MediWound's (MDWD) CEO Gal Cohen on Q4 2015 Results - Earnings Call Transcript

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MediWound Ltd. (NASDAQ:MDWD) Q4 2015 Results Earnings Conference Call January 25, 2015 8:30 AM ET


Anne Marie Fields - SVP, LHA

Gal Cohen - Chief Executive Officer

Sharon Malka - Chief Financial and COO


Matt Keeler - Credit Suisse

Jason Wittes - Brean Capital

Raj Denhoy - Jefferies

Akiva Felt - Oppenheimer

Bruce Nudell - SunTrust


Good day. And welcome to the MediWound Fourth Quarter and Year-End 2015 Financial Results Conference Call. Today’s conference is being recorded.

At this time, I would like to turn the conference over to Anne Marie Fields, Senior Vice President with LHA. Please go ahead.

Anne Marie Fields

Thank you, Maria. 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 and Chief Operations Officer.

Before the opening of the U.S. stock market today, MediWound announced financial results for the fourth quarter and full year ended December 31, 2015. If you have not received this news release or 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 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 forms 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, January 25, 2016. MediWound undertakes no obligation to revise or update any statements to reflect events or circumstances after the date of this conference call.

With that said, I would like to turn the call over to Gal Cohen. Gal?

Gal Cohen

Thank you, Anne Marie. Good morning to our listeners in the U.S. and good afternoon to those joining us from Israel. Thank you all for your interest in MediWound and for participating in today’s call. As a company, we made great progress throughout 2015, in particular with our commercial and clinical programs, which I will detail for you during today’s call.

We achieved many milestones during 2015, including the treatment of hundreds of severe burn patients with NexoBrid in more than 70 burn centers across Europe. We significantly increased awareness, interest and use of NexoBrid through the exposure of then for more 90 abstracts and award winning poster presentations at premier international burn conferences in the U.S. and Europe, as well as from new scientific and clinical reviewed papers. In addition, we initiated our U.S. Phase 3 study of NexoBrid to treat severe burns. In addition to our progress with severe burns, we have two exciting opportunities ahead as we enter into two new markets. One is the market for preparedness of mass casualty incidents with NexoBrid; and the second one is the market for chronic wound care with EscharEx.

We are well-positioned to advance our synergy in each of these markets in 2016, which I will discuss in greater detail later in the call. But first let me turn to a review of our ongoing commercial progress with NexoBrid in Europe.

By the end of 2015, we had trained burn centers in more than 100 hospitals across Europe and we have been working with these centers to integrate NexoBrid use into their workflows. About 70% of those trained burn centers have started to treat patients with NexoBrid, resulting in an increasing number of patients being treated with NexoBrid every quarter.

Throughout 2016, we will continue to train burn specialists at additional burn centers and will work with their burn teams to facilitate the use of NexoBrid in order to accelerate the treatment of burn victims. In parallel, we’re advancing our efforts to obtain reimbursement knowing that it is an important component for widespread adoption and for converting the growing usage of NexoBrid into revenues.

As previously reported, our teams are working with local market access and reimbursement experts to facilitate the review process needed for favorable reimbursement decision on a country-by-country basis. The ongoing local reimbursement processes in all the applicable markets are in different stages and we look forward to receiving initial country approvals in the coming months and throughout 2016.

Our efforts here are aided by significant presence. We had presence in more than 16 international and national medical conferences for burn specialists in 2015, where as I mentioned, there were over 90 clinical papers presented before an audience of burn specialists. There is no doubt that NexoBrid was a subject of a great deal of buzz at these conferences, which is evidenced by the dozens of abstracts being presented by physicians from all over Europe and by the oversubscribed workshops and symposiums we hosted.

Further, we continue to win the endorsement of our disruptive technology by the conferences’ scientific committees as they noted by the number of NexoBrid posters winning best poster or best in category at conferences such as the recent American Burn Association meetings. We are privileged to have a growing number of physicians for meeting burn centers, sharing their hands-on experience with NexoBrid with the appeals in user meetings, in centers of excellence visits and in their interactions.

We are pleased to support and encourage these peer-to-peer discussions and sharing of best practices, which encourages these physicians as they embark on implementing our minimal invasive approach in burn care. We believe this growing bulk [ph] of data and groundswell of support from key opinion leaders will further accelerate in 2016 and will lay the foundations to facilitate NexoBrid transition in standard-of-care.

In 2016, we will continue to support the advancement of burn care by being the gold sponsors of nearly every European national and regional burn conference. We continue to train and support the opinion burn centers and expect to gradually shift the sampling program into commercial sales as we gain reimbursement and formulary inclusion.

We remain on track with our international expansions as well by leveraging other European marketing authorization to expand NexoBrid into emerging markets in Latin America, Asia Pacific and the CIS countries.

Our progress is demonstrated by last week’s announcement of our agreement with Avalon Pharmaceutical for the exclusive distribution of NexoBrid in Colombia, Peru, Chile, Ecuador and Panama.

We also continue to make progress with our current international partners. For example, our distributor partner in Argentina expects to launch NexoBrid there in the coming months, following our recent recipient of marketing authorization from the Argentinean Ministry of Health. We submitted a registration file also in Mexico and in South Korea, and in South Korea we also got an orphan drug designation already.

