MediWound's (MDWD) CEO Gal Cohen on Q2 2016 Results - Earnings Call Transcript

| About: Mediwound Ltd. (MDWD)

MediWound Ltd. (NASDAQ:MDWD)

Q2 2016 Results Earnings Conference Call

July 28, 2016, 08:03 AM ET

Executives

Anne Marie Fields - SVP, LHA

Gal Cohen - CEO

Sharon Malka - CFO

Analysts

Imran Zafar - SunTrust

Jason Wittes - Brean Capital

Anthony Petrone - Jefferies

Operator

Good day ladies and gentlemen, and welcome to the MediWound Second Quarter 2016 Financial Results Conference Call. [Operator Instructions] As a reminder this call is being recorded.

I would now like to introduce your host for today's conference Ms. Anne Marie Fields, Senior Vice President of LHA. Ma'am, you may begin.

Anne Marie Fields

Thank you, Rania. Good morning. 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.

Before we begin, 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 filings with the Securities and Exchange Commission including without limitation, the Company's Form 20-F and 6-K, which identify specific factors that may cause actual results or events to differ materially from those described in the forward-looking statements.

Furthermore, the content of this conference call contains time-sensitive information that is accurate only as of the date of the live broadcast, July 28, 2016. MediWound undertakes no obligation to revise or update any statements to reflect events 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. And thank you all for your interest in MediWound and for participating in today's call.

Following on the momentum we had in the first quarter, the second quarter of 2016 continued to be another quarter of significant achievement for both our commercial and clinical programs. We continued to grow the number of burn centers treating more burn patients with NexoBrid in Europe, obtain reimbursement for NexoBrid in Italy, expanded global distribution of NexoBrid in Argentina, where NexoBrid was launched and to Japan with an exclusive agreement with Kaken Pharmaceuticals and we initiated the second court of the second Phase 2 study of EscharEx to allow patients even more flexibility in using EscharEx in a place and time that best suits their individual daily routine.

Let's start with a view of our ongoing commercial progress with NexoBrid in Europe. I will walk with burn specialist and burn centre across Europe continues to bear fruit as we are seeing increasing adoption and previously treating centers are treating more and more centers and we see an increase in the number of treating centers.

We have done a good job creating interest in NexoBrid and educating burn specialist. As most centers are integrating NexoBrid into their workflows, we see a growing number of patients being treated and were feasible initiating a growing revenues.

Securing national and regional reinvestment, we acquired - remains s a critical component for the last scale adoption of NexoBrid as the new stand of care for debridement of severe burns. We continue to work closely with clinicians, market access professionals, and government agencies to obtain reimbursement, in their applicable countries, and to gain formulary inclusion at the hospital and at the regional level.

During the second quarter, we were pleased to report that that Italian Drug Agency AIFA approved the pricing and reimbursement conditions for NexoBrid for removal of EscharEx in patients with deep partial and full-thickness thermal burns. The approved pricing is again in line with the opinion list price for NexoBrid.

With national reimbursement now in place in Italy, we are working on a formulary inclusion at the hospital in regional levels, with a goal of firmly establishing NexoBrid as the stand of care in Italy and converting the increasing use across the vast majority of burn centers in Italy into revenues.

Our commercial efforts continue to be supportive by the significant presence we have at international and regional medical conferences for burn specialist, where we continue to gain support from KOLs and champions while generating clinical data and sharing their hands on experience using NexoBrid to treat severe burn patients.

In early May, we had a strong presence at the American Burn Association Meeting where 11 papers highlighting the merit of NexoBrid were presented. In addition, the burn centre that pioneered the development of laser Doppler imaging is a diagnostic tool in the assessment of burn depth and severity presented the study on the ability of NexoBrid to allow early direct assessment of burn severity compared with laser Doppler imaging and [Artwork] [ph] was awarded the best oral presentation at the recent British Burn Association meeting.

Throughout the balance of the year, we will continue to support the advancement of burn care by sponsoring additional international, European and regional burn conferences. So at that end, we look forward to the annual international society of burn injuries meeting being held in Miami at the end of August.

And again, we expect a good number of abstract would be presented in support of NexoBrid use to debride severe burns. This is an important meeting because it draws a diverse international audience of burn specialist.

We continue to advance our ongoing U.S. Phase 3 clinical program for NexoBrid in collaboration with BARDA and enjoy the collaborative work with BARDA's U.S. experts. As part of the joint effort to advance U.S. preparedness for mass casualty incidences, we look forward to further increasing the experience of U.S. burn centers, in tweaking severe burn patients with NexoBrid.

