Q3 2023 MediWound Ltd Earnings Call
Good day, and welcome to everyone's third quarter 2023 earnings call.
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At this time I would like to turn the conference over to Dan Ferry of lifestyle Advisors. Please go ahead. Thank you operator and welcome everyone earlier. This morning, <unk> issued a press release announcing financial results for the third quarter ended September 32023.
You may access the earnings press release on the Companys website under the investors tab.
With us today are all forgotten Chief Executive Officer of 91, Honeywell Silver 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.
Before we begin I would like to remind everyone that statements made during this call or in the Q&A session relating to <unk> expected future performance future business prospects or future events or plans are forward looking statements.
Find out of 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 restaurant certainties and could differ materially from those forecast due to the impact of many factors beyond the control of them anymore.
The company assumes no obligation to update or supplement any forward looking statements.
Whether it is whether as a result of new information.
Future events or otherwise.
Testaments are directed to cautionary notes set forth in today's press release as well as risk factors set forth in medical and its annual report filed with the SEC for factors that could cause actual results to differ materially from those anticipated in the forward looking statements.
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Now I would like to turn the call over to Overcoating, Chief Executive Officer and medical.
Sure.
Good morning, everyone and thank you Dan for the introduction.
I am pleased to welcome you to our third quarter 2023 earnings Conference call.
Joining me today are family look some Burke, our Chief Financial Officer, and Barry Wilson, Chen our executive Vice President of strategy and corporate development.
I want to start by expressing our sincere. Thank you from the entire maybe one family for their overwhelming support through email calls messages.
It 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 products can contribute to help big 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.
Nexobrid was successfully launched in the United States and Japan.
In Europe, we expanded both our presence in the target population.
Global demand as the reason fueled impart by world conflicts 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 III study of <unk> 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 'twenty 'twenty four.
A new collaboration with industry leader <unk> healthcare further validates S corrector 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.
Our partner Barry Stowe.
The recent launch of Nexobrid is progressing swiftly.
Patients started treatment soon after its commercial release.
<unk> is dedicated to securing market access.
Meaning PMT committee approvals and training staff at burn centers.
Given the burn care community is positively exposed to nexobrid very still expect rapid adoption and significant growth of their burn franchise in 2024 and beyond.
Further supporting the commercialization efforts in the U S and elsewhere. The journal of burn care in research published results from the detect phase III study.
Study demonstrated that the treatment with Nexobrid resulted in Italy, complete eschar 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 very early success enthusiastic reception and strong published data, we feel quite confident about <unk> future in the United States.
Similarly in Japan, and other major market Nexobrid was launched this quarter through our partner <unk> Pharmaceuticals.
Asia is feedback from K, Ken 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 CH M. P recommended nexobrid label extension to include pediatric indication expanding nexobrid availability to all age groups.
This recommendation was based on our global Phase III study evaluating Mexico grid in hospitalized pediatric patients.
As well as additional data from area tribes.
Pediatric patients with severe thermal burns represents approximately 30% of the total burn population.
Therefore, this label expansion will significantly increase nexobrid addressable markets.
Secondly.
Our recently announced collaboration with fully medics and burn care markets. Peter will further the adoption of Nexobrid in Europe.
Branding or marketing activities in Germany, Austria, Belgium, the Netherlands and Luxembourg.
This collaboration followed Nexobrid impressive presence at the recent European Burn Association Congress.
Nexobrid was featured in 'twenty 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 Nexobrid, driven impart by geopolitical conflicts.
In Israel.
Entire non use nexobrid 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 of prompt Additionally interests from various governments, including Ukraine for stockpiling the product.
In the United States, we secured $6 5 million dollar R&D budget from the department of defense to a divested 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.
Okay.
All of these developments major markets launches indication expansion Dod funding governmental interest.
All of these will accelerate the demand for Nexobrid worldwide.
It is therefore critical that we expand our operation that 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 2020 for 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 Doctor Shmulik Hess.
As our recently appointed Chief operating Officer, and Chief Commercial Officer.
With his extensive experience we are confident the doctor 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.
Yeah.
Now I'd like to provide an update on our <unk> program.
We have received guidance from both the FDA and EMA on the protocol for the global Phase III study, indicating our pathway towards approval.
With the strong data from our phase II studies and with the added information we made to the protocol.
Entering the phase III portion of our clinical development program with great confidence.
The phase II trial is a multicenter <unk> randomized placebo controlled study evaluating the safety and efficacy of <unk> in patients with venous leg ulcers.
The trial will enroll 216 patients equally randomized between <unk> 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 busy period and.
