MediWound Ltd.

Good day and welcome to Mediborne's fourth quarter and full year 2024 earnings conference call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on your telephone keypad. To withdraw your question, please press star then two. Please note today's event is being recorded. I would now like to turn the conference over to Dan Perry of Lifestyle Advisors. Please go ahead.

Thank you, Operator, and welcome, everyone. Earlier today, pre-market open, MedWound issued a press release announcing financial results for the fourth quarter and full year ended December 3-1, 2024. You may access this press release on the company's website under the Investors tab. I would ask you to review the full text of our four looking statements within this morning's press release. Before we begin, I would like to remind everyone that statements made during this call, including the Q&A session, relating to MediWoon's expected future performance, future business prospects, or future events or plans are forward-looking statements, as defined under the Private Securities Litigation Reform Act of 1995. These statements may involve risks and uncertainties that could cause actual results to differ materially from expectations that are described more fully in our filings with the SEC. In addition, all forward-looking statements represent our views only as of today, and Metawound assumes no obligation to update or supplement any forward-looking statements, whether as a result of new information, future events, or otherwise. This conference calls the property of Metawound, and any recording or rebroadcast is expressly prohibited without the written consent of Metawound. With us today are Ofer Gunn, Chief Executive Officer of Metawound, Connie Luxenberg, Chief Financial Officer, and Barry Wolfensohn, Executive Vice President of Strategy and Corporate Development. Following our prepared remarks, we will open the call for Q&A. Now, I would like to turn the call over to Ofer Gonan, Chief Executive Officer of MediWound. Ofer.