Our distribution in Russia, submitted a file for registration, initiated a small clinical study to support registration and local experience. We continue to seek to expand into additional markets, and we are currently negotiating with potential distributor partners in other important emerging markets. We look forward to report to you our ongoing progress here as well.

Turning now to a brief update on our U.S. Phase 3 study. This study is named DETECT, because NexoBrid debrides and protects the patient. As a recap, DETECT is a prospective, controlled, multicenter, multinational assessor blinded Phase 3 study in 175 patients randomized either to NexoBrid, Standard-Of-Care or the Gel Vehicle at a ratio of 3:3:1, and with a follow-up period of 12 months and 24 months. This study is being conducted at approximately 30 burn centers and we had a single primary endpoint, which is eschar removal versus the Gel Vehicle. It is important to note that in previous studies, NexoBrid demonstrated a proportion of wounds reaching complete debridement of 96.3%, whereas the Gel Vehicle achieved 0% of wounds reaching complete debridement.

Additional acute endpoint in the DETECT study asses surgical burden, wound healing, blood loss, and other pharmacoeconomic measurements that should also be supportive for further reimbursement. We expect to have top-line results on the acute primary and secondary endpoints in the first half of 2017 and plan to supplement the long-term 12 months and 24 months follow-up thereafter.

Subject to the strength of the data which we expect should replicate European clinical results, we will seek the FDA consent to file for approval with the data from the acute phase of the study, while supplementing the long-term data as it becomes available.

Moving now to an important new market for NexoBrid, which is mass casualty incident. A burn disaster is any catastrophic event in which the number of burn victims exceeds the capacity of the local burn center to provide optimal care, also known as surge capacity. This surge capacity includes the availability of the -- or the ability of the burn centers to have available beds, surgeons, nurses, support staff, operating home, equipment, supplies, and related resources.

Mass casualty incidences are not limited to terrorism or to expensive act of war. Unfortunately, there are multitudes of civilian mass casualties that occur such as the recent explosion of a chemical plant in China with more than 400 casualties or the amusement park in Taiwan where more than 200 people were set on fire due to explosion this past June. Since then, there was a mass -- a burn event in Australia, in Saudi Arabia, in Dubai. So, these things are happening practically every month and even a road accident or a train collision could challenge burn treatment capacity and turn into a mass casualty incident.

In late September we were pleased to sign a strategic agreement, valued at up to $112 million with the U.S. Biomedical Advanced Research and Development Authority, better known as BARDA. As reported, this is a five-year base contract that includes up to $24 million of non-dilutive funding to support the development activities for the U.S. Phase 3 study of NexoBrid as well as the completion of the FDA approval process for NexoBrid in the U.S. In addition, there is a $16 million firm commitment for procurement of NexoBrid which is contingent upon FDA Emergency Use Authorization or FDA marketing authorization for NexoBrid. In addition, in the contract, there are options to further fund development for $22 million for expanding NexoBrid indications as well an additional option of $50 million to procure more NexoBrid.

Soon after we signed the contract with BARDA, which the focus of the contract was preparedness of the U.S. a real-world MCI occurred in Romania as a fire in a night-club left 145 burn victims in urgent need for hospital care. During this tragic event, we were able to provide humanitarian aid to approximately 40 severe burn patients who were treated with NexoBrid in less than three days, providing a real-world demonstration of the important role NexoBrid can play in such events where physicians and surgical capacity are a bottleneck in saving lives of patients. This is an area of significant need where we are making an effort to expand the medical contribution of NexoBrid and hope to be in a position to work jointly with variety of other countries to aid in their preparedness for such inevitable incidences.

In January this year, the fourth international conference on preparedness and response of heath care systems to emergencies and disasters which was held in Tel Aviv provided us with an opportunity or international platform for initiating discussions with officials from various countries on the merits of NexoBrid for preparedness and response to disasters and emergencies in their respective countries. We will continue to pursue opportunities with government and military groups with various countries as we see this as an important new commercial market where we can build at a peak customer base and make a difference in patients’ lives. While in the early stages of development, we view this as an important business opportunity for MediWound and we will look forward to reporting our progress with these initiatives.

Last but not least, let’s turn now to EscharEx for the treatment of chronic and hard-to-heal wounds and thus the substantial market opportunity within the multi-billion dollar wound care market. Expanding into the wound care market with EscharEx is the next step in our strategy to build shareholder value by leveraging our proprietary technology. We expect to report the results of our second Phase 2 clinical trial evaluating EscharEx for the treatment of chronic and other hard-to-heal wounds in early February, particularly in the coming two weeks.

This prospective randomized controlled study of 73 patients was conducted at 16 clinical sites in Israel and Europe and evaluated the safety and efficacy of EscharEx compared with the Gel Vehicle for the treatment of a variety of chronic and hard-to-heal wounds including a study group in diabetic foot ulcers, DFUs; a study group of venous leg ulcers, VLUs; and a study group of post-surgical and traumatic hard-to-heal wounds. The primary endpoint of the study was the incidence of complete debridement which is the same as our U.S. Phase 3 study for NexoBrid in severe burns. The secondary endpoint asses several parameters including wound bed preparation, wound healing and other efficacy and safety measurements.