The incidence of wound closure by the end of the weekly follow up period.
An interim assessment is planned up to 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 the human factor study.
These are designed to support the BLA office, correct and to improve our.
Future commercialization and market access strategies.
Much like Mexico, Britta notable impact in the burn care market S. Correctly is also attracting significant interest in the chronic wound care sector.
This is demonstrated by the interest expressed by key market leaders to form Richard research collaborations around our study.
To tell you more about these collaborations I will now turn the call over to Barry Barry.
Thanks Ofer.
This quarter, we secured an additional research collaboration partner for a phase III study three on health care, which is in addition to the previously announced ones my medics and modern look at our.
Our primary goal in securing these agreements work 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 to 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 incidence of wound closure.
<unk>.
Depression 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 disappear.
The superior benefits of three M Health Care's co band two and <unk> two light were confirmed in our 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 three of them health care 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 ramp system is equally as important venous leg ulcers are known to have high levels of one fluid drainage and since systems such as <unk>. Two 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 molecule will provide their category, leading <unk> phone dressings as well as their exit fiber fiber AG dressings <unk> as the top brand and the largest category of advanced wound dressings, which are called farm dressings.
Thank you fiber will be included for added moisture management and extra fiber AG for the additional management of localized bio burden.
Lastly, a key goal of our phase III study is to demonstrate that <unk> 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 my medics, who will provide <unk> fix their placental tissue allograft.
<unk> will be used on study subjects as soon as the wound is completely debride and has 100% granulation tissue. When autographing 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 <unk> can mean.
To the market upon its approval with that I'll hand, it back to you Ofer.
Thank you Barry.
In summary, we're making substantial strides towards achieving our strategic goals.
<unk> 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, S. Corrects has attracted collaborations with industry leaders three am magnetics and modeling.
And we are well positioned well for our pivotal phase III trial.
Finally.
Our solid balance sheet with $46 million in cash is a key strategic asset.
Empowers us to successfully execute on our main goals incur.
Increase nexobrid revenues develop S correct through FDA approval and rich profitability.
To discuss our financials in more detail I will now hand, it over to Jaime.
Jaime.
Thank you all for that.
You may begin only that wasn't.
In this quarter the company reported that <unk> our.
For $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 the nonrecurring income from bad.
Gross profit for the quarter.
0.9 million or 19% of total revenue.
Back 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 nonrecurring income from bad.
So I'll need to our operating expenses.
The company's R&D expenses amounted to $1 5 million a decrease from two 9 million in the third quarter of 2022, mainly due to the completion of S. Correct phase two 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.
Of 2022.
The net loss was reported at $2 2 million or 24 cents per share compared to the net loss of $4 2 million or 88 cents per share in the same quarter last year.
This improvement is mainly due to a favorable adjustment from the revaluation of flooring.
The non-GAAP adjusted EBITDA for the quarter was a loss of $2 6 million compared to two 5 million loss 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 <unk> 56 cents per share, which is a significant improvement.
Net loss of 12, 1 million or $2 $67 per share for the first nine months of 2022.
The non-GAAP adjusted EBITDA showed a loss of 90 million compared to a loss of $7 9 million, let me talked it in the first nine months of 2022.
And now a few words about the balance sheet.
As of September 32020 to me the company's cash.
With cash and investments were at $46 million, an increase from $34 1 million, we talked a lot on December 31, 2022.
In the first worked out of 2023, the company successfully raised Augustine Mount of $27 5 million.
During the third quarter of 2023, the company used <unk>.
<unk> 4 million to fund its activities.
With the current financial extending the company's cash flows are expected to support its operations through profitability.
With that I will not turn the call back to also answer.
Thank you Amy.
This quarter is marked by significant progress for maybe one hour.
Our optimism for Nexobrid 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 interests.
Addressing this surgeon 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 mix of bridge revenue following the completion of this scale up.
In parallel our <unk> phase III Global study is progressing towards the initiation.
Guided by the FDA and EMA.
And bolstered by partnerships with three top global warfare companies as correct stands at the forefront of the $2 billion chronic will be broadband markets.
It holds the promise to enhancing the lives of millions.
With that.
We will now open the call for your questions.
Operator.
Thank you we will now begin the question and answer session.
To ask a question you May press Star then one on your telephone keypad.
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Once again, ladies and gentlemen that Star then one if you have a question.
And today's first question comes from RK with H C. Wainwright. Please go ahead.
Thank you.
Good afternoon.
You folks are doing well and your families are doing well.
<unk>.