Thank you, Dan, and good morning, everyone. 2024 was a pivotal year for MediWound, marked by strong execution, significant progress in clinical development, commercial expansion, and strategic partnerships. These achievements have strengthened our position, enabling us to drive continued growth and innovation in 2025 and beyond. I'll begin with Escarex, our next generation enzymatic debridement therapy for chronic wounds. In early 2024, we reported compelling results from our head-to-head analysis against Sampyl. Currently the only FDA approved enzymatic debridement product in the United States, generating approximately $370 million annually. The data demonstrated escorex's superiority over Sampyl across key clinical endpoints, including higher incidence of complete debridement, faster time to complete debridement, more rapid and effective wound bed preparation, and faster time to wound closure. Clinicians surveyed across diverse pairings recognize these superior clinical benefits and the substantial value they provide. In fact, recently conducted market research estimates escorex peak sales potential at approximately $725 million for its primary indications, venous leg ulcers and diabetic foot ulcers. These clinical benefits also make SCRx well-positioned for upcoming changes in wound care reimbursement. Starting next month, Medicare's new LCD policy will require full wound debridement and granulation tissue formation before covering cellular and tissue-based products. This shift strengthens SCRx's opportunity as a major commercial opportunity for our company. SKRx now is in its third history. We recently launched a new global phase three trial to evaluate SKRx for venous leg ulcers, involving 216 patients across 40 sites in the United States and Europe. The co-primary endpoints of the trial are the incidence of complete bright and the incidence of wound closure. This program is strategically de-risked, building on the strong results of our phase two studies with key modifications to maximize the likelihood of success, modification that includes a larger patient sample size to strengthen statistical power, and interim analysis at 65% enrollment, allowing for adaptive adjustment, and standardized treatment protocols to minimize variability and ensure consistency. It is also important to note that Escarex shares the same active pharmaceutical ingredient as Nexobrid, which is FDA approved for a nearly identical indication, ESCA removal. The interim assessment, a significant milestone, is anticipated in mid-2026, with full trial completion expected by year-end 2026. To further strengthen our BLA submission and enhance commercial readiness, we are planning a 45-patient randomized prospective phase two head-to-head comparison of SCRx versus collagenase, scheduled to begin in 2025. This study will include both Santil and the European collagenase product, Iruxol, generating critical comparative data that will be instrumental in supply market access and pricing strategies. The VLU program is supported by strategic research collaborations with leading wound care companies, Solventum, Molneke, and Mimetics. These partners will provide advanced wound care products for our trials, ensuring optimized patient outcomes and standardized wound management across all sites. Additionally, earlier in 2024, we secured 16.5 million euros in funding from the European Innovation Cup. to accelerate the development of SKRx for diabetic foot alters. The Phase 2-3 DFU clinical trial is planned for 2026, and we are pleased to announce a new strategic research collaboration agreement with Keresys, a subsidiary of Coloplast, to support this effort. Keresys, which is a global leader in wound care solutions, will be supplying its fish skin graft for active closure in this trial. Additionally, we anticipate securing another collaboration with a major industry leader to supply their market-leading advanced wound care dressings. With these partnerships, Mary Wound will be working alongside all the relevant key players in advanced wound care, reinforcing our strong industry positioning. Now let's move to Nexobrid, our innovating enzymatic therapy for severe burns. Before we discuss our progress with Nexobrid, I want to take a moment to highlight its critical real-world impact. This past weekend, a devastated nightclub fire in North Macedonia claimed 59 lives and injured at least 155 people. a medical delegation from Israel equipped with NexoBridge immediately flew in to provide support and treatment. We are grateful that NexoBridge could play such a vital role in this tragedy. With that said, in 2024, we achieved significant progress in expanding NexoBridge's commercial reach, generating annual revenue of $20.2 million driven by robust global demand. Moving forward, we anticipate continuous strong growth with projected revenue of $24 million in 2025, capped only by our manufacturing capabilities. This growth will be driven by expanding sales in key markets, Europe, where NexoVid is now available in more than 90 burn centers, Japan, where our partner, Kaken Pharmaceutical, has achieved a remarkable adoption with 400 plus medical facilities using NexoBridge and the United States where various health strong commercialization efforts yielded a 42% increase in hospital orders in Q4, 2024. NexoBridge market's potential was further expanded with FDA approval for pediatric patients, newborn to 18 years old. The Pivotal Phase III pediatric study data supporting the approval were recently published in Burns, the peer-reviewed journal of the International Society for Burns Injuries. Another potential indication expansion emerged during the Israeli Hamas war, where dozens of patients with blast injuries were treated with Nexobrit. The outcomes were remarkable, and the data from these cases will be presented at the upcoming American Burn Association Conference. Additionally, we reported a positive result from the Expanded Access Protocol, NEXT, which evaluated 239 patients across 29 U.S. burn centers. The study confirmed NEXT's safety and efficacy in eschar removal, as well as its significant reduction in the need for surgical procedures for burn patients. Operationally, we successfully completed the construction of our state-of-the-art GMP manufacturing facility, which remains on track to reach full operational capacity by late 2025. Commercial availability will depend on regulatory approvals from FDA EMA, which are expected in 2026. This facility will significantly expand our production capabilities, allowing us to meet the growing demand the growing global demand, and sustain long-term revenue growth. This year, we also strengthened our balance sheet with a strategic $25 million pipe financing round led by Molniki. This reflects industry confidence in our strategy and provides additional resources to execute our clinical and commercial growth plans. With a robust cash runway of approximately $44 million, MediOne is well positioned to deliver on its critical, clinical, operational, and commercial objectives. Now I'd like to turn the call over to Hani to review our financial performance in greater detail.

