MediWound Ltd.
Q3 2014 Earnings Call Transcript

Published: 6 Nov 2014

[Operator:]

Good ladies and gentlemen and welcome to the MediWound 3Q 2014 Conference Call. At this time all participants are in a listen only mode. Later we will conduct a question and answer session and instructions will follow at that time. (Operator Instructions) As a reminder today’s conference is being recorded I would now like to turn the conference over to Anne Marie Fields from LHA. Ma'am you may begin.

[Anne Marie Fields:]

Thank you good afternoon. This is Anne Marie Fields with LHA thank you all for participating in today’s call joining me from MediWound are Gal Cohen, Chief Executive Officer and Sharon Malka, Chief Financial Officer. Following the close of the stock market today MediWound announced financial result for the three and nine months ended September 30, 2014. If you have not received this new release if you would like to be added to the company’s distribution list please call LHA in New York at 212-838-3777 and speak with Carolyn. Curran. Before we began I would like to caution that comments made during this conference call by management will contain forward looking statements that involve risks and uncertainties, regarding the operations and future results of MediWound. I encourage you to review the company’s filing to the Securities and Exchange Commission including without limitation the company’s Form-20S and 6-K which identifies which identifies specific factors that may cause actual result or event to differ materially from those described in the forward looking statements. Furthermore the content of this conference call contains time to time sort of information that is accurate only as of the date of the live broadcast November 5, 2014. MediWound undertakes no obligations to revised or update any statement to reflect event or circumstances after the date of this conference call. So with that said I would like to turn the call over to Gal Cohen. Gal?

[Gal Cohen:]

