Earnings Call Transcript - MDWD Q4 2022

Operator, Operator

Good day. And welcome to MediWound’s Fourth Quarter and Year End 2022 Earnings Call. Today’s conference is being recorded. At this time, I would like to turn the conference over to Monique Kosse of LifeSci Advisors. Monique, please go ahead.

Monique Kosse, LifeSci Advisors

Thank you, Operator, and welcome, everyone. Earlier today, MediWound issued a press release announcing financial results for the fourth quarter and year ended December 31, 2022. You may access that release on the company’s website under the Investors tab. With us today are Ofer Gonen, Chief Executive Officer of MediWound; and Boaz Gur-Lavie, Chief Financial Officer. Following our prepared remarks, we will open the call for Q&A. 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. Although the company believes the expectations reflected in such forward-looking statements are based upon reasonable assumptions, actual outcomes and results are subject to risks and uncertainties and could differ materially from those forecast due to the impact of many factors beyond the control of MediWound. The company assumes no obligation to update or supplement any forward-looking statements, whether as a result of new information, future events or otherwise. Participants are directed to cautionary notes set forth in today’s press release, as well as the Risk Factors set forth in MediWound’s annual report filed with the SEC for factors that could cause actual results to differ materially from those anticipated in the forward-looking statements. The conference call is the property of MediWound and any recording or rebroadcast is expressly prohibited without the written consent of MediWound. Now, I’d like to turn the call over to Ofer Gonen, Chief Executive Officer of MediWound. Ofer?