Thank you, Ofer, and good morning, everyone. I'll now take you through our financial results for the first quarter and full year of 2024. Starting with the first quarter, we reported revenue of $5.8 million compared to $5.3 million in the same period last year. Gross profit came in at $0.9 million with gross margin of 15.5% up from $0.7 million and a 13.5% margin in Q4 2023. R&D expenses were $3 million compared to $1.8 million in the prior year quarter, primarily due to costs related to the S-Correct value Phase 3 trial. SG&A expenses total $4 million compared to $2.8 million in Q4 2023, mainly reflecting higher share-based compensation expenses. This resulted in an operating loss of 6.1 million compared to 3.9 million last year. Net loss for the quarter was 3.9 million or 36 cents per share compared to 1.7 million or 19 cents per share in Q4 2023. On a non-GAAP basis, adjusted EBITDA loss was $4.9 million compared to $3.2 million in the same period last year. Now, moving to full-year, we reported total revenue of $20.2 million compared to $18.7 million in 2023. The increase was primarily driven by higher revenue for VeriCell, a new contract with the U.S. Department of Defense. Gross profit for the year was $2.6 million with a gross margin of 13% compared to $3.6 million and a 19.1% margin in the prior year. The decline was mainly due to changes in revenue mix and higher fixed costs associated with scaling our production. R&D expenses came in at $8.9 million compared to $7.5 million in 2023, primarily due to costs related to SKRF value phase 3 try. SG&A expenses were $13.1 million compared to $11.6 million in 2023, mainly reflecting higher share-based compensation costs. Our operating loss for the year was $19.4 million compared to $15.3 million in 2023. Net loss for the year was $30.2 million or $3.03 per share compared to $6.7 million or $0.75 per share in the prior year. The $23.5 million increase was primarily due to financial expenses, mainly from the revaluation of warrants following a 75% increase in our share price in 2024. Non-GAAP adjusted EBITDA loss for the year was $14.8 million compared to $12.3 million in 2023. Turned into balance sheet, we ended the year with $43.6 million in cash, cash equivalent and deposit, compared to $42.1 million at the end of 2023. During the year, we successfully raised $25 million through pipe offering, received $1.2 million from the exercise of Series A warrant, and secured $1.2 million grants from the European Commission. We also fully settle our liability with TEVA. In total, we used 22.9 million to fund operation, including 6.8 million allocated to capital expenditure, primarily for scale-up of our manufacturing facility. That concludes my financial review offer. Back to you.

Thank you, Hami. So in summary, 2024 was a transformative year for MediWound defined by significant clinical, commercial, and strategic achievements. Our strong execution, expanding pipeline, and key partnerships position us for sustained growth and long-term value creation. As we continue to advance our programs, expand market adoption, and drive innovation, our focus remains on delivering meaningful improvement in patient care. We look forward to providing further updates in our progress in the coming quarters. And with that, I will now turn the call back to the operator to open the line for questions. Operator? Thank you.

Yes, sir. We will now begin the question and answer session. To ask a question, you may press star then 1 on your telephone keypad. If your question has already been addressed and you'd like to remove yourself from queue, please press star then 2. Today's first question comes from Josh Jennings at Cowen. Please go ahead.

Hi, good morning, or good afternoon. Thanks for taking the questions, and congratulations on the initiation of the value study. Appreciate all the review of the trial design and the path forward. One follow-up was you have some powerful wound care collaborators in the study, so then from all of you, my medics, and was just wondering, You know, outside of supplying the wound care products for the study, you know, what else are they doing in terms of enhancing study execution? Just wanted to get that under our belt.

So, hi, Josh, and thank you for the question. Barry, do you want to address it?

Yes. Thanks, Josh, for the question. Generally speaking, having standardized products across these three key categories, the moist wound dressings, the compression bandaging, and the tissue substitute will help just to make sure that all variability is minimized throughout the study, which of course will optimize the outcomes. As far as the companies themselves are concerned, aside from the products that they'll be supplying, they'll also be supplying training. So, in fact, this weekend in Philadelphia, we have our investigators meeting, and there will be training of all the sites. Those companies will be involved, and on an ongoing basis, if there are any questions related specifically to their products, they'll provide that education and training.

Excellent. Thanks for that. And I wanted to ask about the DFU study expected to begin in 2026. Maybe something is in place. It's a two-part question. One, should we expect it to be a global trial? with the EU funding similar to the VLU study, the value study, and then to maybe just outline, you know, what's required in just a similar pathway that you took for VLU in terms of getting trial design approved by the FDA and EMA. I'd love to just hear you walk us through that again. Sorry to make you review it.

So the phase three study with VFU patients will be as close as we can to this phase three study of the VLU patients. The only difference is that we have less data that we have for VLU patients. So in order for the agencies to agree, to agree to that structure of the study, we need to get their sign-off. Our plan is to approach both FDA and EMA in the second half of this year with a protocol that is based on the data that we have to date. We have a few dozens of patients that we treated with DFU patients, and the data looks basically similar to what we have with VLU, but we need to have it approved. This is why when we guide about this study, we say a phase two, three study, because maybe we need kind of an interim assessment and shift into a phase three down the road. Having said that, we need to get clearance from the agencies before we can give a lot of details. Our thoughts about how the study will look like is currently posted on our website, and it looks quite similar to the VFU trial. With this trial, we will also have strategic collaborations, the same as we have with the VLU trial, but it will be with different partners.