Thank you Anne Marie. Good afternoon to all listeners in the U.S. and good evening to those joining us on [indiscernible]. Thank you all for your interest in MediWound and for participating in today’s call. We have made a considerable progress throughout the third quarter as we continue to execute our strategy as planned. In particular, we made a lot of headway with our commercial and clinical progress which I will highlight for you in today’s call. First, let me review the company’s ongoing commercial progress with our lead product NexoBrid in New York. As many of you know we introduced NexoBrid in Germany LEDCM with significant launched efforts beginning in the second quarter when we hired our own ground [indiscernible]. Our primary calling points are the burn centers and the burn unit in Germany when we have completed a training of delivering clinical team and treat patients with severe burns. As we have noted before the introduction of a new treatment paradigm takes time to integrate into the hospital long standing working practices. We believe that NexoBrid will become the standoff cure however as any new therapy introduction there are few necessary steps to market adoption. These are awareness and interest; use an advocacy [ph]. Let me review our initiative and progress in each of these three steps. With regards to awareness we made a significant progress developing awareness and educating burn specialist and the clinical merit of NexoBrid through ends and pull with the way severe burns are treated. In addition to calling on physicians at the major burn centers, we have been active at the key regional and national medical conference for burn specialist well showcased NexoBrid and highlighted its benefit in both the scientific and clinical session. For example, we significantly end the visibility of NexoBrid at the National Burn Conference in Germany and in Poland. In October, we participated at the ISBI the international society for burn injuries conference in Australia were there were multiple or valid positive presentation highlighting NexoBrid effective, fast, selective in the market [indiscernible] capabilities in the treatment of severe burns. One of this positive session focus on the role of NexoBrid in the care of next causality burns in the event disaster. In addition, the disaster committee of the ISBI recommended the inclusion of NexoBrid and sparkle a draft plan for mass casualty event as they see all of NexoBrid in providing a relief in the expected bottlenecks in hospital during such disaster. Moving forward, we are committed to being the Gulf sponsor of every European national and regional burn conference in 2015. For example, this week we were the Gulf Sponsors of the Israeli Burn Association Conference interest our launch event in Israeli. And we will the Gulf sponsor of the entire burn association conference during later this month. We are confident that the increasing awareness of NexoBrid generated at this venue will translate into further interest and use. I say that these venues have already resulted in considerable awareness interest and even enthusiasm for NexoBrid. As an example, during the conference in September in Germany the local key opinion leaders conveyed there interest by convening an internal meeting to discuss the integration of NexoBrid due to daily processes -- as part of their opinions. Following the meeting, we were approached by addition of sites that have been shipping on the trend for quite some time and now after stop gaining experience in the use of NexoBrid. In addition to the consensus, we had a publication plan in place to promote our evidence-based approach in burn care. Such publications increase awareness and interest about the product in wider surface. Now let’s see how this interest in NexoBrid is turning into the second step of use of the product. Specifically, we’re very pleased with the advances in moving traditions along the exit from awareness and interest to use when we provide product and onsite training to burn specialist and their clinical team. We’re using a comprehensive NexoBrid training program that not only trains the team on the use of NexoBrid itself being relatively easy to use but watched the team step by step so the entire process of integrating NexoBrid into the daily work flow. This presentation is interactive, it enables the burn team to interact with our burn experts on site and think together how to best implement NexoBrid at their specific site. As we explained centers using start with one or two small cases and follow the patients to about the month and feedback gain in order to gain and from experience and feel confidence with the treatment before they continue to treat additional patients. What we’re seeing is the increased usage, increasing confidence in the treatment which in turn encourages the provision to treat more patients and gradually over time they become site champions and even [indiscernible]. This is why we’re not trying to drive usage by initially providing some stream of charged product. In fact, more patients who are treated in Germany with NexoBrid in the last few months since our appeal was on the ground than the entire Phase 3 study. As I said, increasing usage to [indiscernible] which is basically the third step that we’ll go over now. In Germany, we already have a number of sites that -- and our top of the living burn centers in Germany and we’re starting to see reorders from these seller sites. We’re quite pleased to note that a number of German tradition presented data at the IMVI [ph] sharing the experience and outcomes using NexoBrid in all of the presentation. The conversations for using NexoBrid by leading burn specialist we use in the daily processes are strong endorphins and should generally enhance the product acceptance as the new SOC in the treatment of severe burn. One of the centers that is related to ABA has already became what we call a center of excellence. This center of excellence welcomes physicians from other hospital and countries who wish to gain more experience, hands on experience in the use of NexoBrid. In the objective case of that of Spanish traditions gone into a center in Berlin in order to see how to use the product with the expert on that site. The other center that presenting the -- use NexoBrid to treat about half of its incoming burn patients in the last few months. We’re very pleased with the progress our team has made we did see productive phase in Germany. We expect that over time then we build on the foundation they have led to expanding of NexoBrid from an innovative new treatment to the [indiscernible] of a scale for treating severe burn. Turning now to the expansion into the rest of Europe. Our commercial