Turning now to our progress expanding NexoBrid into other global market. During the second quarter, we made significant progress advancing our strategy to leverage our EMA marketing authorization to expand NexoBrid internationally. We are very pleased to report that our distributable partner in Argentina launched NexoBrid during the second quarter as planned and look forward to professionally support them as they expand access in Argentina to local awareness, interest, use and advocacy.

We were also pleased to join and sign an distribution agreement with Kaken Pharmaceuticals for distribution of NexoBrid in Japan. Kaken Pharmaceutical is a company with over $1 billion of files and has a leading position in wound care in Japan. They have a considerable regulatory market access and sale capabilities, so we are very happy to help Kaken as a partner in this important market.

Our distributions partners have already submitted registration files in Mexico, in South Korea, and in Russia and we are preparing to do so in additional countries in South America, India and Japan. We look forward to updating you on the progress towards approval and commercial launches. We continue to seek potential distributor partners in other important markets and we look forward to providing you with further news on this front as well.

Now, let's turn to a discussion of our progress with EscharEx, our treatment for chronic and hard-to-heal wounds. In February, we reported positive top line results from our second Phase 2 clinical trial evaluating EscharEx for the treatment of chronic and other hard-to-heal wounds. The positive data in post-hoc analysis from our Phase 2 clinical study with EscharEx encourages us to advance this very promising product in diabetic foot ulcers and venous leg ulcers which represents a tremendous market opportunity.

We were particularly pleased to have this compelling Phase 2 data presented as a late breaker at the SAWC Spring conference in Atlanta before an audience of leading wound care specialists. Stakeholders at the conference were very interested to hear that 93% of the wounds which completed the driving with EscharEx were debrided within 7 days after nearly four to five applications on average.

This is particularly compelling when you consider the topical debridement treatments currently on the market require daily applications for weeks and months to achieve complete debridement, yes they still sell in the U.S. alone 100 of millions of dollars every year.

Enrollment of the second court of 24 patients to demonstrate safety after extended application period is ongoing. This second quarter is also a multi center perspective randomized vehicle controlled assessor-blinded blind study in which 24 patients in two different wounded theologies diabetic foot ulcers and venous leg ulcers are randomized to EscharEx or the gel vehicle at the 2-to-1 ratio.

The product is applied for an extending period of time 24 hours, or 48 hours with the main objective to document safety after extended application periods to further contribute to the products convenient application by allowing patients even more flexibility in using EscharEx in a place and time that best suits their individual daily routine further enhancing ease-of-use and compliance.

Recruitment should be completed in the coming months and we expect to have top line results from this second quarter of patient in the fourth quarter along as to approach the FDA by year end in order to establish plans for pivotal program that would support a BLA submission for EscharEx.

It is also important to note, that EscharEx indication is for debridement of wounds. So it is complementary with the numerous market technologies that are aiming to heal this wounds. We see a number of potential synergies with this product and expect that they will be used sequentially in clinical practice.

EscharEx represents a very meaningful market opportunity. So expanding into the wound care market with EscharEx continues to be an important next step in our strategy to build shareholders value by leveraging our proprietary technology.

In addition to EscharEx, we are delighted to be achieving or advancing MWPC003 what we call MediWound 003 agent and injectable form of our technology for the treatment of connected tissue disorder. Our injectable bromelain solution agent is an investigational sterile injectable drug containing a mixture of medical-grade proteolytic enzymes as used in NexoBrid and in EscharEx.

In May we reported that a comprehensive view of MWPC003 for the treatment of Dupuytren's contracture was published in a peer-reviewed journal, Bone & Joint Research. An XO study was conducted in 71 courts that were injected with our 003 agent in descending doses.

This study demonstrated that even very small doses of our agent can dissolve the pathological code in more than 80% of the cases. The scientific rational for 003 to treat connected tissue disorders is based on this patriotic properties which allows us to dissolve the pathological code even when using very small doses and the potential for their reported anti-inflammatory activity of bromelain to reduce the high recurrence rate.

We are enthusiastic about this opportunity as this preliminary study demonstrated statistically significant efficacy in a known and accepted connected tissue order model and supports additional new potential uses of our enzymatic technology.

With that overview of our commercial and clinical programs, let me turn the call over to Sharon Malka, our Chief Financial Officer for a review of our financials. Sharon?

