MediWound Ltd.
Q2 2021 Earnings Call Transcript

Published: 10 Aug 2021

[Operator:]

Good day, and thank you for standing by. Welcome to the Q2 MediWound 2021 Conference Call. . I would now like to hand the conference over to your speaker today, Jeremy Feffer. Please go ahead.

[Jeremy Feffer:]

Thank you, Don, and good morning, everyone. Earlier today, MediWound issued a press release announcing financial results for the second quarter of 2021. You may access that release on the company's website under the Investors tab. With us today are Sharon Malka, Chief Executive Officer of MediWound; and Boaz Gur-Lavie, Chief Financial Officer. Following management's prepared remarks, we will open the call for Q&A. Before we begin, I would like to remind everyone that statements made during this call, including the Q&A session relating to 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 the expectations reflected in such forward-looking statements are based upon reasonable assumptions, actual outcomes and results are subject to risks and uncertainties and could differ materially from those forecast due to the impact of many factors beyond the control of MediWound. The company assumes no obligation to update or supplement any forward-looking statements, whether as a result of new information, future events or otherwise. Participants are directed to cautionary notes set forth in today's press release as well as the risk factors set forth in MediWound's annual report filing with the SEC for factors that could cause actual results to differ materially from those anticipated in the forward-looking statements. The conference call is the property of 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 Sharon Malka, Chief Executive Officer of MediWound. Sharon?

[Sharon Malka:]

Thank you, Jeremy. Good morning to our U.S. listeners, and good afternoon to our listeners in Israel. Welcome to our second quarter 2021 conference call to discuss our financial results and business highlights. The second quarter of 2021 and the subsequent weeks have been eventful from a clinical and commercial standpoint with a positive interim assessment for EscharEx Phase II study, FDA feedback on NexoBrid BLA and the robust results of NexoBrid Phase III pediatric study. Commercially, we continue to generate product revenue growth compared with the prior year driven by the procurement of NexoBrid by BARDA and the revenues continued growth out of U.S. On the clinical front, we are pleased with the progress we gained across each of our ongoing clinical programs and are encouraged by the positive clinical data for both EscharEx and NexoBrid. Let me begin first with a review of our EscharEx clinical development program, where we most recently announced the best possible outcome of the interim assessment for its U.S. Phase II adaptive design study. Recall that this study aims to assess the safety and efficacy of EscharEx for the debridement of venous leg ulcers as compared to Gel Vehicle and nonsurgical start of care while the interim assessment served to determine whether a sample size adjustment is required to maintain conditional power for this study. The interim assessment had 3 potential outcomes

[Boaz Gur-Lavie:]

Thank you, Sharon, and good morning to our U.S. listeners and good afternoon to Israeli ones. First, I'd like to reiterate our continued product revenue growth from both the U.S. market and the ex U.S. market as NexoBrid continues to support our balance sheet. We're looking to enhance our global expansion and expecting to have additional marketing approvals in new territories this year and throughout 2022. I would like now to provide you with an update of our financial results for the second quarter and first half of 2021. Revenues for the second quarter of 2021 increased 50% to $6.1 million compared to $4 million for the second quarter of 2020. Product revenue for the quarter was $3 million, an increase of 175% compared to 2020 second quarter product revenue of $1.1 million, primarily driven by BARDA procurement of NexoBrid for emergency stockpile and sales increase outside of the U.S. Gross profit for the quarter was $2.4 million or 39% of net revenue compared to a gross profit of $1.2 million or 30% of net revenue for the parallel quarter. Gross profit from product revenue was 57% of net revenues versus 48% in the second quarter of 2020, driven by increase in product revenue versus a fixed nature of our manufacturing costs. Research and development expenses for the quarter were $2.7 million compared with $1.6 million for the second quarter of 2020. The increase was primarily due to EscharEx clinical development program. Selling, general and administrative expenses for the quarter were $2.6 million compared with $2.3 million in the second quarter of 2020. As a percentage of revenue, SG&A expenses decreased 1,400 basis points from 57% in the second quarter of last year to 43% for the second quarter of 2021. Operating loss for the quarter was $2.9 million compared with an operating loss of $2.7 million in the second quarter of 2020. The company posted a net loss of $3.2 million or $0.12 per share for the quarter compared with a net loss of $3.1 million or $0.11 per share for the second quarter of 2020. Adjusted EBITDA for the quarter was a loss of $2 million compared with a loss of $2.1 million for the second quarter of 2020. Moving now to the first half of 2021 financial results. Revenue for the first half of 2021 increased 41% to $11.9 million compared to $8.5 million in the first half of 2020. Products revenue for the half were $5.9 million, an increase of 224% compared to the $1.8 million in the first half of 2020. Operating loss for the half was $4.8 million compared with an operating loss of $4.9 million in the first half of 2020. The company's net loss for the half was $6 million or $0.22 per share compared with a net loss of $5.6 million or $0.20 per share for the first half of 2020. Adjusted EBITDA for the half was a loss of $3.3 million compared with a loss of $3.9 million for the first half of 2020, an improvement of 14%. This was driven by our product revenue growth and continued budget discipline, allowing us to advance our clinical development program of EscharEx while yielding this improvement. Now moving to the balance sheet headline. As of June 30 this year, MediWound had $17.2 million in cash and short-term investments compared with $21.6 million as of December 31, 2020, and no debt. MediWound remained on budget, utilizing $4.4 million in the first half of '21 for its operational activities. Throughout the remainder of '21, the company will continue to invest primarily in research and development efforts for EscharEx while a planned NexoBrid dealer resubmission and its related ongoing development programs will be funded by BARDA. We now expect cash use for '21 to be in the range of $9 million to $11 million. Our financial guidance also assumes that the COVID-19 dynamics do not worsen, including the impact of the delta variant in the second half of the year. With that, I've concluded my financial overview, and will now turn the call back to Sharon. Sharon?