activities in Europe are on track, we recently launched NexoBrid in the Nordic countries, in Austria, in the Slovak Republic, in Spain and in Israel. We remain on our plan to launch in most of the European countries to have success run by the end of the year. Our country business managers have nearly completed reporting the local sales and market stuff. They’ve net their market, they’re developing and implementing the local market access strategies and are in the process of training the burn centers and team in the major burn centers in their respective countries. In parallel, we’re implementing our market action spend across Europe. As we know, European market access is a country-by-country process and remained confidence and would be able to demonstrate the clinical and cost effective benefit of NexoBrid in treating severe burn patients. Our cost effectiveness enabled us to generate sales and [indiscernible] in most countries without the need for the mission and level of investment. In some countries like in France that I mentioned before we will need to wait for the review of our hedge economic technology this year before being allowed to commercially supply NexoBrid to hospital and currently we plan to be in the position to supply NexoBrid to the hospital in France for example in the second half of 2015. To support and enhance the hospital level market access effort we have introduced our proprietary budget impact tool [ph] which demonstrates to the hospital administrator the positive economic impact that NexoBrid has on their institution. We believe that combined with our compelling key conductor our budget impact tool will favorably influence the stakeholders at the hospital level to allow the inclusion of NexoBrid. We also continue to advance our international commercial strategy. End of this year, we announced the distribution agreement in Latin America, in CIS, in Asia Pacific with the goal of making NexoBrid available to help severe burn patients worldwide. I can say that recently our process in Argentina fight for approval NexoBrid, the total force have generally taken Argentina about the year and then hospital we expect to commercially launch the product. In addition, we continue to have discussions with other potential distributors in other international market and look forward to updating you when discussions turn into signed agreement. Turning now to our clinical development program, in addition to expanding geographically, we are fitting to expand NexoBrid label. As we just reported, we initiated our Phase 3 pediatric investigation study to evaluate the efficacy and safety of NexoBrid as a treatment for severe burns in children. As you may know NexoBrid is fulfilling the Europe and this study is in mind with legislation for the approval of medicine given in children. We’re very pleased to be starting this pediatric study because early assessment of severe burn in children is frequently softer from causing liquid and given more challenging in the late treatment. Also treating children with the surgical standard care is even more demanding then surgical treating adult so we believe that NexoBrid can play a major role in this indication as well. We recorded already more than 110 children in clinical study and the effect of those treated with NexoBrid in terms of earlier eschar removal reduction in surgical burden and long-term cosmetics in function even greater than others. These adult to spare these youngsters from surgery or even just to review the number of expensive physical decisions in autographing is a highly motivating factor for all them. To recap the pediatric study is a perspective randomized control with the standard study to feel compare to NexoBrid in standard care in approximately 160 children between the ages of four and 17 with severe burns. The study will be conducted approximately 25 sites in Europe and Israel. After we initiated the study and recruit 50 patients a data safety monitoring board will be commissioned to evaluate the data and they ready to allow the inclusion of children between the ages of zero to three years old as well into the study. The final end point of the study evaluates the eschar removal, surgical version of medicine function within 24 months follow up. Interim results we’ve predefined rules after 12 months follow up of all the patients are expected to be available in the second half of 2017. At which point the study could already be deemed successful. After the full 24-month follow-up of all the patients a final long-term results are expected and we believe that they will be available in the second half of 2018. Turning now to the initiation of our Phase 3 program for NexoBrid in the U.S. As previously reported se submitted the clinical protocols to the IRD investigation of the new board and completed all the preparation for the study to start. We received a few minor questions from the IRD regarding the study protocol and already responded. For example IRD ask, why do we have a small gentle feeble arm [ph] in the study if we already demonstrated into Phase 2 study in the U.S. with the placebo gel has now been affect and obviously more efficacy. We responded that this was an FDA request and we comply what the FDA has requested. Our responses are now that can be queue for the IRD review and the protocol will be a [indiscernible] start the study by year end. In the meantime, our U.S. commercial strategy continues to involve. We have established now a U.S. market access advisory board which includes the leading burn specialist as well as marketing investment expert. This board will be a great value as we expect the strategy and plan for our U.S market access. Looking beyond NexoBrid our phase 2 clinical study of EscharEx for the treatment of chronic and hard-to-heal wounds is ongoing. EscharEx is based on the same technology as NexoBrid. So believe that it develop in program is significantly various invasive needs on the wealth of clinical data as well as the preclinical toxicology and manufacturing control data could serve in there proven process of NexoBrid. This allows us to show cost on the clinical development of EscharEx to expedite [indiscernible] markets. During the last quarter, we continue open additional clinical sites in our Phase 2 study for EscharEx and should keep us on track to report top line results from this client by the end of 2015. We are looking forward to advancing EscharEx in this large enrollment market with significant unmet medical needs. We are also about to begin a joint U.S. European market study to maximize a future adoption of EscharEx. To get overview of our progress let me turn the call over to Sharon Malka our CFO for the view of our financials. Sharon please go ahead.