So to start off with Brett.
In terms of Japan.
You said you are getting good feedback.
<unk>.
I'm just trying to see.
Thanks again.
And on that comment a little bit more.
And also in terms of.
How does.
How does it commerce commercialization work.
In Japan.
And for a product like this.
And so if you can highlight.
Both of those that'd be helpful.
Hi, Okay, I hope, you're well as well.
Thank you for the question.
So.
As I said in Japan, a pharmaceutical a successfully launched nexobrid commercially.
The Japanese market is quite substantial and our more than 6000 patients annually.
Annually, receiving the treatment of severe burns and the majority of them.
They are growing eschar removal is a critical first step.
The initial feedback you know as a someone who licensed products, we get them periodically.
Input from them. So the initial feedback is very positive they are working diligently to secure contracts in key hospital system in Japan.
There are something like 422 relevant hospitals.
For instance, in United States the numbers only 120.
People would pay for that 400 hospitals, they approached already all of them.
Uh huh.
And they expose the products and gait training school.
Many dozens of his face right now.
In the first after deploying them, but first a few boxes they increased their order, but as we say and as we said in the last.
Quarter two.
Currently there is much more demand to Nexobrid, then we can actually manufacture and supply so we will keep.
Keith.
Our initial Ah.
Commitment the according to the contract, but the Japanese launch is going better than expected.
Very good then.
With the.
Added indication of pediatrics.
No.
The new collaboration with <unk>.
How is this going to work for you folks.
And you know.
So you'd think that polymeric collaboration will give a little bit of a blend.
Especially since you have been in Europe for a while.
Right.
So again, it's a it's a it's an interesting question.
So bill Commendation for the label extension.
<unk> pediatric indication is quite substantial in Europe, because around 30%.
Of.
Of all the burn patients are considered the Tucson, and we got a 100% of what we asked.
From a M.
And of course, the labor that we've got is exactly what we aim for.
The collaboration with PMI of course, the impact in the near term will not be substantial because.
Europe reflects what we see in other theory, it's always we have much more demand than we can actually supply, but we are looking them out through 2025 2026, we want to have a very strong presence in Germany, Austria, Belgium, Netherlands and Luxembourg.
In 2026 were supposed to have manufacturing capabilities, we want our our spread in Europe to be as strong as we can as strong as we can and PMI is a quite an ideal partner. If you go to European Burn Association Congresses.
You'd see.
Very few strong companies in wound care, maybe one by the way is one of them, but you're my is very strong there and we think it will.
Just beside this collaboration.
Alright, and then last question.
On the manufacturing piece.
So I just said.
And our larger demand.
And then Mark you can supply.
So.
And you are saying, but.
Early 2025.
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 to identify.
Okay.
So this is a tough question.
We have that.
We have commitments to support our clients and our partners.
And we also.
The.
Schedule to complete.
The.
GMP compliance type of facility is by mid 2024, and we hope to reach <unk> cable infection and capability in 2025 by the way it.
It can be quicker.
So we need we need to satisfy overseas and they think we are very clear with that United States and Japan about top priorities. Because these are considered the most important market.
After that we have Europe, five EU five and the rest.
They need to wait and we might lose some partners in very small countries, but eh.
It is what it is.
Very good. Thank you very much elsewhere and talk to you soon.
Thank you.
Thank you and our next question comes from Francois Brisbois with Oppenheimer. Please go ahead.
Alright, thanks for taking the questions.
In terms of the Eschar X trial can.
Can you help us understand maybe the timelines you talked about an interim assessment.
They started the trial enrollment start 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 and the trial early because of them.
You know overwhelmingly good efficacy or just any color on timing and interim assessment expectations. Thank you.
Yes.
Yeah.
Hi, Frank and and they appreciate the question.
Yes, the phase III protocol, we have been going back and forth with EMA.
The F D a to make sure that they are both aligned aligned with the same.
Same requirement, because we want to ask Eric to be approved.
Globally.
We managed to approve.
An interim assessment. This is all a plan up to 67% of the participants completed the trial.
We managed to reduce the number of base since last time, we said that we would need to recruit 244 patients but now.
Especially due to the fact that we have an interim analysis.
EBIT do a shorter five so now we are guiding a show Thats why last 24 months rather than 18 months.
In the interim assessment will be something like faster.
10 months.
And the data will be won't be it would be an efficacy data and safety data.
Isn't the stopping rules and interim assessment, if we see that we don't have enough power.
For succeeding in the endpoints, we might increase the number of patients, but we will not be able to be crazy.