Excellent. And just one last one on MexiBridge. Yes, they've made great progress in terms of getting the state of the art GMP manufacturing facility in place and ramping up capacity this year. I understand that regulatory approvals are necessary for product to be commercially available. When's the earliest that regulators can get in to do the inspection and move forward with clearance? I know you don't have any control over the timing, but when's the earliest that they could start that process? It sounds like you're expecting approvals in 26.

So currently our guidance for the revenue are reflecting the fact that we will get in the beginning of 2026 approval in Europe and by mid 2026, we'll get a SPA approval. The thing that we need to have in place in order for those approval to take place is that we need to make sure that we are able to manufacture product with the same quality and the same characteristic of the current manufacturing facility that we have, which is quite smaller. After we finish proving that we can do the same, we need to manufacture a few batches of both Mexobrid for the United States and for Europe. Europe demands three months of stability after that, that they can come for an inspection. This is why we expect the European approval to be earlier. And the U.S. FDA, the guideline is that we need to wait six months of stability. So these are the timelines, and this is why we guided in the beginning and in the middle of 2026 both approvals.

Thanks, Ofer. Thanks, Barry. Appreciate it.

Thank you.

And our next question today comes from Francois Brisebois with Oppenheimer.

Please go ahead. Thanks for the questions and congrats on the progress this year in 24. I was just wondering if you can touch base. You started your call talking about the Medicare update. You just, you know, remind us when that came in place and how, you know, just a little more color on how do you think that is a positive for MediWoon. And then the second question is more on the interim analysis. Just a reminder, I think you mentioned it on the timing of that for the trials of Phase 3 and What are the different kind of outcomes that can come out of this interim analysis? Thank you.

Okay. Thank you for the question. Barry, can you step in to address the first question, and I will answer the interim assessment one?

Sure, of course. So with regard to the Medicare question, recently, as you're likely aware, the seven local MACs, the Medicare Administrator Contractors, posted final changes to what's called an LCD, a local coverage determination policy, related to the usage of cellular and or tissue-based products, CTPs. This category has exploded in the last several years to as high as 3 billion in the U.S. And while several dramatic changes were written into the draft policy, as it turns out, the final policy ended up not really too different than the current one. This new policy becomes active in less than a month on April 13th, 2025. One key change is the slight limitation on the number of applications of tissue that could be put in place on a patient during one complete episode. That number has gone down from 10 previously to four, but it does have the ability to do an additional four if the wound situation warrants additional applications. And for these additional four, the sites must complete some additional paperwork, but that extra work is not deemed to be too time-consuming to keep them from doing so. That's the bigger change that the industry will focus on. From a MediWOON perspective and how it relates to SCRX, another meaningful change from this new LCD is the increased attention to documentation. required showing that the wound is completely debrided and covered in granulation tissue prior to application of any tissue substitute to the wound. And given that this is what SCRX does so well, it debrides and it gets wound bed, the wounds prepared, this will position our drug as the optimal product of choice when surgery or sharp debridement is not deemed to be the best option.

Okay. Okay, Barry, I have nothing to add to that. Thank you for answering. As for the interim assessment, as I said in my prepared remarks, this program is strategically de-risked. Many won't succeed in 14 out of 14 clinical studies, and we have no plans to fail in the most significant study that we are conducting. So we plan an interim assessment after 65% of the patient in the study, which is 140 patients, are treated. And there are two outcomes to this assessment. One, 90% – there is a 90% probability of success. The 90% power for success is maintained. In this case, we are stopping the enrollment of the study. By then, more than 200 patients will be already included in the study. And then we just are waiting for the follow-up and the study is done. If we see that the likelihood of success is less than 90%, let's say 77%, we have some flexibility in the protocols to include additional few dozens of patients. in order to maintain the 90% probability of success. If everything goes as we planned, the interim assessment should be by mid-2026, and the study completion, assuming the 90% probability of success is maintained, the study completion is by the end of 2026. I hope I answered the question.

Yep, thank you.

And our next question today comes from R.K. from H.C. Wainwright. Please go ahead.