This study is supported by the Israeli Office of the Chief Scientist providing certain non-dilutive funding which reaffirms again the innovation and potential for EscharEx by the OCS review team. The results from our first Phase 2 feasibility study that was conducted in 24 patients at two clinical sites in Israel already demonstrated efficacy in debriding after just a few tropical applications in a variety of wound etiologies including DFUs, VLUs, pressure sores, and other post-surgical or post traumatic hard-to-heal wounds. We believe that since EscharEx is based on the same technology as NexoBrid, the wealth of development data supporting NexoBrid as well as the clinical data from our first Phase 2 feasibility study in treating chronic and hard-to-heal wounds, derisks EscharEx development especially as the FDA recently indicated that there is no need to open a new IND for EscharEx as it will be reviewed under the same IND as NexoBrid.

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

We also recently completed a comprehensive market research on EscharEx with more than 200 healthcare professionals in the U.S. and Europe. According to the study, there are more than 1 million patients with just DFUs and VLUs in the U.S. alone that undergo debridement. So, just in the U.S., just in two indications, just in patients that undergo debridement, there are more than 1 million patients. The several physicians indicated that products having a profile of EscharEx would potentially be prescribed to a significant portion of this patient pool. With an average cost of treatment of $1,000 to $2,000 per patients, EscharEx represents a very meaningful blockbuster market opportunity. These findings were reaffirmed again by a U.S. advisory board that was comprised of leading U.S. medical, marketing and reimbursement experts, which was convened to review and discuss the research reports.

As you can imagine, we look forward to receiving the top line data from the EscharEx Phase 2 study and based on positive results to advancing our development program for this very promising product.

With this overview of our commercial and clinical program, let me turn the call over to Sharon Malka, our Chief Financial Officer for a review of our financials. Sharon, please go ahead.

Sharon Malka

Thank you, Gal, and good morning everyone. It is a pleasure to be reporting our fourth quarter and year-end financial results. We continue to fund and execute our commercial plans and clinical programs confident that our investment will drive the use and adoption of NexoBrid in Europe and advance our pipeline products in a number of important medical indications that represent significant commercial opportunities.

Let me turn on to our financial results. During 2015, we shipped about 4,400 units of NexoBrid to burn centers across Europe, of which approximately two-third were part of our investment in the sampling program. The Company generated revenues of $601,000 for the full year of 2015 compared with $259,000 for the prior year. Revenues for the fourth quarter of 2015 increased to $267,000 from $124,000 in the prior year’s fourth quarter. The increase was primarily due to sales of NexoBrid associated with the mass casualty incident in Romania which were ordered in addition to the Company’s donation of humanitarian aid.

As Gal noted, our efforts during the year continued to be focused on the commercialization of NexoBrid including training, market access and hands-on experience in burn centers throughout Europe. Over time and with reimbursement and formulary inclusion, we expect to drive revenues as these burn centers convert from experimental usage into commercial orders.

In 2016, we will continue to invest in training and sampling programs as well as in market access initiatives that with favorable reimbursement will accelerate market adoption and will enable us to translate the positive momentum into sales.

Operating expenses for 2015 were $19.3 million, which is in line with our expectation compared with $18.9 million for 2014. The increase was primarily due to an increase of $1.2 million of commercial activities associated with the European marketing infrastructure and $0.8 million due to research and development activities related to clinical development which was offset by $1.7 million decrease in non-cash share-based compensation expense.

Operating expenses for the fourth quarter of 2015 were $6.4 million, also in line with our expectations compared with $5.6 million for the fourth quarter of 2014. The increase was primarily due to $0.8 million of research and development activities related to our clinical development.

Net loss for 2015 was $22.1 million or $1.02 per share compared with a net loss for 2014 of $18.9 million or $0.95 per share. For the fourth quarter of 2015, we reported a net loss of $7.8 million or $0.36 per share compared with a net loss of $7.1 million or $0.33 per share in the fourth quarter of 2014.

Adjusted EBITDA for full year 2015 was a loss of $18.1 million of which $6 million in the fourth quarter compared with a loss of $16.1 million for 2014 of which $5.3 million in the last quarter of the year.

Turning now to our balance sheet, as of December 31, 2015, cash equivalents and short-term deposits were $45.8 million and working capital net was $45.2 million. We remain on track with regards to cash use, utilizing above $19.1 million in cash during 2015 to fund ongoing operating activities in line with our guidance of $20 million for this year.

During 2016, we will continue to primarily invest in the commercialization of NexoBrid across Europe and to support late stage clinical development of EscharEx and other pipeline product candidates. We expect that BARDA contract we had recently awarded will positively affect our financials by offsetting our NexoBrid development cost and at the later stage by contributing to revenues as a result of the procurement commitments. The cash used for 2016 is expected to be in the range of $20 million to $22 million.

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

Gal Cohen

Thank you for that review, Sharon. The progress we’ve made throughout 2015 puts us in a strong position to achieve a number of value creating milestones during 2016. These include the following: The coming readout of the top-line data from our Phase 2 study with EscharEx in the coming two weeks; continued adoption of NexoBrid in Europe; obtaining favorable reimbursement decisions for NexoBrid in Europe; ongoing enrollment of our U.S. Phase 3 study for NexoBrid; expansion of NexoBrid as an important tool in managing MCIs; and further commercialization of NexoBrid in international markets.