Ofer Gonen, CEO

Thank you, Monique, and good morning, everyone. It is my pleasure to welcome you to our conference call. I am excited to be here today to discuss the remarkable company achievements in the fourth quarter and throughout 2022. We have made important achievements in all of our programs, positioning ourselves to become a global biopharmaceutical company. During my eight months tenure as CEO, our progress has been significant, including the FDA approval of NexoBrid, which is now ready for a commercial launch in the United States with our partner Vericel. This innovative therapy has the potential to transform treatment of severe burns and become the standard-of-care in the United States as it is already in Europe. Additionally, we are moving EscharEx into a Phase 3 study in venous leg ulcers, demonstrating our commitment to advancing treatment for patients in need. Our success is due in part to our strong financial position, fueled by fundraising efforts that have brought in $70 million over the past year from top-quality institutional investors. Looking ahead, we are well positioned to take advantage of what we believe will be another excellent year. Our team is fully dedicated to realizing the mission of improving patient outcomes and bringing innovative therapies to the global healthcare market. Now let me discuss NexoBrid in more detail. We were proud to see NexoBrid approved by the FDA in December. This achievement is a testament to the hard work and dedication of our team, who left no stone unturned in developing the science, conducting the trials, analyzing the data, completing the BLA, and of course, putting manufacturing protocols in place. We are confident that NexoBrid has the potential to change the standard-of-care for burn patients in the United States and around the world, and we are proud to be at the forefront of this revolution. We also know that the data and the rigorous review that supported NexoBrid’s approval validates our technology platform and will support the regulatory pathway for our pipeline of products. We look forward to partnering with Vericel for the U.S. commercial launch of NexoBrid, which has a market potential of $300 million. Vericel is actively preparing for the launch in the second quarter with their sales teams, medical training, and educational sessions, and we have seen widespread interest and enthusiasm for NexoBrid among burn centers and other healthcare professionals. We are confident in Vericel’s ability to successfully launch NexoBrid and provide access to burn patients in the United States. Our ongoing NexoBrid Expanded Access program has allowed physicians at leading burn centers in the United States to gain important first-hand experience using NexoBrid. We have successfully treated 206 patients at 26 leading burn centers in the United States, and based on their feedback, we are confident that NexoBrid will be an important part of the standard-of-care practice. We are also pleased to collaborate with the U.S. Department of Defense for the development of NexoBrid as a nonsurgical solution for the treatment of burns in the field, and we look forward to continue promoting this project and will provide additional updates this year. Globally, NexoBrid gained marketing approvals in Japan, India, and Switzerland, and we anticipate commercial launches in these large markets later this year. We also anticipate an approval of the pediatric label expansion in Europe by mid-2023, which will further broaden the market and accelerate NexoBrid’s revenue growth worldwide. NexoBrid generated $26.5 million in revenue last year, and it will be cash flow positive this year. We expect revenue growth to exceed 50% in 2023 due to the product launches, the global demand, and the pediatric label extension in Europe. To meet the growing demand, we are expanding our manufacturing capabilities by scaling up our facility and adding an additional manufacturing lines. We are on track to complete this process. Also, in preparation for our expanding needs, we have made some important additions to our team that includes several talented executives who have experience in building world-class facilities, developing innovative wound care products, and executing on commercial operations. This includes Dr. Robert Snyder, our Chief Medical Officer; Tzvi Palash, our Chief Operating Officer; Barry Wolfenson, our Executive Vice President of Strategy and Corporate Development; and Alicia Torrenova, our Vice President of European Operations. These talents will be essential for expanding our global presence, supporting the increased demand for NexoBrid, and accelerating our blockbuster opportunity NexoBrid. Now let me turn to our progress with EscharEx, our next-generation enzymatic therapy for chronic and hard-to-heal wound. MediWound is focused on realizing this billion dollar market opportunity. Our Phase 2 results clearly demonstrated that EscharEx outperformed the nonsurgical standard-of-care in debridement of venous leg ulcers. With only eight applications over a 14-day period, the study met the primary endpoint with a high degree of statistical significance. The median time to achieve complete debridement was nine days in patients treated with EscharEx, compared to 59 days in the nonsurgical standard-of-care arm. On average, 3.6 treatment applications were needed to achieve complete debridement with EscharEx, compared to 12.8 applications of the nonsurgical standard-of-care. Results were highly statistically significant. Additionally, our Phase 2 pharmacology study showed robust results with an average of 8.9 applications to achieve the debridement. The study also demonstrated a reduction in biofilms and bioburden. We submitted the protocol design for the Phase 3 study with the FDA for review. The final trial design will be announced while discussions with the FDA are completed. We anticipate initiating the study in the second half of 2023. We also plan to submit a request to EMA for scientific advice on our Phase 3 protocol and on the clinical development plan of EscharEx. This global approach should not have an impact on our timeline. EscharEx has gained the attention of wound care specialists and many important strategic players in the market. Topical debriding agents with the competitive advantages of EscharEx would be a significant step forward for patients and caregivers. We are thrilled to have the funding to advance this program as quickly as possible and are confident that EscharEx has incredible potential to unlock significant shareholder value. Finally, turning to MW005, where I am excited to update you on our promising biological drug candidate for treating non-melanoma skin cancers. In Q4 2022, we released positive data from our Phase 1/2 study on low-risk basal cell carcinoma, demonstrating that MW005 is safe and well tolerated. Patients in this study achieved complete clinical and histological clearance of their target lesions. We are currently enrolling additional patients in this specific study to optimize dosing and application and expect results in Q3 2023. It is worth noting that MW005 shares the same active pharmaceutical ingredients as NexoBrid and EscharEx. This platform technology reduces many of the clinical development risks associated with MW005 as it has already been proven to be safe and effective. In conclusion, we are very well positioned for a strong 2023. There are several promising milestones in the future. NexoBrid is set to launch in the United States in the second quarter of this year. Additionally, we anticipate further key global market launches and are preparing for potential pediatric label expansion in Europe. Before this growth, we are scaling up our manufacturing facilities. Furthermore, we plan to initiate a Phase 3 study with EscharEx in venous leg ulcers in the second half of 2023, and anticipate additional data for MW005. With a strong balance sheet and nearly $66 million in cash, we are well positioned to support our development and strategic plans through 2026. I am very optimistic about MediWound’s future and believe that we have established a solid foundation for continued success. Before I turn the call over to Boaz for a review of our financials, I want to take a moment to address the news of his departure that was announced today. Boaz has been an invaluable asset to the company and has provided strong financial and commercial leadership during his tenure. I am grateful for his support during my transition to CEO and appreciate all that he has done for us. We have decided to welcome Hani Luxenburg as our new Chief Financial Officer. With a proven track record of 20 years delivering business growth and profitability, I am confident that Hani will help us continue to achieve our goals and drive our success forward. Boaz will remain with the company through July 31st to ensure a smooth and orderly transition. I want to thank him for his dedication and hard work over those years. With that said, I will now hand it over to Boaz for a brief overview of our financials.