Thank you. Good afternoon, Ofer and Hani, and good morning, Barry. A couple of questions. Barry, thanks for explaining the LCD, the new LCDs, you know, that is going to become official, you know, in a month. So based on what you were saying regarding the granulation of the tissue, is there a way where you, at least if you can compare for us, how fentanyl performs versus what we should expect from escorex? And, you know, based on that, does escorex have... has potential to be better than what Sentinel does right now.

So, Barry, do you want to address it?

Sure. Well, a couple of things. Firstly, and thank you, RK, for the question. You know, as you know, we announced the results from this head-to-head Phase 2 study earlier this year, and SCARAC was shown above SAML and all the key endpoints, whether that was time to complete debridement, incidence of complete debridement, and also time to wound closure. With regard to the – so right there off the bat, if you're a treating physician and you have a wound that comes in, and you want to get towards a CTP for active closure, you're going to know that the data suggests that SGRX can get to that CTP within only a couple of weeks, that the average is going to be five to six applications within a couple of weeks. And the published data, even outside of, for SAMHSA, even outside of our Phase 2 analysis, suggests that it's more along the lines of six to eight, if not even more weeks. So there's going to be an incentive to use EscarX because it will get to that CTP application much, much more quickly than would sample.

Thank you for that. And then, Ofer, a quick question on the VLU, the ongoing VLU study. Is there any possibility for this study to enroll students you know, quicker than expected so that, you know, we can expect data earlier, whether it's the interim or the final complete data set later next year.

Yes. So, hi, and thank you for this question. It's a great question because I was asked about it again and again by my board yesterday. I wouldn't expect a quicker enrollment. There are many patients. We are in the largest centers in the United States and Europe. There are a lot of patients that are available, but we are making sure that we are recruiting the right patients. I want patients with real chronic wounds. I don't want patients with a wound which is not that severe, and even a placebo will do something. So we're spending a lot of time and a lot of effort screening and making sure that no patient is getting into the study unless he has a real chronic wound, a real heart rate wound, because our intention is that placebo will do nothing to it. I don't mind waiting another month, another two months. I'm not incentivizing centers to recruit as many patients as they can as quickly as they can. On the contrary, I'm just making sure it's a very lucrative study. Everyone wants to get to be treated with ancillaries that we are getting the most expensive dressings, the most effective pressure garments. We know that we will have a lot of demand to participate in this trial. Our motivation is to make sure that it is done adequately and I would not expect quicker enrollment. Thanks for that.

And then on the collaboration with BARDA in terms of identifying a U.S. facility and trying to plan and design a facility in the United States, what is the status there? And also, can you give us any color as to how you're going to manage these facilities big projects like you just got done with the um with the israeli facility and um you know what's the timeline you know if you so decide and and identify a specific site in the united states and how does it play into the expansion of nexa bread um you know from what you're you know yet to accomplish that's already been signed up for.

So the facility in Israel that is going to be in full capacity scale by the end of this year and getting the approval by mid next year, we will have the capacity to support the foreseeable market of Nexovoid both in the United States and globally. Having said that, the U.S. government recognized the need to having a backup facility in the United States. So we got some funding to identify location for such a facility. We are planning such a facility. We are having additional indications such as the temperature stable formulation and additional indications that we are working on that this facility will need to support. So we have the funding for that. Hopefully by the end of this year, we will know exactly what is required in order to finalize building such a facility. I would expect a three-year practical. It will not have any impact on our revenue guidance because we are speaking now on 2027, 2028. But we will have a lot of additional capacity either to manufacture more S-Corrects or to manufacture the military use indication, et cetera. So it's a project which is very important for us. but it won't have any impact on the next four years other than getting funding from the U.S. government.

Perfect. Thank you very much. Thanks for taking my questions. Thank you. Okay.

And our next question today comes from Chase Knickerbocker with Craig Hallam. Please go ahead.

Good morning. Thanks for taking my questions. Just a couple on the VLU study around enrollment. So can you just... kind of cue us in on what you're hearing from prospective centers as far as what they think enrollment rates that are feasible are. And then how are the early site activation activities going, everything planned so far? And then along those lines and with the LCD, you know, there's a number of skin sub-trials going on as a result of the clinical evidence requirements in that LCD we were referencing. Are you watching out for any competition for patients or kind of what are you hearing from these centers? Sorry for the multi-parter, thanks.

