Earnings Call Transcript - MDWD Q2 2025

Operator, Operator

Good day, and welcome to MediWound's Second Quarter 2025 Earnings Conference Call. This event is being recorded. I would now like to turn the conference over to Dan Ferry of LifeSci Advisors. Please go ahead.

Daniel Ferry, LifeSci Advisors

Thank you, operator, and welcome, everyone. Earlier today, pre-market open, MediWound issued a press release announcing financial results for the second quarter ended June 30, 2025. You may access this press release on the company's website under the Investors tab. I would ask you to review the full text of our forward-looking statements within this morning's press release. Before we begin, I would like to remind everyone that statements made during this call, including the Q&A session relating to MediWound's expected future performance, future business prospects or future events or plans are forward-looking statements as defined under the Private Securities Litigation Reform Act of 1995. These statements may involve risks and uncertainties that could cause actual results to differ materially from expectations and are described more fully in our filings with the SEC. In addition, all forward-looking statements represent our views only as of today, and MediWound assumes no obligation to update or supplement any forward-looking statements, whether a result of new information, future events or otherwise. This conference call is the property of MediWound, and any recording or rebroadcast is expressly prohibited without the written consent of MediWound. With us today are Ofer Gonen, Chief Executive Officer of MediWound; and Hani Luxenburg, Chief Financial Officer. Barry Wolfenson, EVP of Strategy and Corporate Development, is also participating in today's call. Following our prepared remarks, we will open the call for Q&A. Now I would like to turn the call over to Ofer Gonen, Chief Executive Officer of MediWound. Ofer?

Ofer Gonen, CEO

Thank you, Dan, and good morning, everyone. In the second quarter, we continued to execute across our clinical, commercial and operational objectives. The EscharEx VALUE Phase III trial is actively enrolling patients and with new collaboration established with Convatec and Essity, all the relevant global wound care leaders are now engaged in our clinical programs. At the same time, NexoBrid continues to gain traction in the U.S. market and the commissioning of our manufacturing scale-up remains on track for completion by year-end. As a result of these activities, we are in a strong position to achieve several key milestones over the next 12 months that are expected to advance our strategic and financial objectives. Now let's begin with an update on EscharEx, our late-stage enzymatic debridement therapy for chronic wounds. Enrollment in the VALUE Phase III study for venous leg ulcers is actively progressing. This global trial aims to enroll 216 patients across 40 sites in the United States and Europe. Once 65% of those patients have completed treatment in the VALUE trial, we will perform an interim sample size assessment. We expect this readout to take place by mid-2026. During this quarter, we further strengthened our network of research partners. We established new collaborations with Essity and Convatec to support both the ongoing VLU trial and the planned DFU trial. Specifically, Essity's JOBST medical compression therapy products are now included in the VALUE trial protocol and Convatec's AQUACEL dressings will support the DFU study. Both of these category-leading partnerships complement our current relationships with Solventum, Mölnlycke, Kerecis and MIMEDX and reinforce the broad validation of EscharEx within the wound care ecosystem. In addition, a new post-hoc analysis from our earlier Phase II study was published yesterday in advances in wound care. It's a leading peer-reviewed journal. The analysis confirms that wound bed preparation is a key predictor of healing in venous leg ulcers and that without it, chronic wounds rarely heal. Wounds that failed to achieve wound bed preparation had a 90% probability of not healing in the study, while those that achieved it were four times more likely to close. The p-value was 0.0004. These data validate EscharEx's potential to improve healing outcomes by accelerating wound bed preparation, which is the primary endpoint of our Phase III study. While wound bed preparation has been recognized for nearly two decades as a core principle in chronic wound healing, this is the first time that this concept has been confirmed with robust clinical evidence. Now let's turn our attention to NexoBrid, our innovative enzymatic therapy for severe burns. In the United States, adoption continues to expand. Our partner, Vericel, reported 52% year-over-year revenue growth for NexoBrid in the second quarter, driven by increases in both hospital unit orders and number of ordering centers. Operationally, the commissioning of our new manufacturing facility remains on track towards completion by year-end with regulatory authority review and approval determining the timing of enabling the commercial output. Capacity expansion is critical for us in order to support our global growth. We also continued planning for future U.S.-based manufacturing as part of our collaboration with BARDA. In parallel, we were awarded an additional $3.6 million in non-dilutive funding from the U.S. Department of Defense to support the development of a room temperature-stable formulation for NexoBrid, bringing the total program funding to $18.2 million. This supplemental funding will enable expansion of our CMC activities, enhancement of in-house manufacturing capabilities and initial preparations for the clinical trial. Now I'd like to turn the call over to Hani to review our financial performance in more detail. Hani?