Sharon Malka

Thank you, Gal. It is a pleasure to be reporting our second quarter 2016 financial results. As you have heard from Gal, the second quarter featured excellent progress across the number of important areas that positions us for continued commercial and clinical success. We will continue to execute our commercial plans and clinical programs supported by BARDA and office of Chief Scientist funding, trusting that overtime the return on these investments will create value.

Looking now to our financial results, revenues for the second quarter of 2016 were $356,000 compared with $165,000 for the second quarter of 2015. Revenues in the first half of 2016 was $610,000 compared with $232,000 for the first half of 2015 and so pass 2015 full year revenues of about $600,000.

During the third half of 2016, we shipped approximately 2,800 units of NexoBrid. Our commercialization efforts continue to focus on stimulation of NexoBrid in burn centers throughout Europe and on market access. Overtime and with reimbursement and formulary inclusion, we expect to drive revenues at treating burn center convert from experimental usage into ongoing commercial order.

Net research and development expenses for the second quarter of 2016 were $2.9 million compared with $1.5 million for the second quarter of 2015. The increase in net research and development expenses was primarily due to an increase of $1.4 million of expenses related to NexoBrid clinical trials and $0.6 million related to EscharEx development which was offset by an increase of about $0.8 million participation by BARDA and office of Chief Scientist in Israel.

Sales, marketing and G&A expenses during the second quarter of 2016 saw a modest increase to $3.7 million from $3.4 million in 2015 second quarter. Operating expenses for the first half of 2016 totaled $10.5 million compared with $9.3 million for the first half of 2015. Again the increase was primarily due to an increase in net research and development expenses of about $0.9 million and $0.4 million increase in non-cash share based compensation expenses.

The increase in net research and development expenses was as a result of increase of about $2.8 million for NexoBrid clinical trials and about $1.2 million for EscharEx development, which was offset by about $3.1 million participation by BARDA. Overall, we are conducting more research and development activities with less cash utilization as a result of the non-dilutive funding of post-BARDA and Israeli Chief Scientist Officer.

Net loss for the second quarter was $7.5 million or $0.34 per share compared with a loss of $4.5 million or $0.1 per share for the second quarter of 2015. The increase in net loss was primarily due to an increase in operating expenses of $1.7 million primarily due to the research and development activities and $1.5 million net financial income million that were recorded in 2015 which was largely comprised of non-cash revaluation of contingent liabilities and changes in foreign currency exchange rates.

For the six months ended June 30 2016, we posted a net loss of $11.3 million or $0.52 per share compared with a net loss of $10.5 million or $0.49 per share for the same period in 2015. Adjusted EBITDA for the second quarter of 2016 was the loss of $5.7 million compared with a loss of $4.8 million for the second quarter of 2015, while adjusted EBITDA for the first half of 2016 was loss of $8.7 million compared with the loss of $8.5 million for the first half of 2015.

Turning now to our balance sheet, as of June 30, 2016 the company's cash and short-term deposits balance was $37.8 million and networking capital of $36.7 million. This compares with cash and short-term deposit of $45.8 million and working capital of $45.2 million as of December 31, 2015.

During the first half of 2016, the company utilized $9.2 million in cash to fund operating activities which was somewhat offset by license fees paid by distributors. Throughout the balance of 2016, we will continue to invest in the commercialization of NexoBrid across Europe and in research and development efforts of NexoBrid supported by BARDA funding, as well as to advance the clinical development programs of EscharEx to treat chronic wounds and our product candidate 003 to treat connective tissue disorders.

Our BARDA contract continues to positively affect our financials by offsetting NexoBrid development cost and at the later stage, we expect it to have a positive impact on our financials by contributing to revenues as a result of the procurement commitments.

Consequentially, we expect that cash use of 2016 will be in the range of $18 million to $20 million lower than the company previous forecast of $20 million to $22 million.

With that financial overview, let me turn the call back to Gal. Gal?

Gal Cohen

Thanks for that review, Sharon. Our achievements during the first half of 2016 have well positioned us for the catalyst ahead. We look forward to continued revenue growth and progress throughout the balance of the year as we look to broaden commercial adoption of NexoBrid in Europe, expand access to NexoBrid to international markets, updating the top line results of the second court of patients treated for 24 and 48 hours in the EscharEx Phase 2 study and gain clarity from FDA on our pivotal program for EscharEx to treat chronic wounds and hard-to-heal wounds.

And now Operator, please open the call for questions. Thank you.