So, hi, Chase, and I hope I remember all the thought of the question. Let's start with the end because this is how my memory works. When we did the feasibility study, feasibility testing about which sites to pick, we chose sites that do not have competing trials. Having said that, we might have one trial or two competing in specific sites, but None of them can compete financially in our trial. We are a much complicated trial. We are paying much more money for each patient per center, around $100,000 per patient, which is at least three or four times more than they are getting from simpler CTP trials. So we do not identify it as an issue. This is the last part of your question. As for the rates, we are aiming for the same rate that we had in the previous phase 2 chronic study, which is half a patient per center per month. Very feasible. It is also based on the experience of the CRO that we are working on in this phase 3 study, and it looks something that all our calculations are based on these numbers. It can be a little bit quicker, but as I said, as I answered to, I think, RK, I don't, we are not pushing to, we are not, we are focusing on the quality of the trial and not in trying to recruit as many patients as possible quicker because the patients are there. Did I miss any part of the question, Chase?

Yeah, yeah. And then just kind of back on the site activation side, that was all very helpful. And just on the site activation side, has everything kind of happened to plan for you know, anything that's going better or, you know, anything that's taken a little bit longer. I know it's early days.

Currently, we were well prepared to start the study. So we have the agreement in place and the sites are very enthusiastic and we don't see any delays. On the contrary, we are, again, we started, we just started in the United States. So at least Something like 50% of the sites will open only in the next couple of months. But we are in a very good place. And in the United States, there is a lot of enthusiasm around this specific trial.

Good. And just maybe one for Hani. If we think about R&D spend this year as the BLU trial ramps up, is that kind of per patient as they're enrolled the right kind of way for us to think about it and model R&D? Are there other kind of startup expenses we should be thinking about? Maybe just kind of any way you can help us think about R&D spend in 25. Thank you.

Yeah, I think that in 2025, our R&D expenses will increase compared to 2024. Of course, it derives from, as I said, per patient, the cost will be around $100,000 So as we are aiming to enroll around 100 patients this year, you can do the calculation, and the result is that the R&D cost will increase substantially compared to 2024.

Very helpful. Thanks for the question. Thank you, Chase.

Thank you. And our next question comes from Michael Ukinowicz with Maxim Group. Please go ahead.

Hey, guys. Thank you so much for taking my questions today. Congrats on all the good progress. Thank you. I guess, first off, I'd just like to ask a little bit about, on the DFU study, could you talk about the rationale for partnering with Kerasys, and does this replace the Mimetics graphs, or is it a different type of graph?

So, The rationale is that we want to work with the best products, and we don't want to be associated with a specific advanced wound care company. So if you look at the CTP, the best data as far as we know in venous leg ulcers are mimedixes, and this is why we signed with them. The best results that we see in diabetic foot ulcers are of keratosis coloplast. This is why we picked them. As you can imagine, and based on the environment and the CPP and the LCD and the reimbursement, all of them are interested to participating in such trials to generate more data and to be used by as many sites as possible. So we have the ability to choose, and we are happy with those specific two partners that we picked.

Okay. And then...

When we look here, 2025 revenue guidance, could you help us understand where that 4 million in incremental growth comes from if we are expecting the EMA approval on the facility to come in early 26? Yeah.

So, as I'm saying, we do not expect to sell more next-of-breed units, not substantial more next-of-breed units in 2025. There are a couple of two or three weeks more that we can manufacture due to all kinds of activation effort that we had last year. So we have a few more weeks of manufacturing. And also we increased the price a little bit where we could. And we are shifting territories. There are more profitable territories. So the numbers, according to the current plan, the mass, shows that the revenue will increase quite substantially. But again, it is still, based on the same capacity, maybe another two or three weeks more and higher prices.

Okay. Thank you very much for the additional call.

Thank you. Thank you. This concludes our question and answer session. I'd like to turn the conference back over to management for closing remarks.

So thank you, everyone, for joining us today. We enjoyed it. We look forward to continuing our dialogue and updating you on our progress during the next quarterly call. Bye-bye.

Thank you. This concludes today's conference call. We thank you all for your participation, and you may now disconnect your lines. Have a wonderful day.