistic for us to expect the interim readout?

So, thank you for the question, Francois. So, the trial, we need to recruit 216 patients that will be randomized one-to-one, escorex versus placebo, after 67% of the recruitment and after those participants have completed the trial, we have an interim assessment. I would expect that something like 18 months after the study initiates.

Okay, great. Thank you. And then in terms of the, you talked about Veracel and the centers, a little bit of metrics there. 50 centers, 25, just the numbers. Can you maybe help us understand how many centers total are there for Veracel and where do we stand?

So again, VeriCell is responsible for the U.S. market, so it's better to ask them that question. But what I can share with you is that there are around 100 centers that treat burn patients for adults. And once we get the approval of the podiatric population, there will be additional 30 centers that will be relevant. So all in all, in the United States, there are around 130 centers, Vericell already reported that by the end of last year, they were approached already 50, they got 50 committee engagement, 25 of them already approved. So I think that we have, they're doing a very good job with that.

Okay, and just lastly, quickly, in terms of the shelf life, you talked about expiration and obviously demand can change depending on the expiration. How long does it take for your product to expire?

The shelf life of NexoBread currently is almost three years. It's two years and nine months. But as you can imagine, due to the fact that the demand for commercial, I'm not speaking about even stockpiling, for commercial use is such a significant We don't expect any expiration of NexoBread product. Everything is going to be used. Everything that we ship, every vial of NexoBread that is shipped to a customer is being used in the following few months. So expiration at this stage is not something that bothers us.

Thank you.

Thank you. The next question comes from RK with H.C. Wainwright. Please go ahead.

Thank you. Good morning, Ofer and Hani. I'm sorry, I also have a question on capacity and mix of bread. Just trying to think through some of the projections you put out there for 2025 and 2026. So Going to the far end in 26 and with your projection of 39 million, what are you taking into consideration there? Are you taking that you will be able to handle all the demand that is out there at this point? or you're also including the projected growth from all these territories, whether it is U.S., Japan, India, pediatric approval, and the governments?

Hi, RK. Well, it's a good question. We took conservatively, when we looked at the 39, we didn't plan on a very significant growth of demand. We are looking at the current demand. we are looking at the performance on specific markets that we are already in. For instance, in Japan, their expectation was that we can increase quite substantially our shipments to them after one quarter of being in the market. So the product was accepted there extremely well. So as for 2026, the 39 million, We do not include all kinds of growth and unexpected positive surprises. It's only based on our ability to know that in 2026, we can meet all the demand that we currently have now. If we have surprises, this specific facility will be able to support more than $80 million in revenue. So we are okay with scenario of unexpected growth.

Fantastic.

And then in terms of on the S-Correct side, Barry was saying there's going to be data presented in three different conferences in May. I just want to understand, you know, if there will be any updates in these conferences which can help us kind of figure out what to expect in the pivotal study, in the 216-patient study, which we probably will see some data, as I said, 18 months from the start of the program. It's probably more than 26, I would think.

Let me elaborate a little bit on that. So, as you can all figure out, the strength of this data of escorex versus... Suntil were extremely robust. They positioned Escarex to become the market leader in enzymatic agents for the treatment of chronic wounds. There is a lot of interest in the industry around this specific data that we have, but the FDA, I want to remind you all, the FDA is focused on the performance of Escarex versus placebo So we will issue additional data, and there is a lot of strategic interest about what we are going to present at the Wound Healing Society, at the Symposium of Advanced Wound Care, and at the European Wound Management Association. But it will not give you more color regarding our probability of succeeding in our phase 3 trials. which is supposed to be easier because it is versus disabled.

Thanks.

Thanks for taking all my questions. Talk to you later. Thank you.

The next question comes from Michael Okunowich with Maxim Group. Please go ahead.

All right. Thank you very much for taking my questions today and congratulations on all the progress. So I guess the first thing I wanted to ask is just with the acceptance of the pediatric SPLA, is there a similar thesis here for pediatric patients in the U.S. as you had with Europe where you could see outsized utilization due to the nature of the pediatric burns market, or is that a unique feature of the European market?

I hope that I understand you correctly. We received the European Commission approval and brought in the NextAway label in Europe last quarter, and now it is for all ages. It will not impact our immediate financial outcome because of the limitation of our capacity. So maybe the proportion between the treatments of adults and and pediatric will change a little bit, but it won't impact our bottom line. In the United States, we expect the same. We had a very robust phase three study with pediatric patients. We believe that the FDA will not have different requirements than the European had. So as we guided, we expect to get this approval later this year. Again, the impact on future revenue is quite extensive because the number, the proportion of pediatric population in the United States is approximately 30 to 40 percent of the overall bearing population. Therefore, this label extension should significantly increase the addressable markets.

I was asking more in terms of the greater degree of utilization because Nexabrid is more gentle and provides less scarring, as you said, with the European population, not in terms of immediate revenue?

I believe that if you look at how the standard of care in the United States was until a quarter ago, it is even painful to watch, very aggressive. a lot of pain and blood associated. We believe that we have an ideal partner in the United States to take over this market quite swiftly, and it will be also adopted the same in Europe. Children are, I don't see parents prefers that his child will go through a painful operation instead of being applied with a topical drug.

All right. Thank you for that. And then I also wanted to see if you could give me any additional color on the timeline you're expecting for the DOD stabilized formulation and then Would this be limited to DOD sales on the program, or could this be applicable to foreign governments or first responders in more result regions or NGOs? Are there other organizations that might also seek to utilize a temperature-stabilized formulation?

So, Michael, this is a very good question. So, as I mentioned, we got $13 million R&D funding from the DOD to advance this project. We believe it can open the gate for us for additional armies, as well as simplify our supply chain costs and administration, moving from cool chain to room temperature. So the project is well underway. We have all kinds of very successful or encouraging results, and we are hoping to see the U.S. Army embracing the fruits of our collaborations in the next few years. We plan to have a meeting with the FDA next quarter to discuss the development path and to get some guidance of what is required in order to approve this product. I should also mention here that this product is, of course, under the license agreement with VeriCell, so any any implication or any commercial activity in the United States, of course, it's subject to agreement with them.

All right. Thank you very much. And once again, congrats on all the progress you've made.

Thank you, Michael.

At this time, these are all the questions we will be taking today. I would like to now turn the conference back over to management for closing remarks.

Thank you everyone for joining us today. We look forward to updating you again on our next call.

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.