MediWound Ltd. Q1 FY2025 earnings call

• Clinical and Commercial Progress: EscharEx's VALUE Phase III trial is on track, with collaboration with Kerecis bringing major wound care companies into the clinical program. NexoBrid is gaining global traction with strong US sales and new clinical data. - Manufacturing: Progressing on the new manufacturing facility for NexoBrid, with commissioning expected by year-end 2025, and US expansion plans underway. - Financial Review: CFO Hani Luxenburg reviewed revenue decline due to lower BARDA-funded development services, improved gross margin, increased R&D and SG&A expenses, and balance sheet details.

The company has two main product segments: EscharEx and NexoBrid. For EscharEx, the VALUE Phase III study for venous leg ulcers is on track with recruitment progressing as planned across ~40 sites in the US and Europe. A Phase II head-to-head comparison vs Collagenase is scheduled to begin in the second half of 2025. The company secured a EUR2.5 million grant for the DFU trial. For NexoBrid, US revenue from Vericel was up 207% YOY in Q1 2025, global demand is high, and a new manufacturing facility for NexoBrid is on track for commissioning by year-end 2025. Total revenue for Q1 2025 was $4 million (down from $5 million in Q1 2024). Gross profit was $0.7 million (gross margin 19%), R&D expenses were $2.9 million, SG&A expenses were $3.1 million, operating loss was $5.2 million, and cash balance as of March 31, 2025, was $38.7 million.

• Revenue Guidance: Anticipates $24 million in total revenue for 2025 and $30 million to $33 million in 2026. - Manufacturing Timeline: New manufacturing facility for NexoBrid is on schedule for commissioning by year-end 2025, with commercial availability expected in 2026 after regulatory approvals.

• Regulatory Uncertainties: Uncertainties in FDA inspection timelines for the new manufacturing facility. - Market Demand Volatility: Uncertainties in stockpiling agreements and market uptake of NexoBrid. - Financial Volatility: Volatility in financial income due to warrant revaluation, dependent on share price.

Q: Maybe just first on manufacturing. Can you remind us what is kind of yet to be done to kind of be ready for scale up by year-end? And then any additional feedback that you've gotten from the relevant agencies around timing of those required regulatory approvals sign-offs, particularly with the FDA?

A: Chase, great to have you with us today. Let me address the manufacturing question. So as I said, the demand for NexoBrid is increasing due to several factors. We have major market launches, US, Japan, growing governmental interest, expanding of indications, the pediatric indication, the military use. So we are focusing on making sure that we will be able to deliver. We completed the construction of the new facility, and we are now in the commissioning phase. Actually, we are on time, and we anticipate achieving all operational capacity by the end of 2025. After that, we are calling for inspections, EMA and FDA. EMA is easier because we -- they are -- the inspectors are Israelis, so we expect it to be quite sooner. As for the FDA, we are -- there is quite of an uncertainty about how they are doing remote inspections these days. Anyway, we are expecting that only around mid-2026, so we have time.

Q: So a couple of quick questions. So in your prepared remarks, you started talking a little bit about stockpiling of NexoBrid. So in general terms, how are you planning for this? I know you have enough demands on you for the product. So I'm just trying to think in general terms, what could we even be thinking in dollar amounts worth of stockpiling that you could be expected to fill?

A: So RK, this is great to have you on the line today. It's a great question. Stock -- currently, we have guidance regarding our revenue, okay? We can achieve those numbers. And currently, our preference is to treat patients, not to use NexoBrid. I don't want it to be in the shelf somewhere. So even governments that we are speaking with, they are familiar with our priority, first of all, to treat real patients, and it will also support great commercial launches in specific territories. As for how much governments will buy in 2026, 2027, I can't really give you the numbers. All I can say everything is embedded in the guidance that we are giving, generating revenue of $24 million this year and generating $30 million to $33 million next year. After that, we will know better. I can just share with you that after what countries saw what NexoBrid did during the Israeli-Hamas war, there is a growing interest around many governments, United States, Europe and others, and we are just starting the discussions now.

Q: In terms of the EscharEx on the ongoing EscharEx Phase III trial, you are saying you have 40 centers running the trial for you. Of the 40 centers, what percentage is in the US? And would there be any reason why the study could get completed ahead of time than what you're anticipating right now?