[Sharon Malka:]

Thank you Gal. Good afternoon everyone it is pleasure to be reporting our third quarter financial result. We continue to fund and execute our commercial plans and our clinical program being confident that our investments will drive the use and adoption of NexoBrid and advance our pipeline product. Let me now turn to our financial result. Revenue for the first nine months of 2014 was approximately 135,000 reflecting into factory sales of NexoBrid in Germany as we are still early in the launch process and [indiscernible]. Our efforts during the quarter remain focus on site learning and hands on experience [indiscernible] Germany. Overtime, we expect to drive revenue as these burn centers compared from initial usage to confident and re-order. Operating expenses for the third quarter of 2014 were on plan at 4.5 million compared with 2.3 million in the same period of 2013. The increase was due to 1.2 million of commercial activities associated with building our European marketing infrastructure and executing our commercial launched program and $0.9 million increasing non-cash share based compensation expenses. Operating expenses for the first nine months of 2014 were $13.3 million compared with $4.5 million for the first nine month of 2013. The increase was primarily due to $3.6 million of commercial activities associated with building our European marketing infrastructure addition of $2.7 million increasing non-cash stock-based compensation expenses and about $0.5 million one-time IPO related expenses. For the third quarter of 2014, we reported a net loss of $5 million or $0.24 per share. The net loss for the nine month ended September 30, 2014 was $11.8 million or $0.61 per share. Our adjusted EBITDA for the third quarter of 2014 was loss of $3.7 million compared with the loss of $2.1 million for the same quarter last year. The resulted EBITA for the first nine months of 2014 was a loss of $10.3 million compared with a loss of $4.9 million for the same period last year. Turning now to our balance sheet; as of September 30, 2014 we have $69 million cash and cash equivalent and working capital total $70.1 million. We remain on track with regard to cash use and the company used $12.1 million in cash during the first nine months of 2014 to fund ongoing operating activities. As we have discussed we continue to invest in our marketing infrastructure and to advance commercial launches across Europe. We will also find further clinical development of NexoBrid and EscharEx. With that financial overview let me turn the call back to Gal. Gal please.

[Gal Cohen:]

Thanks for that overview Sharon. In conclusion, we remain focused on executing our strategy and had made significant progress towards our goal. We continue to expand our commercial efforts throughout Europe and to advance our clinical development programs. We have substantial market opportunities ahead of us both in severe burns and in chronic wound. And we’re eager to achieve several milestones during the fourth quarter and look forward to reporting to you on our next call. And now operator, please open the call for questions.

[Operator:]

While we’re waiting for our first question I would like to note that Sharon and Gal will be participating in the upcoming Credit Suisse Healthcare conference taking place next week from November 10 to the 12th, in Phoenix, Arizona. The following there will be addressing investors at the Jefferies Global Healthcare conference which is taking place November 19th and 20th in London. For those of you attending either of these conferences and would like to meet with the team please reach out to your respective Credit Suisse or Jefferies representative or you can always contact me or Anne Marie Fields at LHA at 212-838-3777 and operator we’re ready for the first question.

[Operator:]

Thank you. (Operator Instructions) And our first question comes from the line of Bruce Nudell of Credit Suisse, your line is now open.

[Unidentified Analyst:]

Hey guys, this is Matt in for Bruce, thanks for taking the question. First of all if you give us any color around how many centers you’re in, in Germany today using NexoBrid and how that compares to where you were maybe a quarter ago?

[Gal Cohen:]

I think [indiscernible] of the other centers in Germany which announced result in ’17 and what we see in the last quarter is the sense of but really we’re sitting on the fence and would starting to treat patients are now gradually starting to beat their hands into the water and stop chasing patients as well.

[Unidentified Analyst:]

So maybe 17 in the quarter and you’ve got to trained all the centers in Germany today.

[Gal Cohen:]

-- All your centers that can treat adults in Germany.

[Unidentified Analyst:]

Okay and then how many cases for those position that you saw you mentioned several seen reorders, how many cases or how long it take before those translated reorders?

[Gal Cohen:]

I think it takes certainly depends on several percentage from champions of champion but what we feel is that one big treats 5 to 10 patients they feel comfortable enough and go from experimental use of a testing technology to reordering and treating patients and as I mentioned within one sentence Germany particularly treated half of these patients so far and which we find is very encouraging.