Hani Luxenburg, CFO

Thank you, Ofer, and good morning, everyone. Let's turn to our financial results for the second quarter of 2025. Second quarter revenue grew 43% sequentially and also increased year-over-year. The growth reflects higher product sales and a more favorable revenue mix. Total revenue was $5.7 million, up from $5.1 million in the second quarter of 2024. Gross profit for the quarter was $1.3 million or 23.5% of revenue compared to $0.4 million or 8.8% in the prior year period. The margin increase reflects a more favorable revenue mix. Research and development expenses were $3.5 million compared to $1.9 million in the second quarter of 2024, driven by continuing investment in the EscharEx VALUE Phase III study. SG&A expenses totaled $3.6 million versus $3 million last year, primarily due to increased share-based compensation. Operating loss was $5.7 million compared to $4.5 million in Q2 2024. Net loss was $13.3 million or $1.23 per share compared to a net loss of $6.3 million or $0.68 per share in the same period last year. The increase was mainly driven by $6.6 million in noncash financial expenses in the second quarter of 2025, reflecting the revaluation of our warrants. Adjusted EBITDA loss was $4.5 million compared to $3.4 million in the second quarter of 2024. Looking at our performance for the first half of the year, total revenue was $9.7 million compared to $10 million in the first half of 2024. The slight decrease was primarily due to lower BARDA funded development revenue as NexoBrid R&D program nears completion. Gross profit was $2.1 million or 21.5% of revenue compared to $1.1 million or 10.5% in the prior year period. R&D expenses rose to $6.4 million from $3.4 million last year, driven by clinical investment in the EscharEx. SG&A expenses were $6.6 million compared to $5.9 million in the same period of 2024. Operating loss for the first half was $10.9 million compared to $8.2 million last year. Net loss for the period was $14 million or $1.30 per share versus $16 million or $1.73 per share in the prior year period. Adjusted EBITDA loss was $8.5 million compared to $6.2 million in the first half of 2024. Now turning to our balance sheet. As of June 30, 2025, we had $32.9 million in cash, cash equivalents and deposits compared to $43.6 million at year-end 2024. During the first half of the year, we received $0.7 million from the exercise of Series A warrants and used $11.9 million to fund our operations, including $2.3 million in CapEx, primarily related to our new manufacturing facility. An additional $1.8 million in warrant exercise proceeds was received after the quarter-end. As of today, the exercise of outstanding Series A warrants could provide us with up to $32 million in proceeds. These warrants have an exercise price of $13.47 per share and may be exercised through November 2026. We believe our current cash position, together with potential proceeds from these in-the-money warrants provide us with the financial flexibility to advance our key programs and support operational needs through upcoming milestones. That concludes my review of the financials. Ofer, back to you.

Ofer Gonen, CEO

Thank you, Hani. To close, the first half of 2025 reflects disciplined execution in line with our strategic priorities. We remain focused on three core objectives: advancing the EscharEx VALUE Phase III trial towards enrollment targets, completing the commissioning of our expanded manufacturing facility to meet anticipated demand and building global recognition of EscharEx through clinical collaborations and peer-reviewed publications. Progress across these areas is on track, positioning MediWound for a meaningful milestone in the months ahead. With that, I will now turn the call back to the operator to open the line for questions. Operator?