A: So it's an interesting question. We are -- first of all, as for the fact, the sites, almost 50% of the sites between 17 to 20 will be in the United States. We have two to three sites in Israel and the rest will be in Europe. So this is the structure of the sites. As for enrollment pace, as you can imagine, there are 1.5 million patients in the United States that are relevant to such a treatment. We chose the most performing sites to participate in the trial. So we don't think that enrollment will be an issue. Having said that, we spend a lot of energies, a lot of money and a lot of efforts making sure that we are recruiting the right patients. I don't want a healthy patient to join the study. I don't want someone that a placebo can cure his wound to join the study. I don't want a person that by mistake, by chance, know the PI to join the study. So the screening process is something which is very, very articulated. So we plan half a patient per site per month. This is our track record of clinical trials in this indication. This is what we know from the previous clinical trials at our CRO. This is the track record that they have. So we don't see a reason that it will be quicker. And actually, we are not in a rush. The only thing that we care about is that this trial will be a success and that it will change the treatment of chronic wounds.

Q: In terms of the Phase II head-to-head study against Collagenase, which you plan to start soon, would the results of that study and the Phase III study come around the same time or one would -- the Phase II would come ahead of it? Just trying to understand so that when the whole package will be ready to be sent out to the regulators.

A: The plan is that the trials will finish. I think the head-to-head study since it didn't start yet, so I cannot tell for sure. But the plan is that it will be finished ahead of the Phase III study. It's a much shorter study. We are looking -- there are all kinds of parameters that will impact especially safety, market aspects, pricing aspect, et cetera. We don't need the long follow-up, the three month follow-up after the study completes in the Phase III trial. So this is much shorter and more simpler trial. As far as we are planning now, we will get the final results before the Phase III is completed.

Q: I guess I'd just like to follow up a little bit on the head-to-head study. And in particular, if you could help us understand what kind of considerations might go into the pricing strategy. If you're achieving faster debridement than SANTYL with fewer applications, do you have to just -- you then justify enhanced pricing to match cost per application or then do you also need to consider the reduced health care utilization with faster debridement as well? I'd just like to get a sense of kind of what factors and metrics would be relevant for those pricing determinations.

A: Michael, thank you for joining us today. Barry, can you please address that question? Barry Wolfenson: I think the model that we have out right now with our $851 price target is merely the first component that you mentioned, which is what was the cost of the product over the duration of the treatment period, and we're comparing the average cost of SANTYL over a treatment period versus then what would be the anticipated premium for the average cost of EscharEx. The next part is what we'll be doing. We're actually doing a full market research study on market access and pricing that will get into the second component, which is the HEOR, the health economics component of it, where we do look at what are all the downstream impacts of saving 6 weeks of treatment from the time that it takes to apply the drug, the nursing time, the physician time to what happens to these patients? Do some of them end up in the hospital? Do they have infections that are needed to be treated? And once we get all of that together, if indeed, there is a good pot of dollars that the facility would save on average, then we think that we have the opportunity to take a higher premium against SANTYL.

Q: First question, the NIH funding environment is certainly challenging, which could impact BARDA, Department of Defense. It seems like that revenue was down a little bit in Q1. Are you expecting that to rebound significantly in the coming quarters, or how should we think about that overhang even though that's not a main priority, obviously, the product sales are more important? Just trying to get a sense of how to model that development services line.

A: It's great to having you with us today. Maybe, Hani, do you want to answer this question? Hani Luxenburg: So our guidance for 2024 remains with no change. Actually, we anticipate $24 million in total revenue. As you're all aware, the change in the U.S. administration caused a brief delay in the approval of both BARDA and DoD funded activity during the transition. However, all programs now appear to be back on track, and we do not anticipate any material impact on our revenue -- on our 2025 funding outlook. And the outcome is that the revenue will not change for this year.

Q: Since I have you there, could you talk a little bit about the below the line, below the operating income, that financial income expense line has been pretty volatile, certainly very positive in this quarter, more of a negative -- not negative, but more of an expense in the prior quarter. How should we think about that below-the-line expense -- financial income expenses going forward? What's a representative number? Is there any noise in there?

A: I wish I knew the representative number. If I knew it, I wouldn't be here because it's very much influenced by our share price for each -- in the end of each quarter, okay? So the below-the-line expenses is mainly from the financial income or expenses from revaluation of our warrants. So at the end of each quarter, we are doing a revaluation. And if it depends -- it very much depends on the share price. If it was increased or decreased from the beginning of the quarter, and this set the direction of the income or expense, okay? So at the end of this quarter, the share price was $15.52, much below what it is now, okay? So it is very much dependent, and I cannot tell you what to expect. It depends on the market. And I hope we'll see a good transition in our share price, and it will set the opposite way because if it increases, there are expenses, financial expenses. If it decreases, there are financial income. I hope I answered.

Q: I'll just take a look at the filings where we'll get the greater detail. But that is helpful.

A: If I may add, those options expire in November 2026. These are $34 million of warrants that are way below the money. If you want to look at next quarter, you will see that there was a significant increase in the share price. Probably there will be financial expenses related to that, but we are okay with that. Hopefully, after November 2026, this company will remain with no warrants and this issue will be -- will disappear.