[Unidentified Analyst:]

Okay, perfect and just one follow up and then I’ll drop, is that when you see - converting does that really efficacy based, is it a result of the economic argument that you’re making or what’s driving that?

[Gal Cohen:]

I think perfectly efficacy I mean the NexoBrid is particularly the ability to remove the eschar earlier without harming viable tissues and to allow the physician to [indiscernible] of the would bed and now get how to go about and treat the patient I think conditions realize that. The main challenges that they’re facing at the beginning are launch with the NexoBrid itself I mean they know how to use it, it’s not so difficult and it work so they see it remove the eschar it’s more about how to assimilate it to integrate it into - because they have been processing surgical - for the last 25 to 40 years and also effecting inline around that the eschar, the physiologist, the OT of the department and it take a bit of time specially in Germany that likes really to follow the protocols and integrate and understand how to best use the product in the daily routine. The economic element I think is more something that you can make sure that it’s not a show stopper rather than incentive to use the product. So the incentive is clinical and the economical benefit and any concerns of the administration of the hospital regarding the integration of the product into the use of its public center.

[Operator:]

Thank you. And the next question comes from the line of David Maris of BMO Capital Markets, your line is now open.

[David Maris:]

Good evening, just one question on the update and we have - it’s not that much of a surprise that the sampling program that the trail program has taken kind of a more aggressive stand of getting physicians to try the product. So maybe you could just give us a little, is it taking longer to convert over a physicians from a trial to actual user and is that in part due to they’re starting off with the smaller burns and you had originally expected or is it getting procedures in the hospitals set for that physicians and other caregivers know what to be doing if they do decide to use NexoBrid? Maybe just talk a little bit about how the trial process has changed from your expectations from a ago?

[Gal Cohen:]

Thank you for the question. I think that’s first of all as I mentioned in the process going from awareness to interest from use to later on advocacy and we fill up awareness in Germany, I don’t think that you find the build center in Germany was not - you didn’t heard about the NexoBrid or interested in knowing more about it. And once we go into the training program and they get it interested they start experimenting the product, as we mentioned we provided the three products for them to experiment because we believe and we see this from our in market surveys that the more they use the product they’re more confident they gain and feel comfortable to integrate the product and start using it. What we see as we mentioned with unmet clinical study that you have exclusive [indiscernible] you said, you need to treat the patient’s wound and realize physician experiment start with the smaller patient because it also get comfortable with it and they’re not talking within the frame of a protocol so they have to create their own protocol nothing about these [indiscernible] just as we mentioned the integration of the treatment into their -- impacted and they usually started a small hence initially clinical advantage [indiscernible] and the broader hand they see after -- then they want to follow the patients for a couple of weeks until we will heal in the each patient. Only then they’re seeking and looking for the second patient to try the product and they do it with the couple of patients then additional physicians within the department and increasing their interest and want to try as well with their patients. During this process, where they treating the department five to 10 patients, the department experience start to learn what we need to prepare who needs to do what and when, what is the role of the nurse I’m not talking about the variety of the sale [indiscernible] supply the product for four hours you will move it and that’s it but all this things that are around it because these centers have been new for the last 25 for 40 years to the surgical value we have the procedures for that. So I think the product that we see the more that we can drive the experience in the center, the more that we can then convert then from users to order and to reorder so this is why we extend this training program, this is why we provide through product to more than along this exist as fast as we can. We don’t want to push them too high because traditions in general don’t like -- to shut it down before, they want to feel comfortable and it’s very important for us to put infrastructure in place so that the long term use of NexoBrid becomes standard of care. So this is the process that we see now in Germany. By the way in Germany, we also see that in Nordic countries. We see in the Nordic countries the -- between the center we see in other countries centers already reordering NexoBrid and hopefully we’ll see now this part is going on also in Austria, in Czech Republic, in Spain, in Israel which obviously additional situations have following the centers have more experience already. And in the next quarter as I mentioned we would like to expand that to practically most of European countries except for maybe France and one other.