Plan is for 216 patients and I hope I answered your question.
Yeah. Thank you Anna.
Obviously very unfortunate the reasons for why Nexobrid is 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 at two three X times and Youre.
Well 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 goes would it completely resolve the.
Greater demand and supply and what would that do to your balance sheet. Thank you.
Yeah.
Thank you for that Frac. 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'll see that they're always margin that we have at least three fall demand more than we can.
And for Us.
The scale up is planned to do six X.
So currently it seems okay, but this scale up if we working to shift it's actually 11 X. So we've dealt with.
Don't see a reason why this manufacturing facility.
Not to be enough to.
To manufacture everything that nexobrid needs in the foreseeable future.
Thank you.
And just I assume the second the second part of the question. So if you look at our if the demand today is three X on the money.
Sure we don't see why the reason why in the 2025 or 2026, when we have it.
With manufacturing capabilities, why or why not.
Let's say four five times because currently we are just limiting our our sales force.
In order to be able to hu.
To keep.
Many.
Partners Happy we cannot we cannot buy everything.
Thank you and our next question comes from Michael.
<unk> with Maxim Group. Please go ahead.
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 up and in particular.
Does this 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 ask that's fully up and running.
I think hi, Michael I think timing will take that question.
Hi, Michael and I appreciate your question.
So our cash is.
Cash and investments.
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 III program, which we'll probably call approximately 30 million and the second is the remaining cost of the facility scalar.
So it's up to about 6 million and we accept about 1 million to be covered by BARDA.
So assuming we meet the scanner timeline according to plan.
Which means that the construction they need will be and by mid 2024 and for scale up manufacturing in 2025.
<unk> expense is expected to generate meaningful revenue in 'twenty, 'twenty, one and going forward.
We anticipate that the possibility.
But the ability in 2000 22027.
Alright, Thank you very much and then.
I'd also like to ask a little bit deeper about the research partnerships in particular now that we have three of them joining in.
Do your 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 is some benefit here for partnering or even potential acquisition discussions and the reason I ask because <unk> seemed like it could be a really attractive.
Compound for someone especially like three of them, if they're looking to compete with Santo.
Right. So so that's a that's a very important question and Barry can you. Please provide more detail on that.
Sure. Thank you. Thanks for the question as far as the data that they're going to get there. 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 products.
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 III studies that are done.
This space certainly not too many studies at all with the rigor with which the study is being done so they'll get a good set of data.
And an actual control study.
They'll have.
The marketing capability to say that in the most important phase III 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 two.
The question about M&A licensing any kind of business development activities Youre right I would I would add.
There's a little bit of flavor.
That three M. As you probably know is splitting off.
Health care Division.
Into a listed entity.
Sometime I believe in 2024.
Just announced the new name of this entity.
The past weeks, so its becoming a.
The reality and the intent of that spin off is to really unlock innovation in that.
In that division, which does about $8 billion I think in sales that year, so would they be a potential good acquirer or licensor of S correct absolutely.
Obviously, our stated intention at this point is to not only bring <unk>.
Forex 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.
We'll always be open.
And to see what the prevailing winds are and what the market bears.
Alright. Thank you very much and then just one more and I'll hop back in the queue I would like to see if you could expand a little bit on the exploratory studies for them.
That's correct would you be more geared towards generating additional marketing data and.
I'll use or potentially towards layering in additional indications.
Hum.
So.
When we're thinking about it.
At this stage, we're thinking about guidance that we got from the FDA FDA is interested in showing that the PK profile of the drug.
It is relatively a small one.
20 patients.
And also there is since the <unk> is a drug which is going to be used at home.
Also wants us to do.
Which is called human factor study, just making sure that the ethylene to read the patients.
To read the information a few.
I'm, a very small study even without patients only only healthy volunteers.
We might and we are thinking about it.
Additionally.
One or two studies with <unk>.
The market access and making sure that where we are.
EBIT charge as maximum as we can after ethics.
Sure.
But when we know exactly what we do we would share it with you and the public.
Alright, Thank you very much and congrats on all the progress you've made this past quarter.
Thank you.
And ladies and gentlemen, as a reminder, if you'd like to ask a question. Please first star then one at this time, we will pause for just a moment to assemble our roster.
And ladies and gentlemen, this concludes our question and answer session I would like to turn the conference back over to Ofer <unk> for any closing remarks.
Thank you everyone for joining us today, we look forward to updating you again on our next call.
Thank you. This concludes today's conference call. Thank you all for attending today's presentation. You may now disconnect your lines and have a wonderful day.
Okay.