We continue to execute our strategy and are encouraged by the enthusiastic feedback and momentum from physicians as well as from opportunities ahead in aiding governments to prepare for MCIs and the great potential of our pipeline products.

And now operator, please open the call for questions.

Question-and-Answer Session


Thank you. [Operator instruction] We will now take our first question from Matt Keeler from Credit Suisse. Please go ahead.

Matt Keeler

I guess just to start on the Phase 2 chronic wound data; can you give us any color around what metrics you will be able to share in the press release in February?

Gal Cohen

Well, the top-line data will include mainly the primary endpoints and several secondary endpoints, as well as some safety data. So obviously the primary endpoint, which is complete eschar removal; the number of applications this will require in order to reach complete eschar removal; the incidence of wounds that reached a vertical 100% or complete granulation, granulation is a kind of a tissue that you have on a wound bed of a chronic wound in order to go to the next stage of wound healing; will have the incidence of complete wound closure; will have time to wound closure. Again these are secondary endpoints, unlike many of the studies that you know because EscharEx is not a wound closure product, it’s debriding product. So, it’s not a primary endpoint, it is a safety measurement for us to show that EscharEx doesn’t have the repetitive [ph] effect on wound closer; and will also have obviously the safety measurements, so will have AEs, SAEs to the extent reported.

These are the main metrics that we will be able to share following the top-line data. After we have the top-line data, we will continue the follow-up of the patients where the investigators are blinded. And this is mainly for safety. And I assume that towards the -- or during the second quarter of next year, most probably we will be able to report all the data which would be mainly quality of life, reoccurrence of wound [indiscernible] that have a more long term nature.

Matt Keeler

Got you. Sorry go ahead.

Gal Cohen

I’d say the final results will be most probably in the second quarter of this year. I was told that I said next year, so I mean this year. We are already in 2016.

Matt Keeler

And then assuming the data looks good diabetic foot ulcers and venous leg ulcers, what’s -- can you talk us through sort of the next steps to getting into a U.S. approval and what are the implications of having EscharEx under the same IND as NexoBrid?

Gal Cohen

Thank you for the question. First of all, what we did in this study mainly is to look at three different indications, diabetic foot ulcers, venous ulcers, and post-surgical complications and want to see the effects of EscharEx in each indication in order to be in a position to best design the next clinical studies, setting goals for the endpoints. We are looking at many, many endpoints in this study, mainly secondary endpoints, in order to see which endpoint makes more sense to design the most effective study going forward.

Once we have these results, we will do one of two things. First of all, all the logic behind EscharEx is to take the proprietary technology and to optimize it for the treatment of chronic wounds in the U.S. We looked in the clinical and in the market studies where are these patients being treated, who is treating them, how is the compensation package or program system works in the U.S. for these patients, where are they treated and so on. So everything around EscharEx is to address these things. So, we will continue our efforts to make EscharEx even more user friendly than it is now to make it as easy as possible for healthcare provider, caregivers to administer EscharEx in the office and even maybe in the household.

Once we have the results, we will approach the FDA and we will discuss with the FDA the plans going forward to see how FDA and us think that we can have the clinical development program that will bring us to the market as soon as we can.

As for the FDA feedback that we do not need to submit a new IND and that we can use the same IND as NexoBrid, because it’s going to be reviewed by the same team, we believe this is another signal to setting our belief that EscharEx has a derisk expansion opportunity. Because practically what it means in our mind is that we can leverage the CMC what is called manufacturing control data that we use for NexoBrid, we can use the pre-clinical data that was used for NexoBrid. We have to remember that on a burn patient, you put about 20 grams of NexoBrid; on a chronic wound patient, you’re going to put much less active ingredient then on the burn patient. And because most of the complex, extensive and long pre-clinical studies are done by systemic exposure, our provision would be that these studies could be used in order to support EscharEx as well.

So in our mind, the main theme with EscharEx is to do the clinical development. Since we already have a Phase 2 study with 24 patients that demonstrated EscharEx can remove eschar from diabetic foot ulcers; venous ulcers and so in applications [ph] and now with the second Phase 2 study hoping that it will have good results, I believe that the clinical data will also enable us to provide the CMC pre-clinical and clinical data to convince the FDA to allow us to move forward in the U.S. and get this product as soon as we can to an advanced clinical program that will bring us to the market.

Matt Keeler

When you say -- sorry, it’s my last question, as fast as you can, what’s sort of the best scenario I guess?

Gal Cohen

I think that there are two parameters here, or I would say even three. One, one of the purposes of a Phase 2 study is to be able to power a Phase 3 study. Depending on the effects that we’ll see in the Phase 2 study, we know how many patients we need in a Phase 3 study. And this will obviously determine the length of the study. Do we need to record 400 patients or 200 patients? So, this is one parameter. The second parameter we need to discuss with FDA, can we go with one Phase 3 study, because of all the data that we already have or must we do two Phase 3 studies, which is what is usually needed for a drug to get approval to adequately randomize control studies. And the thirdly thing is whether the data that we already have would convince FDA to allow us to go to a Phase 3 study. We know what we believe, but at the end of the day the FDA decision and we’ll have to hear their thoughts and their guidance in order to know how to best move forward with our development program.


We will now take our next question from Jason Wittes from Brean Capital. Please go ahead. Your line is open.