Operator, Operator

The first question comes from Josh Jennings with TD Cowen.

Joshua Thomas Jennings, Analyst

Ofer, Hani, and Barry, it was great to see the post-hoc analysis from EscharEx Phase II trial published. And I wanted to just check in and see, are there any other publications that we should have on our radar that are coming up in the back half of 2025 or into 2026. And then also just wanted an update on the head-to-head trial versus SANTYL and just making sure that, that's still on the docket for this year to kick off.

Ofer Gonen, CEO

It's great to have you with us, as always. In response to your first question about publications, there are a few that we are not discussing at this time, but we will be focusing on diabetic foot ulcer trials. We have data on this, and our aim is to generate significant interest among key opinion leaders before we initiate the trial. There are important conferences coming up, such as DFCon and SAWC, and I expect to see additional publications related to those events. Regarding the head-to-head trial, we plan to launch a randomized study in the second half of 2025 to compare EscharEx directly to collagenase. This trial is on schedule, and our intention is to enroll 45 VLU patients, dividing them between EscharEx placebo and either SANTYL or IRUXOL in Europe. Yes, that is still our plan.

Joshua Thomas Jennings, Analyst

Excellent. And BARDA seems to be stepping up. I was hoping you could just give us a review. I know you've done this in the past, but just of the U.S. facility and BARDA funded planning and design, maybe just help us, I guess, remember or just better understand the funding there? Is it fully funded? Will MediWound have control of that manufacturing facility once it's completed? Maybe just review the details there. And then I have another follow-up question on BARDA interactions, too.

Ofer Gonen, CEO

Okay. This is definitely an important topic for us. So governments around the world took note of NexoBrid's impact during the Israel-Hamas war. In particular, the U.S. government showed interest in a domestic backup site. Apparently, they are not interested in being dependent on manufacturing in Israel. So we started planning and site selection in the United States. The funding of this process is 100% done by BARDA, and we are now getting ready for the second part once we know the prices, the cost, location, we can discuss with the U.S. government, the funding of the facility as a whole. I hope I answered the question.

Joshua Thomas Jennings, Analyst

You did. And BARDA has also published an RFP, a request for a proposal for enzymatic debridement products for the treatment of deep and full thickness severe burn injuries. Maybe just review the elements of that RFP and any progress and how you expect that to play out for MediWound and the NexoBrid franchise.

Ofer Gonen, CEO

Yes. So around BARDA, again, they issued just recently an RFP that's covering three major elements: stockpiling of NexoBrid, room temperature-stable formulation for nonsurgical debridement agent and trauma and blast injury solutions. The program is expected to start in the fourth quarter of 2025, and it's a contract that should be for 10 years. As Vericel disclosed in the last earnings call, they've initiated an RFP process. Vericel, they hold the U.S. commercial rights of NexoBrid. So they're the leader in this effort in the United States. Of course, as MediWound, since we have a lot of interest in that, we are providing full support. Hopefully, in the next quarter's call, we will be able to elaborate further about the outcome.

Operator, Operator

Next question comes from the line of Maya Iskandarani with H.C. Wainwright.

Maya Isabel Iskandarani, Analyst

Congrats on the progress this quarter. My question is with respect to the addition of a new compression method for the Phase III VALUE trial. So I believe that brings the total up to five. Can you explain how you plan to distribute these? Would it be physicians' choice of compression method across the 216 patients?

Ofer Gonen, CEO

Maya, thank you for joining the call. Barry, can you step in and address that?

Barry J. Wolfenson, EVP of Strategy and Corporate Development

Sure, Maya, that's a great question. The FDA always looks for a follow-up period in wound healing studies after the wounds have fully closed to evaluate the durability of that closure. The compression medical therapy products from Essity will be utilized for the segment of patients who have achieved complete closure. Our aim is to standardize the treatment so that all patients receive the same level of care. Essity's JOBST line is one of the premier lines of medical compression therapy, and we are using two versions of it. One is a custom product tailored for patients with unique leg shapes, and the other is a standardized product. This will only apply to patients who have fully closed wounds during the trial and are in the follow-up period.