Boaz Gur-Lavie, CFO

Good morning, everyone, and thank you, Ofer, for your kind words. I would also like to express my gratitude to all of you, our investors and analysts for your support and collaboration throughout my time as CFO at MediWound. As Ofer mentioned, I will be stepping down from my role at the end of July. It has been an honor and a pleasure to lead such a talented team of individuals and to spearhead the financial and commercial accomplishments that we have achieved together. I am proud to have played a key role in driving our growth and success, and I am confident that the company is in a strong financial position to continue executing clinical and commercial programs under the new leadership of Ofer as CEO. It was important for me to assist with Ofer's transition as CEO at MediWound and to contribute to the recent fundraising warrants, as well as to develop and execute on our European operations and our global expansion strategy. With these efforts, I am confident that MediWound is well positioned for continued success. Not to mention, it was fun working together. Once again, thank you for the great communication and collaboration over the years. It has been a wonderful journey, and it’s time for me to move on. Moving to the financial statement. Total revenues for the full year were $26.5 million, compared to $23.8 million for the year ended December 31, 2021, an increase of 12% year-over-year. License revenues were $8.2 million, driven by the $7.5 million of BLA approval milestones from Vericel. Revenues from products were $5.3 million, a decrease of 44% compared to the $9.6 million in 2021 due to BARDA’s procurement completion for the emergency stockpile. Total revenue for the fourth quarter of 2022 was $11.6 million, compared to $5.5 million in the parallel period, primarily driven by the BLA approval milestone of $7.5 million from Vericel. Revenues from products were $1.2 million, compared to $1.9 million in the fourth quarter of 2021 due to a $1 million decrease in emergency stockpile procurement by BARDA, partially offset by our European and international sales increase. Gross profit for the year was $13.2 million or 50% of net revenues, compared to a gross profit of $8.8 million or 37% of net revenues for the same period in 2021. Gross profit for the quarter was $8.2 million or 70% of net revenues, compared to a gross profit of $1.5 million or 28% of net revenues for the fourth quarter of 2021. Both for the full year and the quarter, gross margin improvements were driven by the $7.5 million milestone payment from Vericel upon the BLA approval. Total operating expenses for the full year of 2022 were $21.5 million versus $20 million in 2021. Total operating expenses for the fourth quarter were $6 million, compared to $5.1 million in the fourth quarter of 2021. Both for the full year and the fourth quarter of 2022, the increase in total expenses was primarily driven by one-time expenses related to the BLA approval and the management change. Operating loss for the full year was $8.3 million, compared to an operating loss of $11.2 million for the year ended December 31, 2021. Operating profit for the quarter was $2.1 million, compared to a loss of $3.5 million in the fourth quarter of 2021. The improvement was primarily driven by the $7.5 million milestone payment from Vericel upon the BLA approval. Net loss for the full year was $19.6 million or $3.93 per share, compared to a net loss of $13.6 million or $3.50 per share for the year ended December 31, 2021. Net loss for the quarter was $7.5 million or $1.18 per share, compared to a net loss of $4.2 million or $1.07 per share for the fourth quarter of 2021. The increase in loss for the full year and the quarter was due to non-cash financial expenses derived from the September and October fundraising warrant revaluation. Adjusted EBITDA for the full year was a loss of $4.4 million compared to a loss of $8.3 million for the year ended December 31, 2021. Adjusted EBITDA for the fourth quarter was a profit of $3.4 million compared to a loss of $2.9 million for the fourth quarter of 2021. Moving now to the balance sheet highlights. As of December 31, 2022, MediWound had $34.1 million in cash and short-term investments, compared with $11 million as of December 31, 2021. MediWound utilized $11.9 million to fund its operating activities and $3.1 million for continued liabilities and capital expenditures during 2022. In February 2023, the company received a $7.5 million milestone payment from its partner Vericel for U.S. FDA approval of NexoBrid in December 2022. On February 7, 2023, the company completed a public offering, which provided the company with an additional $27.5 million in gross proceeds. The company expects cash used for 2023 to be in the range of $16 million to $18 million. Based on the company’s current operating plan, we believe that existing cash and cash equivalents will support its operations through 2022. With that, I have concluded my financial overview, and I will now turn the call back over to Ofer.