[Sharon Malka:]

Thank you, Boaz. We are excited by our prospects as a company. We have a diversified pipeline with meaningful early and late-stage products to support our continual growth for years to come as we have several tremendous opportunities ahead of us. With that, it is my pleasure to open the call for your questions. Operator?

[Operator:]

. Your first question comes from the line of Kevin DeGeeter with Oppenheimer.

[Kevin DeGeeter:]

Maybe first off, congratulations on the pediatric data for NexoBrid. Can you provide us an update on how to think about regulatory process in the U.S., we believe that's a separate regulatory file from the adult population. Do you need any additional clinical data or other supporting information apart from resolution of CRL for the adult population before filing?

[Sharon Malka:]

Thank you for the question, Kevin. As we communicated earlier, when we got the CRL and mentioned in our prepared remarks, we believe that we can address the FDA concerns without additional study, we do have sufficient data, given the robust clinical data package, we believe that NexoBrid remain well-positioned to become a standard of care and ready for approval. We are actively preparing together with our partner, Vericel and BARDA for a Type A meeting with FDA. This meeting can be requested within 3 months after the FDA regulatory action. And typically, schedule within 30 days from application. That's the time line -- time frame we are looking for. So obviously, we are looking to do so as soon as possible. And beyond that, we are not going to comment on when the meeting is schedule and so on, but we plan and we certainly update investors and analysts at the appropriate time when we have more clarity after this meeting.

[Kevin DeGeeter:]

No, that's where you actually answered my second question. But my first one was actually in context with a pediatric population, which I believe, is not included in the filing before which you received a CRL. Can you provide an update on the regulatory strategy in the U.S. in the pediatric population?

[Sharon Malka:]

Yes. Correct. So regarding the pediatric population, any label extension in the U.S. will be only after we'll get the approval for the adult BLA or the adult indication. This is a label extension. Currently, we are leveraging the pediatric data in the safety update, we will provide the FDA as part of the resubmission and leverage the pediatric data where we have already approval for NexoBrid, i.e., in EMEA and other international markets for label extension.

[Kevin DeGeeter:]

And then...

[Sharon Malka:]

As a reminder, in the U.S., we are -- As a reminder, in the U.S., we have waived from pediatric investigational plan. So based on our prior discussion with the FDA, we plan to submit this data of the pediatric kids study after we will finalize the adult review of the file.

[Kevin DeGeeter:]

And then maybe just lastly, on the NEXT study, I think you called out that you dosed about 100 patients or treated about 100 patients on compassionate use. How many centers roughly have used NexoBrid under the expanded access protocol. And has that changed meaningfully over the last quarter or 2?

[Sharon Malka:]

Yes. So currently, we have 21 active sites in the U.S., and we have about 3 to 5 additional sites in the process of initiation in the U.S. We -- I would like to reiterate that the expanded access program runs through approval, and we will continue to enroll patients to this study and treat patients with NexoBrid till the review of the BLA will finalized. And as we said, we already treated over 100 burn victims to date. And according to the protocol, we are able to extend to up to 30 sites and reach at least 200 patients under the current protocol.