[Operator:]

Thank you. (Operator Instructions) And our next question comes from the line of Akiva Felt of Oppenheimer. Your line is now open.

[Akiva Felt:]

Thanks. I just had a first a follow up to David’s initial question. If you take the usage that you saw in Germany through the sampling program, if you have been charging commercial price, what would that equate to in terms of revenues?

[Sharon Malka:]

I think in general what we see and it will be -- just because of forward-looking statements and daily projections which we believe that it’s not the right thing to do during the launch phase, but if we just talk about evidence that is always be available. We said that in Germany most patients have been treated in the entire Phase 3 study. In the Phase 3 study, there is approximately 180 patients in the two-arm study. So it is what the [indiscernible] is and you end up with patients have been treated. We also said that, in general, we believe that average burn patients has about a 10% -- however will be experimental stage that starting to lose the product that using -- smaller burn so I would expect the [indiscernible] average we’re beginning to be bit lower than 10% and we know that we’re currently charging in Europe approximately a $450 pair 1% [indiscernible] So all the information there and one can get a good understanding for the question that you just mentioned.

[Akiva Felt:]

Okay. No, that’s helpful I’m sorry to put you on the start with the question. But would you say that the traction whether re-sampling or other programs have been in line or ahead of your expectations I mean it sounds like you guys are pretty happy with how things are going in Europe so far.

[Sharon Malka:]

I think there we see a lot of attraction, we see lot of interest, we see lot of enthusiasm in Germany. Our field was started to be on ground in the second quarter technically count the new option in July and August we got a time for launch introduction because all defenses are walking newly a capacity because of the vacation and they don’t to keep patient obviously but I don’t like to start new treatments during this time were half of the staff is not on board. We believe that we were able to gain a lot fair interest in use [indiscernible] this current sound of share has been there through the 70s. So we believe that gaining such interest getting so many centers to start treating in the new topic and new product. Since some centers going from total unawareness to awareness interest use in even efficacy seeing two physicians from Germany going to Australia to report real life usage of the product having one center already is a center of excellence inviting people from other countries and other centers in Germany to spend time ethic center to experience news of NexoBrid. Since a center in Germany that possibly in couple of months treated half of its patients with NexoBrid. So overall we are quite happy with what we see as well as with the extension to additional countries in the ratio of time been able advance the availability of the product to possibly and say half open we hope to complete this process in the next quarter. What we also see and this also not comes to surprise to us and we have communicated very clearly during the IPO and after the IPO we do not believe that NexoBrid will not found care with the new office. We do believe that NexoBrid will be the standoff care because in our mind clearly it is a better mouth check it is that the EscharEx better than anything that exist in the market but it is not going to happen in date. And the main reasons are not are aligned are around what I mentioned before how does the center change the way it works not around the [indiscernible] and on the entire hammering the cure of the patient what they need to do, what the physiologists needs to do, what the physicians need to do and think that is taken a little bit of time it take obviously a little bit of time and things again a confident in the treatment of the entire patient not just to driving the state. And we also have to convey it going forward I am not talking about the first patient or two the administration around the burn center that this also cost effective for this situation. So all these process have to be done in parallel and in addition to that all kind of administrative field that they have to do, that we have to do that we have to do and it depends on the country as sometimes to come from formularize sometimes they need to get this patients believing Italy and keeps a debit can takes a little bit of time couple of months I think we can partly supply the product to the hospital. So we addressing all the small things but overall I think that we are very happy with what we’ve seen in the market.

[Operator:]

Thank you and I am showing no further questions at this time. I would like to turn the call over to Gal Cohen for any closing remarks.

[Gal Cohen:]

Thank you very much. First of all thank you for questions and for your interest in MediWound. We look forward to updating you again when we report our fourth quarter and full year 2014 results in early 2015. Thank you very much and have a good evening.

[Operator:]

Ladies and gentlemen thank you for participating in today’s call. This does conclude the program. You may all disconnect. Have a great day everyone.