Maya Isabel Iskandarani, Analyst

All right. And can you confirm that time lines are similar, if not the same as before the addition of the JOBST product for compression to the protocol?

Barry J. Wolfenson, EVP of Strategy and Corporate Development

Yes, it doesn't change the time lines at all. The follow-up period is a three-month period. That's always been part of the study.

Operator, Operator

Next question comes from the line of Michael Okunewitch with Maxim Group.

Michael Okunewitch, Analyst

Congrats on all the great progress.

Ofer Gonen, CEO

Michael, thank you for joining us.

Michael Okunewitch, Analyst

So I guess just to start out, on the VALUE study, has the patient recruitment and enrollment process matched your expectations? I know you haven't given specific numbers, but I guess just is the trend going in a favorable way? Is it exceeding expectations? Could you give a bit more color on that?

Ofer Gonen, CEO

One of the main focuses of MediWound is executing this trial. We have successfully completed 14 out of 14 clinical trials in the past, and our primary objective is to succeed in this important trial. Enrollment is progressing well; in the United States, nearly all sites are active and recruiting patients. In Europe, site activation is slower due to regulatory timelines. The IND review in the United States typically takes 30 days, while in Europe, the process can take up to 106 days because of multi-country coordination. However, all these steps are complete, and the European sites are being activated. It's too early to determine if we will meet expectations, but so far, everything is going well. We believe the trial is generating significant interest in both the United States and Europe, and we are focusing on selecting the right patients to ensure the trial's success.

Michael Okunewitch, Analyst

Now also, you're now collaborating with basically all of the major wound care companies. So my question is, will having six different products across both of the pivotal studies, is this going to basically demonstrate to physicians that EscharEx can be used universally regardless of whatever preferred supportive products they have?

Ofer Gonen, CEO

Barry, do you want to address this question?

Barry J. Wolfenson, EVP of Strategy and Corporate Development

Sure. Mike, that's a great question. For the CTP or skin substitutes, we're using EPIFIX for the VLU study and Kerecis Coloplast for the DFU. This is why for advanced wound dressings, we're using Mölnlycke for the VLU and now Convatec for the DFU. Our aim is to show that EscharEx does not have to be used in conjunction with any specific CTP, wound dressing, or compression therapy, but it can be effectively paired with any product that is deemed standard of care.

Michael Okunewitch, Analyst

Yes. Great to hear. And then just one last one for me before I hop into the queue. What areas currently are particularly underserved for NexoBrid? Are there any particular regions where you expect the excess demand will fill as your new manufacturing comes online?

Ofer Gonen, CEO

It's as if you participated in our internal meetings because we are discussing it thoroughly. The demand is substantial across all regions. This may be because everyone knows we have limitations, so each territory wants to ensure they have enough NexoBrid, possibly inflating their demand. We believe we can meet our guidance for the upcoming years. If we encounter a positive surprise in any territory, that will benefit us. We recognize there is additional demand, but we are not investing in marketing. I believe that once the facility is completed and approved by the FDA and EMA next year, we will have a clearer understanding of the situation. Thank you.

Operator, Operator

Next question comes from the line of Chase Knickerbocker with Craig-Hallum.

Chase Richard Knickerbocker, Analyst

Maybe just to start on the DFU side of things. Could you give us an update on kind of the timelines as far as when and how you'll get that relevant feedback that you need from the FDA to finalize design? And then just can you give us an update on kind of how you're thinking about the timelines there?

Ofer Gonen, CEO

Chase, great to have you with us again today. As for the DFU, we guided that in the second half of the year, which means as we speak, we are approaching the FDA in order to get feedback on the protocol for the next study. These processes typically take around 90 days. I think we will be then ready to get ready for the trial. But according to our guidance, we'll start in the second half of next year, and we are on track with that as well.