[Operator:]

Your next question comes from the line of Josh Jennings with Cowen.

[Joshua Jennings:]

Can you hear me, okay?

[Sharon Malka:]

Yes.

[Joshua Jennings:]

First, is on NexoBrid. Last week on the earnings call, Vericel talked about how their team is taking a leadership role in the BLA resubmission of NexoBrid. Can you just help us understand on how the MediWound's role out there has changed since the CRL and what exactly do they mean by the leadership role?

[Sharon Malka:]

Thank you for your question. So in general, bringing NexoBrid to the U.S. market is a joint collaboration or joint project, as you know, of Vericel as the commercial -- the U.S. commercial partner wants drive in North America, BARDA as the ones that provide support and funding and of course, MediWound owns the IP and the extensive experience of NexoBrid. We have vast experience with NexoBrid given the 20 years of history with the development of NexoBrid, Vericel have a clinical regulatory and operation team with great deal of experience and success on the regulatory front. So we are in a great position to leverage Vericel to lead the regulatory front with our years of experience with NexoBrid and BARDA's special matter consultants who bring their personal experience. And this joint collaboration providing us with the confidence that we have the best team to achieve the BLA approval. So we feel good about the path going forward. And we have a great deal of confidence with NexoBrid robust clinical data and we look forward to bringing this product into the U.S. market.

[Joshua Jennings:]

Understood. And on EscharEx, you -- believe you've mentioned historically that possibly starting second year pivotal trial for EscharEx, you've seen results of the interim analysis of the first trial now that we have favorable interim results. Any updated thoughts on timing starting the second trial accelerated approval time lines on EscharEx?

[Sharon Malka:]

As I mentioned in the prepared remarks, we plan to complete the enrollment of the ongoing Phase II study by year-end and to generate data from the pharmacology study by year-end. And if we meet this goal, we will have data readout from the ongoing Phase II study anticipated in the first half of '22. The data that will be generated from those 2 ongoing trials together with the data generated to date, which is the prior Phase II study and preclinical studies will be guided and going corporated for a discussion with the FDA before we move forward to the next study in the U.S. in order to align and get FDA concurrence for the next stage of development in the U.S.

[Joshua Jennings:]

Got it. Got it. So just in terms of the pharmacology study EscharEx and when you have data later this year, how will this data inform you on next steps in the pivotal program over pharmacology study -- show you and how we have incorporated into the pathway.

[Sharon Malka:]

As a reminder, this pharmacology study is an open label study assessing the pharmacological effect of EscharEx in up to 15%, both VLUs and DFUs. We already enrolled several patients to this study. And this study will provide us with a better understanding of what is happening in the wound bed during and after the debridement with EscharEx and most specifically, it will enable us to assist effect on reduction of biofilm burden, reduction of inflammation and initiation of healing process. All of those data points or measurements provide us with additional clinical benefits of EscharEx, and we would like to have this data as part of the discussion with the FDA because we would like to incorporate the best results of this study or some of the results of this study also as measurement in the next clinical study in the U.S.

[Operator:]

. Your next question comes from the line of Swayampakula Ramakanth with H.C. Wainwright.

[Swayampakula Ramakanth:]

This is RK from H.C. Wainwright. One question on NexoBrid. One of the concerns of -- one of the issues which you brought up in the CRL was the inspection of your plants that both Israel and Taiwan. So what's the situation there? How this FDA resolving the travel stuff. Any updates there?

[Sharon Malka:]

Yes. So in terms of the inspections, that's not a discussion that we have been engaged with the FDA at this point. we first can resubmit the package and the inspection just need to occur prior to the approval. And since the situation is dynamic worldwide and also the instruction in the FDA are changing on a monthly basis, we will have to monitor carefully and see the vehicles or the tools that the FDA is implementing in order to get the backlog they have with inspections domestically and foreign inspections going forward.

[Swayampakula Ramakanth:]

And then on the 005 molecule, when should we expect data from that study?

[Sharon Malka:]

As communicated previously, we plan to have data from both studies, the Phase I/II study in the U.S. and the IIT study conducted in Israel by year-end 2021.

[Operator:]

And there are no further questions in queue. I will now turn the call back over to CEO, Sharon. Please go ahead.

[Sharon Malka:]

Thank you very much. Thank you, everyone, for joining us today and for your continued interest in MediWound. We look continuing to executing on our strategy and bringing new therapies to the market and to update you again on our next update call. Thank you very much, and have a great day. Thank you.

[Operator:]

Thank you for participating in today's conference call. You may now disconnect.