Ofer Gonen, CEO

Thank you, Boaz. Our positive momentum continues, and we expect 2023 to be driven by several significant categories; strong growth and meaningful revenue for NexoBrid fueled by commercial launches in key markets such as the United States, India, and Japan; scaling up our manufacturing facility to ensure we can meet the growing global demand for our products; initiating a Phase 3 pivotal trial for EscharEx targeting the $1 billion market opportunity; and finally, we look forward to sharing more about our MW005 development plans for BCC. With that, we would now like to open the call for any questions you may have. Operator?

Operator, Operator

Our first question comes from Josh Jennings from TD Cowen. Josh, please go ahead.

Josh Jennings, Analyst

Hi, good morning. Thank you for taking my questions, and congratulations on all the progress in 2022. Boaz, best wishes in your next chapter. I would like to start by asking a couple of questions about EscharEx. Regarding the interaction with the FDA and the finalization of the clinical development program, particularly the clinical trial design, could you provide any additional information? Are there any challenges or details you can share that would help us understand the situation better? I know you've mentioned a timeline for finalizing the design, but I was wondering if you could elaborate further on that.

Ofer Gonen, CEO

Hi, Josh. Thank you for the question. So, as I said, we submitted the protocol design for the FDA for their review. The final trial design will be announced once the discussions are done. We don’t anticipate any issues. I think we have got a very good answer from the FDA, and I think that we are in the last stages of having their understanding of how the Phase 3 will look like. As I said, in parallel, we plan to submit a request to EMA for scientific advice and also to understand how the clinical development plan of EscharEx looks in Europe. This global approach should not have an impact on the timeline. So we still estimate that the trial will start in 2023. As for how the trial will look, I reiterate what I said in the previous call: we will try to make it as close as possible to the Phase 2 study in order for all the investors and strategic players to understand that we are going to meet the endpoint with no issues.

Josh Jennings, Analyst

Excellent. Thanks for reviewing that again. I appreciate it. And I wanted to ask just about partnership opportunities for EscharEx and MW005. How should investors be thinking about future partnership opportunities? It sounds like, I mean, you are moving forward with EscharEx independently. But should we think that down the line, there could still be partnership opportunities?

Ofer Gonen, CEO

That’s a great question. We’ve had internal discussions about it, and there’s significant interest from wound care specialists and key strategic players in the market. Currently, there’s a strong demand for a topical debriding agent like EscharEx, which can effectively debride wounds in just a week. We’re fortunate to have the necessary funding and flexibility to pursue a deal that will benefit MediWound. However, we aren’t considering licensing in North America, as that remains a major market for us. We are, however, in talks with several potential partners about collaborating on the Phase 3 study. Our financial position and track record are impressive; we’ve successfully completed all 14 of our clinical trials across various indications. This financial stability supports our discussions, and there’s considerable interest. Regarding MW005, various pharmaceutical companies are showing interest, and we’re looking forward to Q3 2023 to determine if MW005 shares the same properties as NexoBrid for burns and EscharEx for chronic wounds. If the outcomes are positive, I believe we will have promising collaboration opportunities.

Josh Jennings, Analyst

Excellent. I appreciate that. And then last question just on NexoBrid. It sounds like Vericel is expecting somewhere between $4 million to $8 million in NexoBrid revenues once they launch that product in the U.S., and it sounds like second quarter of 2023. Can you just remind us of kind of the royalty flow-through and how that could impact the revenue line for MediWound in 2023? Thanks for taking my questions.

Ofer Gonen, CEO

Okay. Josh, thank you for your comments. It was a real pleasure working with you and your team. So regarding the question for Vericel, the economics going forward, after the $7.5 million was received in February, are three kinds of streamlines for the revenue. One is the transfer pricing of the product and the cost ratio. The second stream of revenue is royalties, which is a high single-digit royalty upon sales of Vericel’s end customers. And the third would be the milestones upon reaching a certain threshold of revenues, and then they get a certain percentage. I think you can take around 20%, 25% of the economic conversion that would be in our P&L.

Josh Jennings, Analyst

Thanks. That’s helpful color. It’s my pleasure working with you as well.

Ofer Gonen, CEO

Any additional question, Josh? I think you just cut off.