Chase Richard Knickerbocker, Analyst

Got it. Can you update us on the 40 centers, specifically how many are currently active? I apologize if I missed that earlier. Additionally, are you encountering any competition for patients at some of the wound care centers due to those skin sub trials? I'm looking for any insights on competition or general thoughts regarding enrollment. Ofer?

Ofer Gonen, CEO

This is an important question for us. We have around 50% of our centers open and we plan to open about 40 centers. While we aren’t providing exact numbers, we are getting close to our goal. Half of these centers will be in the United States, with only one or two not yet open. All the others are operational and actively recruiting patients. In the U.S., we are on track with our expectations. Regarding Europe, it’s still early to provide a detailed update, but we anticipate that most sites will be open by the end of the third quarter, and I believe we will meet this timeline. In our Phase III trial, we are progressing as planned. As for competition, the presence of additional trials is largely irrelevant in Europe since most CTP trials are based in the U.S. When designing our trial, we carefully selected sites that would best meet our needs and ensured that they would be conducted in areas with minimal competition. While the landscape can change, we currently do not see significant competitive pressure from CTPs. I'm uncertain if CTP trials can effectively compete with a biological trial, as each patient in our trial has a cost around $100,000, which might be beyond what simpler CTP trials typically incur.

Chase Richard Knickerbocker, Analyst

Understood. Just one last thing. I wanted to get your thoughts on the proposed changes to CTP skin substitute reimbursement, which are different from before due to the price cap ahead of the final rule in November. How do you believe this will affect the industry and the future utilization of EscharEx?

Ofer Gonen, CEO

Yes. Sure. This is also something that we are into many details about it. Barry, do you want to step in?

Barry J. Wolfenson, EVP of Strategy and Corporate Development

Certainly, as for the question about how this will shape the industry, I believe it will help to improve the sector. There have been issues with skin substitutes over the years, and the upcoming changes will significantly address these concerns. One key change is that only products with demonstrated clinical evidence will qualify for Medicare reimbursement. Additionally, the updated local coverage determination document specifies that wounds must be properly prepared before they can be reimbursed, meaning they need to be fully debrided and ready for the application of a skin substitute. Our recent publication highlights the importance of wound bed preparation and the role of EscharEx in that process, marking a significant victory for us. EscharEx excels in this area and will serve as an excellent tool for those looking to apply cellular tissue products to patients. Another important point is the elimination of pricing loopholes, which will standardize costs and allow high-quality products to thrive, enabling physicians to expedite the use of these cellular tissue products. We believe this enhancement will allow EscharEx to make a meaningful impact due to its efficiency in completing debridement and preparing the wound bed.

Operator, Operator

Next question comes from the line of Scott Henry with AGP.

Scott Robert Henry, Analyst

A couple of questions. First, you did reiterate that the manufacturing expansion is on track, operational capacity by the end of the year 2025. Could you talk about when you would expect to file in the EU and in the U.S., I believe the EU is first.

Ofer Gonen, CEO

Demand for NexoBrid is increasing due to new launches and growing governmental interest, along with expanded indications we are pursuing. Capacity is one of the main challenges we are tackling because it is essential for supporting global growth. The commissioning process and all necessary validations are progressing well. We anticipate that by the end of the year, everything will be completed, allowing us to begin submissions to regulatory authorities. Stability testing for Europe takes three months, while it takes six months in the United States. We estimate that we will receive approval from the EMA in the first half of 2026, followed by FDA approval in the second half of 2026. The revenue guidance we are providing reflects these estimates.

Scott Robert Henry, Analyst

Okay. Great. Regarding NexoBrid, you have indicated that while there has been some growth from the first quarter to the second quarter, it has been somewhat limited over the past five quarters. Do you expect any opportunity for expansion in the second half of 2025, or are you constrained by your production capacity?