Jason Wittes

I wanted to ask about how you’re formulating EscharEx? And then specifically, you did a very interesting study where you polled 200 users in the U.S. And I think you mentioned about 40% of them undergo non-sharp debridement. And I’m assuming that’s at least your initial target. In our discussions with docs, there’s also quite a few patients that are basically sent home with either Santyl or some other debridement cream and just told to use it over a few week course. Can I assume that your initial formulation will be something that’s going to have to be used in a doctor’s office and eventually you’ll reformulate it for home use or what have you thought about in terms of how you might formulate EscharEx for the U.S. market?

Gal Cohen

Thank you Jason for the question. This is exactly the aim behind EscharEx. If NexoBrid is a very effective product that is being used in a hospital setting, chronic wound patients in the U.S. to the best of power knowledge and best on our research are treated in offices, in nursing homes, at home by caregivers, by nurses coming to home. So, all the efforts -- or not all the efforts but much of the effort behind EscharEx is to create a presentation formulation that it will enable to use the product in a physician’s office, at home by a nurse, at home by a caregiver. And so what we’re doing, we’re investing a lot of efforts in the ease of use of the product. And as I mentioned, we will continue following the results of this study to go and further make EscharEx even more friendly or more user friendly as much as we can, because we want it to be as easy as possible for caregivers to be able to use the product, which would I believe would give the product the widest potential.

So this is exactly where our efforts are and this is exactly what we’re doing. It also fits with the U.S. current reimbursement program and it fits with a patient flow and it fits with the treatment paradigms. So unlike in NexoBrid where we are changing the way burn care is being administered, in chronic wound market which is a huge market, we will make all the efforts to fit into the existing market so it will be seamless and as easy as possible for all the markets to adopt the technology.

Jason Wittes

That’s very helpful, I mean it is from at least the initial trial indications, a much more potent product and say Santyl which is out there, should we assume that there’s going to be some additional training and pain management that is going to be required for this product or is that something that you’re looking to sort of avoid, in practice?

Gal Cohen

So first of all, we always need to have some kind of guidance and factors [ph] of training for any drug but EscharEx should be quite straight product to administer, if we need to target product profile. And again unlike burns, burns are a very large wound and chronic wounds usually are not. And many chronic wounds don’t even feel pain or chronic patients having chronic wounds don’t even feel pain, and this is one of the main reasons for having a chronic wound with particularly diabetic foot ulcers and so on. And because we are using a much [Technical Difficulty] are, most probably, there is no need to do a systemic pain management like in burn patients. So even if to some patients, there would be some pain to some degree, it can always just look like [indiscernible] gel for like 20 minutes and then use the product without any discomfort. So again, as I said, we are trying to fit the current treatment paradigms in a way that it will fit a patient at home, by caregiver, by a nurse, in the office to administer the product without any discomfort or safety issues but this is exactly why we’re doing the clinical studies. This is still an investigational drug product and we have to document and do the studies to make sure that we don’t see any adverse events or anything like that.

Jason Wittes

And you now -- you have increasingly more experience or at least the clinics, some of the clinics in Europe have increasingly more experience with NexoBrid, I’m curious in terms of they are triaging patients? And if you compare sort of the more experienced centers with less experienced centers, are those more experienced centers now treating pretty much the entire range of burn victims or is there still sort of some sort of stratification going on there.

Gal Cohen

I think there is always stratification but stratification is becoming more wide if you say -- if you can say that. We have a center in Germany that treated 90 patients, 90; it means that practically every month they are treating several patients particularly on a weekly basis. We have centers in Italy. Italy’s amazing. I mean in Italy in four-five months, 14 centers which is like 80% of Italy are treating patients almost on a I would say weekly basis but particularly. And we also see differences from centers to centers. Some centers use it on hands, some centers you need some big burns because NexoBrid has many medics. If you use it on hands, you can avoid escharotomy which is particularly an emergency procedure that leaves a very nasty scar and can hurt the delicate structures in the hand. If you use it on large areas, then you can save donor sites and in large burns, to some extent there are no available donor sites. You can reduce the amount of inflammation -- the inflammatory effect of a big eschar on a patient.

So we see different centers using that on different patients. And what we are trying to do is to take each center and do this peer review; the share of best practice between these care physicians. So the ones that are using it on hands will start it on face, and the ones that use it on face will start it on big burns; and the ones that use it only on second degree will see the merit and using the product on third degree burns. And I believe that this snowball is rolling, this is why we are so enthusiastic about these 90 abstracts that have been presented throughout the year, so that this target information, this knowledge, these experiences will drive additional physicians, additional centers to take a stand and move forward with technology and debride their patients with NexoBrid.

Jason Wittes

And then last question in terms of reimbursement, can you give us a sense of which countries you may think -- you anticipate may come on line in 2016 in terms of providing full reimbursement? And secondly and related to that in your guidance for 2016, should we still assume about 75% of units or sampling units?

Gal Cohen

Well for the first question, we particularly submitted the files in all the countries in Europe that require a national level reimbursement process. And these countries are the Czech Republic, the Slovak Republic, Belgium, Italy, Spain and France. In UK, we have to go through a formulary process in each hospital and we are certainly underway to do that in most of the burn centers in the UK as well. We are in different stages of the processes in different countries because each country has a bit of a different process but in general the process usually has two stages, one is that you have a scientific committee that has to give the recommendation and then if they give a positive recommendation, you have a financial committee that has to negotiate the price.