Operator, Operator

Yes. We have a question now from Francois Brisebois from Oppenheimer. Francois, please go ahead.

Francois Brisebois, Analyst

Hi. Thanks for taking questions, and best of luck, Boaz, on the next venture here. On my side, I just wanted to touch on, in terms of EscharEx, you talked about keeping it to yourself in the U.S. just based on its massive opportunity. Can you just maybe help us understand how many physicians are out there and what kind of sales force would be necessary? What kind of numbers would be needed to target the physician?

Ofer Gonen, CEO

Thank you for the question, Frank. So, first of all, the reason for us to keep EscharEx’s North American rights is that the market we are targeting is $2 billion. I think we made that very clear in our previous presentation. Our first priority is to have it approved. Currently, we look at the SANTYL sales, which are between $300 million and $400 million annually. According to market research done by an external party, we saw that not only do we draw a significant share from the current enzymatic debriding agent, but we also draw a significant share from the other modalities, mainly the sharp debridement, which is used by 50% of the physicians. It’s a very big market. We will get ready for that commercially in the next few years. Since I see the interest from the big players, I don’t believe that in the end of the story, we will be the only one that approaches the final users. Having said that, we are preparing for that.

Francois Brisebois, Analyst

Thank you for that. Regarding EscharEx, you mentioned approaching the EMA. Is there a reason why the EMA and FDA might have different requirements for trial design, or is there a possibility that the U.S. may wait for the EMA's decision? Are these processes completely independent, and will they not significantly influence each other?

Ofer Gonen, CEO

It’s a very interesting question. Since I tackled that basically in the first couple of months that I became a CEO. MediWound has a history of developing a drug for severe burns. It was approved by EMA, and only a few years later, it was approved by the FDA. The requirements were quite different; even the endpoints were different. Having said that, when a pediatric label extension was discussed, both agencies, EMA and FDA, agreed that the company will do the same trial for both agencies. We are following EMA guidelines and we are looking closely at the FDA guidelines. We also spoke with the FDA a couple of times, so we know what is required from the FDA. We think we know how to adjust this to the EMA’s requirements as well, but these are not identical requirements for a Phase 3 study. Having said that, the bar for the FDA is considered higher. Therefore, I believe that we are in good shape, and this is the reason we estimated that approaching EMA regarding our Phase 3 study will not change the timeline.

Francois Brisebois, Analyst

Understood. Okay. Lastly, the pediatric label expansion is expected around the middle of this year in Europe. Can you help us understand the size of the pediatric market commercially and share any thoughts on label expansion into pediatrics in the U.S.? Thank you.

Ofer Gonen, CEO

Okay. Let’s start with the first question. Pediatric patients represent about 25% to 30% of the total burn population. Having said that, the market is a little bit smaller because the children are smaller than adult patients. Pediatric populations often face painful surgery and it can be very traumatic for the young patients and their families. So we believe that approval will allow pediatric patients and their families a much better experience. We think that this will have a big impact on the demand for NexoBrid in Europe once it is approved. As for the United States, we have also a plan to submit for pediatric label expansion. It’s the same clinical trial we did for both EMA and FDA. Therefore, we don’t foresee any issues with approval. Having said that, the timeline will be a little bit shifted because we started with Europe first.

Francois Brisebois, Analyst

That’s it for me. Thank you.

Ofer Gonen, CEO

Thank you.

Operator, Operator

We now have a question from Swayampakula Ramakanth from H.C. Wainwright. Swayampakula, please go ahead.

Swayampakula Ramakanth, Analyst

Thank you. This is RK from H.C. Wainwright. Boaz, it’s been a great pleasure working with you. Certainly, we will miss you and good luck in your next steps.

Boaz Gur-Lavie, CFO

Thank you, RK.

Swayampakula Ramakanth, Analyst

So, Ofer, a couple of questions from me. On the NexoBrid Expanded Access program, you stated that about 200 patients have been treated so far. Just trying to understand what your learnings are from that, and how are you and Vericel utilizing that information as you prepare for the commercial launch?