Ofer Gonen, CEO

We are projecting $24 million in revenue for 2025 and are confident we can achieve this. The revenue increase will not come from additional NexoBrid, as we currently have no inventory and sell everything produced immediately. The expected revenue growth in the second half of the year will come from development services, not NexoBrid. We can only anticipate growth from NexoBrid after receiving EMA approval for the new facility.

Scott Robert Henry, Analyst

Okay. Great. And I know you've talked about BARDA funding already in the call, and it seems like that's very much on track. But three months ago, six months ago, there was some concern about BARDA funding in general, given the political environment in the U.S. How is that environment currently? Are you back to kind of normal operations? Has it eased? Or is there any overhang left from that political environment?

Ofer Gonen, CEO

So this is a great question. In the previous quarter, we said that we had some delays in receiving revenue from both BARDA and DoD. And this quarter, you see the opposite. You see that debriding burns or treating burns people or burns soldiers became kind of a priority. BARDA submitted an RFP. BARDA decided to support building a manufacturing facility in the United States. The Department of Defense increased the award, the non-dilutive funding that they are granting us for development of room temperature-stable formulation to be used in the battlefield. So as far as we see, these projects are considered a priority around the Department of Defense and the Ministry of Health of the United States, and we are, of course, satisfied with that.

Scott Robert Henry, Analyst

Okay. Great. And perhaps a final question for Hani. Expenses in the quarter, I believe, roughly $7 million operating expenses. Would you expect that to increase in the second half? Or is that kind of a high watermark? It was a little higher than the first quarter. Just trying to get a sense of the trends.

Hani Luxenburg, CFO

Scott, very good question. So in respect to our operating expenses, I will expect it to increase a little bit in the second half. As also mentioned before, in the United States, most of the sites already recruiting patients. But in Europe, there was a slight delay because of the regulatory process. And those steps are now completed in Europe and European sites are being activated. This will result in higher R&D expenses in the second half of 2026. I hope I answered your question.

Operator, Operator

Next question comes from the line of Maya Iskandarani with H.C. Wainwright.

Maya Isabel Iskandarani, Analyst

My question is actually also related to FDA turnover and the possibility of delays. So for the new NexoBrid facility, are inspection timelines on track? And otherwise, do you expect any changes to that timeline?

Ofer Gonen, CEO

Maya, we are actively participating in various seminars to gain a clear understanding of the FDA's plans regarding inspections of facilities located outside the United States. As we see it, there are no anticipated inspections in the immediate future, with expectations set for one or two quarters from now, and there are no concerns regarding these. The FDA inspection is scheduled for the latter half or the end of the first half of 2026, and we do not foresee any issues arising from that. Moreover, our revenue guidance is primarily influenced by the developments with the EMA, and we are confident there will be no problems with our facility's approval, as the inspectors are from Israel. Therefore, we estimate that by early to mid-2026, the new facility will be capable of producing significant quantities for distribution to major markets such as Europe and other regions associated with the EMA.

Maya Isabel Iskandarani, Analyst

Okay. And a quick follow-up question. Are the BARDA RFP and new DoD funding both able to be used for the development of the room temperature-stable formulation?

Ofer Gonen, CEO

You are on point. Importantly, BARDA has also expressed an interest in the program of the room temperature-stable formulation that initially was funded by the DoD. In the recent RFP that BARDA just published, you can see that room temperature-stable formulation for nonsurgical debridement is specifically highlighted as one of the areas of focus. As you can imagine, NexoBrid that is stable at room temperature can be used not only for soldiers or not only for military uses, also a lot of civilian scenarios are relevant. So yes, both agencies are very interested in this program.

Operator, Operator

This concludes our question-and-answer session. I would now like to turn the conference back over to Ofer Gonen for closing remarks.

Ofer Gonen, CEO

Thank you, everyone, for joining us today. We look forward to updating you again on our next quarterly call.

Operator, Operator

Thank you. The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.