According to our indications, we hope to be in a position that in the second half of 2016, we will get decisions in most of these processes, hopefully positive decisions. We have -- I believe that we have a good data; we have -- we’ve certainly demonstrated clinical benefits of the patients; we certainly demonstrated clinical and/or value -- pharmacoeconomical measurements have shown this is cost effective, but at the same time we don’t have full control because these things are being managed by processes within the governments and not always we have -- we can predict what would be the final results because of many-many parameters. But we’re hopeful that during the second half of this year, we will get decisions for most of these markets.

Now, as for the free of -- or the sampling program we believe that this year hopefully about 40% to 50% of the products will be provided in this manner because as we said before if these reimbursement decisions will only get into effect -- not all of them but let’s say some of them get into effect earlier, some will get into effect in the second half of next year and until this point in time, we want to make sure that physicians are treating patients, getting more experience, rolling this snowball forward. Also there are some technical things. For example, in some countries you can get a decision and then it takes like two months until it’s published or things like that. So, this is why we believe that in ‘16, we’ll most probably sample about 40%, 50% of the year.


We will now take our next question from Raj Denhoy from Jefferies. Please go ahead. Your line is open.

Raj Denhoy

I wonder if I could a follow-up a little bit on the last question in terms of the guidance for 2016. I know you haven’t traditionally provided top-line guidance, but is there anything you could provide for us in ‘16?

Gal Cohen

As you said and thank you for the question Raj, we did not provide guidance on revenues because we believe that in this kind of a period where there are so many parameters, professionally we believe that this would not be the right approach. As I said before, if we sample about 70% in 2016 -- ‘15,and we’re going to sample about 40%, 50% in 2016, I think Sharon mentioned how many TBSA units we’ve provided in 2015. And this might give you some indication to make your own assumptions about the market. What we can give you guidance is where we do have control, and this is about cash use. So, initially in the year, we said that we’re going to use $20 million to $22 million of cash. Once we got the BARDA agreement signed, we updated our projections to $20 million and end at the end of the year we did a little bit above $19 million which is I -- because I always like to spend less than I wanted to. And we are going to do the same in ‘16. We’re going to have a guidance of about $20 million to $22 million, mainly because our clinical programs are advancing. So, that will require a little bit more capital. And we believe that we will be within this guidance during 2016 which should give enough cash to through ‘16 and mostly probably ‘17 and going forward.

Raj Denhoy

Beyond NexoBrid, you did mention that you did expect to receive perhaps some more orders under the BARDA contract, I mean ‘16 as well as some of the funding from that. Is there anything you can provide in terms of what that could contribute in ‘16?

Gal Cohen

I think that as I mentioned, the BARDA contract has two components, one is reimbursement of R&D costs. And here we believe that our cost in U.S. Phase 3 study would be reimbursed by BARDA. So, next, we should be -- this should be a big contribution to our -- or to the reduction in our R&D costs. Again our R&D costs might not be reduced so much because we are now moving into -- we go to the pediatric study, with the -- hopefully with the EscharEx study and also with our 003 program that might be in a position to go through a clinical study in late 2016.

And for procurement, in order to procure the product, first of all there is commitment; there is a binding commitment in the contract for BARDA to buy product for $50 million, within the five-year frame of the contract. In order for BARDA to do that, BARDA will need to get either what we call a Emergency Use Authorization which is something that BARDA can get if they want to use a product that was not yet approved in the U.S. or once the product is approved and they have the green light to procure more. I think that according to BARDA’s timeline, most probably this -- Emergency Use Authorization would make more sense or be more credible for them in 2017. Because they said and they communicated it’s going to take them between year and a half -- or about year and half to get this thing done with the FDA. So, this is why I believe that this is the case.

Raj Denhoy

And then just last question from me. You talked about some of the other geographies you are opening up, Latin America, Russia, going to distributors in some of these other markets. Should we expect a reimbursement timeline in those markets to be similar to what you are experiencing in Europe, or is there perhaps a faster way to get the material covered there?

Gal Cohen

I think again, reimbursement is really something that has to be done on a local basis. It differs from country to country. Sometimes in some countries, it even differs from region to region within the country and sometime even within hospital to hospital. So, I believe that it really depends on the country. I think that in Mexico for example, most of the drug use is being covered by the government. In other markets, it might be different. What we have asked our distributors is to build a market access plan while they are submitting the files to build a market access plan in each one of these markets. And based on these plans, we will have a better visibility exactly where can we expect to get -- and what kind of reimbursement in different markets.

I think in generally your comment is absolutely vital because you know that the opportunity in general in the emerging markets is much greater than in the U.S. or Europe because the incidence of burns is much greater. Let’s take Asia for example. 400,000 hospitalized burn patients just in India, which is anything between 4 to 10 times more than in the U.S. but at the same time, market access is not as in the U.S. But based on the marketplaces that we see from our distributors, still even in these markets, even if 10%, 15% of the population has access to market to reimbursement, the numbers are huge. Take 10% of 400,000 patients that’s 40,000 patients that’s almost like all the patients being admitted to what we call ABA burn centers in the U.S. So this is why we believe that we should pursue this international effort. We don’t think that we should reach ourselves because this market needs e local expertise that we don’t have. We also don’t have the span to be all over, so we focus on the U.S. and Europe but we are very fortunate to be -- find partners in particularly now almost all Latin America, in Asia Pacific and in Russia. And we are discussing with company’s possibilities to expand this reach to I would say important markets in the Far East.