Ofer Gonen, CEO

Hi, RK. Good to hear from you. So, as I said, we have successfully treated 206 patients at 26 leading burn centers in the United States. At some point, we will need some data from those treatments. But what I can share is that they are very consistent with the clinical trial. When we said that the patients were treated successfully, we mean successfully. NexoBrid is very effective, 95%, 96% of the applications are a success in 4 hours. So we just see it as a kind of education for the U.S. burn centers and specialists. I think this expanded access trial will support Vericel’s launch because, something like, 20% of the centers in the United States are treating patients with that drug regularly. Having said that, don’t forget that the approval currently is only for adults, and in the Expanded Access program, we are also treating pediatric population. So I think it will support, if I go back to the question that Frank asked me earlier, it would also support the pediatric indication expansion because we will keep on recruiting patients in this study. Although, NexoBrid will be approved in the United States, it will be available in the United States commercially very soon.

Swayampakula Ramakanth, Analyst

Fantastic. And then regarding your obligation to BARDA, if there’s any, can you kind of tell us or highlight for 2023?

Ofer Gonen, CEO

Yes. We have, as you know, BARDA has the kind of replenishment program, $16.5 million that was done in the previous two years. We are currently negotiating 2023 and 2024. BARDA also supports our Sulfur Mustard Program. After NexoBrid was approved, we started pushing the $43 million grant that we got from them in order to have a debriding agent for Sulfur Mustard Gas injuries. Looking at 2023, I would expect additional stockpile commitments, along with a little bit more of fundraising for financing our R&D staff and especially the Sulfur Mustard Program.

Swayampakula Ramakanth, Analyst

My last question is about the manufacturing facility. You mentioned that it’s progressing well. Can you provide some insight into the timeline for its commissioning? Additionally, is this a necessary step for the successful launch of NexoBrid, or are these two events independent?

Ofer Gonen, CEO

Yes, it's an independent event. We are working to meet the timelines we communicated to the market for the Q2 U.S. launch. But you are correct...

Operator, Operator

I am sorry. I think we lost a line here. Let me check back with the presenters. Please hold on.

Monique Kosse, LifeSci Advisors

Hello, Operator.

Operator, Operator

Yes. We have the speakers back. Sorry for that glitch.

Ofer Gonen, CEO

Yeah. Sorry about that.

Operator, Operator

Okay. Everyone is live now. Go ahead, please.

Ofer Gonen, CEO

All right. So, as I said, our current sales are limited by our production capacity. Having said that, we are going to meet the launch requirement. Vericel is a very important partner for us. This year is going to be a special one, because on top of the demand that we have from the market, we also need to manufacture EscharEx for our Phase 3 trial. We have initiated the scale-up of the manufacturing facility immediately after we raised the capital in September 2022. The total cost is something like $10 million to $12 million, but we expect 30% to be covered by various grants. Since it’s a sterile manufacturing facility, the scaling up process will take approximately 24 months, but we are working very hard to execute and ensure that we are doing it on time and that all the gaps will be recovered.

Swayampakula Ramakanth, Analyst

Thank you, Ofer. Thanks for taking the questions.

Operator, Operator

We have a question now. The question comes from Michael Okunewitch from Maxim Group. Michael, please go ahead.

Michael Okunewitch, Analyst

Yes. Thank you for taking my questions, and congrats on the great progress over the last couple of months. Boaz, I’d like to wish you luck with the next steps in your career.

Boaz Gur-Lavie, CFO

Thank you.

Michael Okunewitch, Analyst

So you guys have done a lot to shore up your balance sheet. You have three years to four years of cash at this point. Could you talk a bit about how you plan to leverage that balance sheet? Is there anything in your portfolio that would benefit from increased funds to accelerate programs? Are you looking at any potential M&A targets, or is this best used to just keep your balance sheet strong and provide funding through that Phase 3 for EscharEx?

Ofer Gonen, CEO

Thank you. Thank you for your question. Maybe I will start, and Boaz will add if needed. If you ask me two months ago, I would have told you that we have enough cash to do the Phase 3 study and enough cash for the scale-up manufacturing facility, because these were our requirements, and we communicated that we have cash to go through 2025. Having said that, we got a reverse inquiry from a very strong investor for an additional investment, making sure that we are able to accelerate the EscharEx effort. The reason for accelerating it is that if we are aiming for a very significant market for many hundreds of millions of dollars in sales, let’s make sure that we get there quicker. Looking at the numbers, $66 million reduced from that $25 million for a Phase 3 trial ballpark and another $10 million for the scaling efforts. You will see that we have enough capital to do whatever is required. We feel comfortable these days with a cushion of a few tens of millions of dollars. We will not run for adventures, buying assets now because we think we have a very strong product, which is EscharEx, which will generate significant value for our shareholders. NexoBrid is profitable, and we will make sure that we increase revenues quite substantially. If we focus on those two efforts, we believe the value of MediWound will increase significantly. Of course, if something opportunistic arises, we can discuss it.