Question-and-Answer Session

Operator

[Operator Instructions] And our first question comes from Imran Zafar from SunTrust. Your line is now open.

Imran Zafar

Hi good morning. Thanks very much for taking my question. I wanted to first ask about Belgium, I know you got -- your secured reimbursement there last quarter and just -- maybe just as a case study and how the commercial market can unfold in another geographies as you get coverage.

Can you just talk about how that’s playing out vis-à-vis what the option by the various burn centers and sort of the trajectory -- the early trajectory in terms of utilization at these centers. Thank you.

Gal Cohen

Thank you, Imran for the questions. Well, as you rightly said, we received the reimbursement in the first quarter and during the second quarter, we were planning the processes to get and I would say a stimulation into the local registry of the hospitals and as we saw, in hospitals as we did get the formulary approved, we started to see revenues being generated because now they pay for the product that they receive.

So overall things unfold the way we expect them to and we are now looking to do the same thing in Italy during the third quarter so, that we can unfold the usage in Italy into revenues as well.

Imran Zafar

Okay. And then you mentioned that you shipped 2,800 units during the quarter, can you just roughly break that down into buckets so, a commercial use, revenue generating units and may be just some of the key markets in which you realized sales from that product within that -- that unit count.

Sharon Malka

Okay. Right, so out of those 2,800 units above one-third of them was shipped to what called international market. Out of and all of it well paid, out of that balance of two third of that was shipped to European countries of which about 40% to 45% were free of charge.

Imran Zafar

Okay. Great. And then just lastly, just talking about this, the diagnostic application for NexoBrid, can you just talk about the clinical and regulatory strategy there in terms of comparing this product with laser Doppler and just kind of, how you planned to pursue that opportunity from a clinical and regulatory standpoint.

Gal Cohen

Yes, well thank you for the question. First of all we are not going to initiate a regulatory process to have NexoBrid approved as an agnostic tool because NexoBrid is a therapeutic agent what the paper actually showed and this was very interesting because this specific centre is a centre that was behind laser Doppler imaging, since the inception of laser Doppler imaging.

They were comparing into two tools and they were able to show that with laser Doppler imaging usually you need to wait for a couple of days at least before you can get an accurate estimation of the burn depth.

And as you know the burn depth, determines the consequence wound closer strategy for the wound. If it’s a full sickness wound you need to graft it, if it’s a sufficient wound you might let it contains the hospitalized so, not on equate start of get the diagnostics of the wound earlier but also they show that in the wound that were and laser Doppler imaging you got either blue or red and they show that wounds that were perceived by this imagining as wounds that would require a surgery after NexoBrid, they discover that either the would entirely did not require surgery or large portion of that wound was not requiring surgery.

So what we do, partially we move the EscharEx which is a therapeutic activity but by doing that we are exposing the wound bed for direct visual assessment so, we don’t need to get or look at large flows we actually can see, if we see that, we know that this wound needs to be grafted, if we don’t see that we see dermis, the wound can be hospitalized this is what the physicians choose to do and in many cases, sometimes the wound does have Elliott effect but they are much smaller than the overall perception of depth of that burn.

So regulatory wise, we are not going after this kind of claim is just a clinical activity of the product that allows physicians to get it for the same price let's say.

Imran Zafar

Right but from a clinical from a validation perspective I mean that, I think it was Belgium study, was pretty small I mean are there large studies versus LDI ongoing to validate that, that application.

Gal Cohen

I think that importance of that study and I think this is why got the best all presentation in the British Burn Association was that, if anyone in the world would have fought differently, it would be that centre, that was developing, it was behind and development of LDI so, the importance of that paper was in the, I would say the quality of other than the quantity.

Now once this was published any centers or many centers that are using LDI and are not so many centers that are using LDI but several that are using LDI and also experience the use of NexoBrid we’ll see for themselves and perhaps they would share this information with the medical community as we expect them to do.

Imran Zafar

Okay, great. That’s all from me. Thank you very for taking my questions.

Operator

And our next question comes from the line of Jason Wittes from Brean Capital. Your line is now open.

Jason Wittes

Hi, thanks for taking the questions, just wanted to ask you mentioned, you are doing a safety study I think 24, 48 hours as your intention that this product is going to be something that you can give to a patient and take home and I’m specifically speaking about EscharEx and that being the cases or they’re going to be special considerations that the FDAs going to look for and designing a clinical trial.

Gal Cohen

So, first of all yes this is our intention we want to generation information that would enabled patient to use the product in the most convenient way to facilitate the compliance of use of the product.