Raj Denhoy

And those arrangements that will be traditional sort of distributor arrangements where either they -- well perhaps if you could describe what those will look like; will they be buying the material firm you or will you be -- how is that going to work practically?

Gal Cohen

I think that they are going to buy the products from us. And taking into account that we are fully integrated company that does the development, does the manufacturing and has all the marketing and medical corporate support, we would see a significant portion of the revenue of the product within MediWound. And we -- their responsibility would be to submit the file, get it approved, get market reimbursement, and market the product, while we are manufacturing and supplying the product and supporting them on a regulatory, medical and marketing basis.


We will now take our next question from Akiva Felt from Oppenheimer. Please go ahead.

Akiva Felt

Sharon might hit at this. But the quarterly revenue growth Q4 over Q3, how much of that was patient growth versus your improvement in reimbursement or other factors?

Sharon Malka

Most of the increase or the majority of the increase was the increase in number of patients treated, not as a result of reimbursement.

Akiva Felt

And Gal, for the U.S. approval of NexoBrid on the acute phase results, is your expectation that this will be a formal accelerated approval pathway or just a standard approval filing?

Gal Cohen

Thank you for the question. Maybe one about previous question and then I’ll address your second question. I think that there are three metrics that we can expand on in order to increase the use and later on the revenues of NexoBrid. One is more centers; two is larger patients; and three is more patients. So, on all these metrics we can particularly expand use of NexoBrid.

As for the second question, we don’t yet have an official message from the FDA of what we call priority review or breakthrough technology or accelerated review. Our strategy is based on medical merit, I mean once we have the acute data of the Phase 3 study, which is particularly all the data except for maybe cosmesis and function and quality of life. If all the -- subject to, so if all the acute data is good and there are no safety concerns, logically there isn’t a -- the concern of having a long-term -- the serious [ph] effect is much lessened. Add to that the fact that we already have a long-term study in Europe in 89 patients showing that the long-term cosmesis and function of NexoBrid was at least as good if not better than the Standard-Of-Care.

So subject to having all this data as well as a safety data at this stage, which is particularly I would say 90% of the data, we hope to be in a position to convince the FDA to allow us to submit a file and to supplement the long-term data thereafter. Because just look at the data, you get the last patient in, you treat him, you get to wound closure, you wait for three months for what we call -- which is based on the guideline, a confirmation of wound closure and then you prepare a file and you submit the file. By the time you submit the file, particularly you are few months away from 12 months long-term data. So by the time that FDA validates the file and starts to review the file, we can be in a position that we can soon supplement the 12-month data. So, we believe that this makes sense if the data will be good at the acute stage. But yes, this is an FDA decision and we will stick whatever the FDA can guide us about that.


We will now take our next question from Bruce Nudell from SunTrust. Please go ahead. Your line is open.

Bruce Nudell

I guess, I just had a question about what the market research has revealed about the choreography and the reimbursement in the setting of the treatment of chronic wound. So, like 1% is done by scraping, how much is informatics? And could you say that -- what are the reimbursement situations for the provider those circumstances? And what does that mean for the opportunity and/or challenges for NexoBrid in a chronic wound setting, I guess speaking to the United States because I guess that’s where you’ve done your market research? Thanks so much.

Gal Cohen

So thanks Bruce for joining and for the question. From what we learned from the study, it seems as follows: First of all, as you know chronic wounds are mainly treated at outpatient setting in the hospital, offices, outside an outpatient setting in the hospital, clinics, in nursing homes, in longer rehabilitation centers and even in the patient’s home by nurses and caregivers. The patients are debrided. I would say more than half of the patients are debrided by what we called sharp debridement. And bulk -- I would say fifth of them are debrided by enzymes and a fifth of them are debrided by other non-surgical means like honey dressings, idole gels, you name it, like many, many, many, technologies.

So the first obvious market would be to go to the other non-surgical approaches which is about 40%, 50% of all the use of debridement in the U.S., again a huge, huge opportunity already by itself. The market study also shows that many of the patients that are going to sharp debridement are still going alongside with a non-surgical debridement option. Because again I think it’s -- in chronic wounds, it’s not like a burn patient that you have to excise all the burn and all the eschar, you are concerned about scars, you are infections that will kill the patients. So in chronic wounds, physicians are much more cautious about -- these patients in general are not healthy patients, they’re usually elderly patients, they don’t heal well. So, they’re very cautious about what you can remove with the sharp instrument. Because of that we believe there is a great potential for all the patients that are treated non-surgically or non-sharp debridement and in addition to that opportunity in the ones that do even go through sharp debridement.

Now in terms of reimbursement, so physicians are being compensated mainly for two things. One, either for the sharp debridement or for office visits. So, we believe that one thing that one can look at is there is an enzyme in the U.S., it is reimbursed; it has -- you just have a prescription, the physician is being reimbursed for the visit, the patient buys the prescription at home, he has a co-pay or doesn’t have a co-pay depending on his program and he uses the product, it’s been supplied [ph] by two times a week in the clinic or somebody at home can do that for him, either a nurse or a caregiver.