Boaz Gur-Lavie, CFO

And maybe just, Mike, from a numbers perspective on top of the $34 million that we had at the end of 2022, we already received the $7.5 million and then we have a recent fundraising, so you’re talking about $66 million, which should support us through 2026. Also, on top of that, we have the commercial sale of NexoBrid, definitely given the recent marketing approvals in India, in Japan, and in the U.S. now. We believe that there will be an increase of 50% in the product revenues, which of course would strengthen our balance sheet. To summarize, once we have the facility scale-up, we will be able to meet the growing demand. I think that will take us out of profitability in the future years.

Michael Okunewitch, Analyst

All right. Thank you for that. And then I’d like to follow up on the EscharEx development plans. Obviously, VLUs are the immediate opportunity we have discussed why that’s a particularly attractive market. But how are you looking at the potential use in diabetic foot ulcers (DFUs)? Is that something where you think about a parallel Phase 3 program?

Ofer Gonen, CEO

As I mentioned earlier in this Q&A session, our top priority is to get approval for EscharEx. We assess the current enzymatic agent and see our superiority compared to it, aiming for approval as soon as possible. Unfortunately, the FDA indicates that building wound or chronic wound is not an approved indication, but it does include VLUs, DFUs, pressure ulcers, and others. We chose venous leg ulcers because the unmet need is significantly larger there. We are also discussing with strategic partners to expand our efforts around additional wound types. Currently, we believe that we may not need to conduct another Phase 3 study, but we might need a bridging study instead. Our primary focus right now is to secure approval, and once we achieve that, we believe we can expand the indication to include other types of wounds.

Michael Okunewitch, Analyst

All right. Thank you very much. And then just one final one for me. I’d like to ask a little bit about the opportunities for NexoBrid in Japan and India. Obviously, Japan is a major market and doesn’t need much introduction. But in India, we might expect lower pricing. Is that offset by the massive population? Can you just give a bit more color on how those markets look for burn debridement?

Boaz Gur-Lavie, CFO

Thank you for the question. So the Japanese market is definitely one of the biggest healthcare markets in the world, and we see, probably, around $1.5 million that we see in the first year. We are very excited about the enthusiasm of Kaken, which is a global pharmaceutical company and our distributor in Japan for the launch. The launch is expected by midyear, and we expect it to grow in 2024 and 2025. Regarding India, our partnership is with BSV, also an Indian global pharmaceutical company. I agree that the size of the population is significant. India presents a more complex picture because a large portion of the population is not covered under any kind of public healthcare insurance. We are still running this market. It’s the biggest market by the number of severe burn patients by far, and I think we are still learning. I would expect it to be around $0.5 million in the first year, and then I think we will be able to provide more details about this market.

Ofer Gonen, CEO

I will just add one trivia: India is the only market in the world in which NexoBrid didn’t get the orphan indication. The number of burn patients there is extremely disproportionate to the size of the population. But as Boaz said, expect $0.5 million this year, and we are learning the market. We will be able to give some more guidance later this year. Again, we are limited by our capacity to manufacture. So this year, we do not plan to sell more to India than $0.5 million.

Michael Okunewitch, Analyst

All right. Thank you very much.

Ofer Gonen, CEO

Thank you.

Operator, Operator

Michael, we will take another question from you if you so desire.

Michael Okunewitch, Analyst

I was because I got bumped off the call before, so you might have queued me in the queue for me.

Operator, Operator

Okay. All right. At this time, we have no further questions then and I would like to turn the call back over to management for some closing remarks. Thank you.

Ofer Gonen, CEO

Okay. Thank you everyone for joining us today. We look forward to updating you again in our next call or speaking to you offline. Bye-bye.

Operator, Operator

Thank you everyone for joining us today. We look forward to updating you again. You may now disconnect.