And we know that many patients in the U.S. have a nurse coming to their house to administer the product and this nurses usually come every two days, every three days to their house and this is why it is important to generate, that will allow to a rigorous the patient or replace the dressing every 48 hours.

In terms of considerations for the clinical study obviously we will discuss with FDA and if FDA would have any recommendations for us then we would adhere to FDA recommendations.

This study would allow, the patients who to be treated whether in a office or at home by a professional caregiver or spouse and would give and flexibility for the patient to do it once a day and may be even once every other day so this is the purpose of that study.

Jason Wittes

Okay. Fair enough and then on the injectable, can we assume that you're going to be able to lever lot of the safety data already generated since the same active ingredient or is it really make that termination when it comes to going to the trials of the FDA et cetera.

Gal Cohen

I think at the end of the day, obviously we will be discussing with FDA and comply with what FDA has to recommend but thinking about it scientifically, we are injecting many month doses of the API and since most of our sense for clinical work was injecting much greater amounts of API IV to animals in terms of systemic exposure obviously the burden heal is much less than and this is why we believe that practically our existing pre-clinical package supplemented by in our local studies that we are currently running it should be suffice, we will have to wait for FDA to address that and confirm that and once they do, we can share that with everybody.

Sensing about the -- package, the clinical -- affecting control of the drug, again API so all the path that relates to instruction of the API and other elements of control has been shared with FDI and they are not different than we have with NexoBrid, that is in the Phase 3 study and with EscharEx, so overall we do believe that this a program has de-risk and R&D and or higher probability or a lower risk associated with it.

Jason Wittes

Okay. And you may have mentioned this but your intention is still to have a discussion with the FDA at the end of the year about next steps or just remind us again on the clinical pathway or kind of sketch out at this point?

Gal Cohen

In regard to Jek?

Jason Wittes

In regards to the injection, yes.

Gal Cohen

Yes injection, so 003 so yes what we are doing now, we are running a small clinical study, we are finalizing the stability in that we need, we are working with the global experts in the U.S. in other countries to look at the positioning of the product on the investment landscape, on the clinical protocols that we would recommend and once we have all this information probably towards the end of this year, we would seek to have FDA advice and initiate the clinical study.

Jason Wittes

Okay. And then I was the ABA and there was a pretty very positive reaction on the burn product. One thing I did notice was burn docs are pretty conservative bunch to say the least and even your biggest advocate sort of go piecemeal in terms of their uses of the product meaning those start with small areas, they will go to bigger area, they are cautious to go to the face although I think face is one of the best applications given the sensitivity for the patients/

But what seems to be really helping was the set up of centers of excellence, which I think you have maybe you could provide us how many now but with those in place are you seeing a change in usage patterns basically I mean from what I am seeing it seems to be encouraging doctors to get more aggressive in their usage?

Gal Cohen

I think that your vision is correct and burn patients are very, very severe patients and surgeons are conservative and they want to make sure that they feel comfortable before they exam but you are absolutely correct in that, that the centers of excellence that we now have in all the major countries, I mean we have in Germany, we have in Italy, we have in Spain, and soon hopefully we will have also in the U.K. and so on they are contributing in best that they can come.

And not only discuss they have hands on experience with the product but actually see and participate in the treatment of the patient in a more let's say control and experience environment and this is how you expand the use for example Cologne in Germany the size of the study that was done at the American Association that won the best poster for last year was a when they treated faces and then physicians even from Germany told us that once they Cologne is doing that they started to do that as well.

And we see that in Italy for example, we have Milano that just started in November and Milano go to a point where they treated 16 patients in one month, so I do think that this is like a snowball and these centers of excellence are means to help to accelerate the development of the snowball down the thing.

Jason Wittes

Got it. Thank you. I will jump back in queue. Thanks a lot.

Operator

And our next question comes from the line of Raj Denhoy from Jefferies. Your line is now open.

Anthony Petrone

Hey this is Anthony in for Raj. A couple of questions on NexoBrid specifically as it relates to the new coverage in Italy, I'm just wondering if you're expecting stocking orders as you as the product gets onto regional formularies as following the reimbursement announcement in that country and then beyond Italy other EU countries in terms of reimbursement, can you provide an update on what milestone we should be expecting over the next 12 months and then I will have a follow up on Japan. Thanks.