Here we are thinking of using the same system. And just once we get NexoBrid -- sorry if and when EscharEx is being approved in the U.S., hopefully it can fit into a similar pattern and life would be as usual. Maybe instead of using the product for six or eight weeks, it will possibly do it in a week, if the data supports this level of efficacy.

Bruce Nudell

Perfect. And then based on your market experience in Europe so far, I know earlier on you felt that the vast majority of hospitalized burn patients are likely ultimately to be treated with NexoBrid, so 70% to 80% of hospitalized burn patients. Now that you have had experience in kind of running to the operational complexities of the treatment burn patients inclusive of the -- perhaps pecuniary incentives on the part of some surgeons, when do you think that peak adoption might be in the setting of the hospitalized burns?

Gal Cohen

Okay. You are asking about NexoBrid?

Bruce Nudell

NexoBrid of course. Yes.

Gal Cohen

Okay. So, can you please repeat the last question? I wasn’t sure I fully understood the question.

Bruce Nudell

Just early on we saw that the vast majority of hospitalized burn patients would be ultimately treated with NexoBrid as any alternative to the dermatome. And now that you’ve kind of had the experience and see the all gross incentives that various clinicians might have, what do you think that peak penetrate may ultimately would be?

Gal Cohen

I think that eventually at the end of the day it’s going to be the standard of care because I don’t see any reason. As I said at the end of the day there are two kinds of patients, the one that you take to the operating room and the one that you don’t. So with the ones that you do take to the operating room, why take a patient to the operating room, excising on general anesthesia, lose a lot of blood, practically remove varieties that you want to preserve; if you can’t remove the eschar in four hours, then the patient’s dead. And for the ones that you do not excise, why put synergy on a patient for two weeks, if you can get their eschar off in four hours. Having said that I think that the best way to go there will not happen overnight, because we particularly have to deal with three circles, I say.

First of all is the physician. The physician has to feel comfortable with the treatment. He needs to know how to apply it, how to assess it, what to do after. And taking a physician from a comfort zone to a new thing and you have to give him the comfort that he knows what to do and to get good results. And this is something that starts with early adopters, expands to the other physicians, and eventually will go to I think most of the treating physicians. And different physicians, as I mentioned start differently; some start with second degree burns, some start with third degree burns, some start with hands, some starts with backs, some start with faces. But eventually when all these physicians will hear the appeal and will understand that most of the third degree burns once use NexoBrid you would see that they are not really third degree burns.

I believe that there is overestimation of blunt depth. In our symposium, I would say that the pillar of laser Doppler imaging in the world stood up on the stage and said look guys we are missing a color in laser Doppler. We see now that what we see as blue, patient that has to go to surgery after NexoBrid is not really blue. So for physicians that are now thinking I don’t need NexoBrid for third degree burns, I think that with time they would see that -- they are very few entirely third degree burns. And that even in third degree burns why would you go to the excision part, why lose blood, if you can just get this thing off and just graft the patients without all this blood loss. And again for everyone this is different. If one starts with hands, why not use it on legs and so on and so forth. It’s going to take time; this is a physician level.

The second level is the department level. They have to convince the nurses to pitch in. I mean a physician can tell the nurse do A, but it’s much better that the nurse understands why it’s good for her. And we have in our campaign for nurses showing the nurses that it’s better for the patients; they have less donor sites; they have less pain; they need to treat less wounds. The nurse is in power; the nurse is now doing things that before only physician could do. So, there are many -- what you call wholesome, what’s for me, for the nurse as well and also for the anesthesiologist. So, this is a department level.

And then it has hospital level. The hospital level doesn’t want to lose money; they want to gain money. So either you can visit a hospital, if this product makes money for it or you get national level reimbursement depending on the country. And this process is what is now taking time but eventually at the end of the day, as one said, it’s a better mousetrap. So why wouldn’t people use it on most of their patients. And the best question to ask a physician after he uses a product, not before because before it’s conceptual thing, after. We see more and more physicians saying -- we just had investigator meeting in Europe and one of the investigators said, if it was my time, this is what I’d do. What’s better statement than that to show you that really physicians believe that this is what should be done in order debride patients.

Bruce Nudell

And just very quickly what percent of hospitalized patients in your sense now that you’re in the hospitals are actually going into operating room to get debrided?

Gal Cohen

What is the percent of patients, in general you mean?

Bruce Nudell

Of hospital patients who are in hospitals or actually going to the operating room to get debrided?

Gal Cohen

If I understand correctly your question in the standard of care what we saw in our clinical studies is about 70% of the patients are going to be surgically excised.


As there are no further questions in the queue at this time, that will conclude today’s question-and-answer session. I would now like to turn the call back to our host Mr. Cohen for any additional or closing remarks.

Gal Cohen

Thank you. Thank you for your questions and for your continued interest in MediWound. We look forward to updating you again when we report our first quarter 2016 results in about three months. Have a great day and keep safe with all the snow out there. Bye-bye.


That will conclude today’s conference call. Thank you for your participation. Ladies and gentlemen, you may now disconnect.

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