Gal Cohen

Thanks. So in Italy, we believe that centers will South Dubai and a store of NexoBrid but because we are providing a very good service to the centers and we can react in a relatively short time to a supply of August then we do not expect them to hold months and months of inventory but other inventory for couple of days, maybe a week or so and in terms of other countries that we are expecting reimbursement on.

So first of all in the countries that we did get reimbursement, we now have to get the formulary inclusion in the local and hospital agents. Again it depends on country to country for example in Italy in some countries to do it in the hospital level and sorry in some regions you do it in your hospital level and in some regions you need to do it in your hospital level and then in the regional level, this is why we believe that is going to last until approximately the end of this year but gradually in the third quarter we will get I think many of them resolved and then rest to undertake little bit longer will continue to the next quarter.

In terms of additional countries, well in Spain currently we are able to generate revenues in the major centers even without having national level reimbursement, so we would continue the process of national level reimbursement but still while we are generating revenues on this country. In England we are not going to grow for national level investment, we are going for the formulary process at the hospital level and again as I said England has started to pick this formulary process that is very and challenging I would say in England already resulted in positive decisions and initial order from centers in England, the challenge in England is that you need physician to recommend to the committee to include the product but in order to provide that product to the physician you need that committee to get decision.

So it is a bit of Cage 22 but we have been able to overcome that and we are on the way to get these investments in Italy as well. In France the process is still ongoing and we believe or we hope that it will be resolved in the coming 12 months as we said and in the coming year, we also are in exam stages in Israel outside of Europe and to get reimbursement and in Germany we are working with the medical community in order to see if we can get an OPS code, the specific code for NexoBrid this process will take time and we don’t have yet clarity at this point in time whether this OPS process will take, will be resolve or will be completed in the next 12 months.

Anthony Petrone

No that is helpful and then to shift gears over to Japan, I'm just wondering the collaboration with Kaken Pharmaceuticals, what the approach there is and if you can maybe give us some milestones for Japan and what you think the ultimate size of that market opportunity is?

Gal Cohen

It is a big country and country I had the pleasure of being in Japan just last week and meeting with Kaken and I think Kaken is a very experienced company, they have a big stake in wound care in Japan.

And what their approach would be to approach the Japanese authorities and discuss with them what will be the right and plans to introduce the product in Japan, this we don’t have certainty at this point because Kaken needs to speak with the authorities but the estimation is that it would take able to get the product registered in Japan and then maybe a couple of more months to get the product there covered by the government which is different and result of that. Does that address the question?

Anthony Petrone

Yes, thank you very much and then just the last one on our end would be just on BARDA. If any updates you can provide there just on how that’s evolving in the U.S. and what we can expect in terms of additional milestones at BARDA again also in the next 12 months or even beyond that. Thanks again.

Gal Cohen

Yes, thank you. So first of all the collaboration with BARDA is going very well. We enjoy the experts they have in Washington that are sitting with us and particularly bi-weekly teleconferences and support our effort.

We're obviously enjoying the financial support which is not dilutive and the things that we look ahead is that, BARDA has a $60 million commitment to procure NexoBrid for top filing within the framework of the agreement. The agreement was five field. It was signed in September 2015. So this is an option of BARDA and BARDA has the decision power when to start procuring but the commitment to procure is confirmed.

I cannot speculate but I would assume that most probably BARDA has to go through this EUA, Emergency Use Authorization process that is expected to take able to. So and I would also expect that on one hand BARDA would like to get preparedness as soon as it can but on the other hand it would like to by everything at a first day and then have expire and start to kick-in.

So, most probably but what I’m saying no again it is decision of BARDA we have no controlling power over that but most probably BARDA would I would say spread the purchase of this quantity throughout the third, fourth and fifth year of the agreement I would expect.

As for additional milestones BARDA has two other options in the agreement, there have been options in the agreement, they have an option to buy more NexoBrid for $50 million again I mean this option would be more viable when the stop queuing already the committed quantity and they have an option to find more R&D for $22 million for example for pediatrics.

We are in discussions with a BARDA, the FDA shown about that and we will be happy to report once we have anything to update.

Anthony Petrone

Thank you.

Operator

And that does conclude the Q&A session. I would now like to turn the call back to Gal Cohen for any further remarks.

Gal Cohen

Thank you. Thank you for the questions and for the continued interest in MediWound. We look forward updating you again when we report our third quarter results in about three months. Thank you very much.

Operator

Ladies and gentlemen thank you for participating in today’s conference. This concludes today’s program. You may all disconnect. Everyone have a wonderful day.

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