Good day, and welcome to the MediWound Q3 2022 Earnings Call. Today's conference call is being recorded. At this time, I would like to turn the conference over to Monique Kassi of LifeSci Advisors. Please go ahead, ma'am.
Thank you, operator, and welcome everyone. Earlier today, MediWound issued a press release announcing financial results for the Q3 ended September 30th, 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 that 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 forecasts 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 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 would like to turn the call over to Ofer Gonen, Chief Executive Officer of MediWound. Ofer?
Thank you, Monique, and good morning, everyone. Welcome to our Q3 2022 conference call to discuss our financial and operational highlights. This quarter, we continue to be on track with a series of positive announcements across all our programs. We are approaching several significant inflection points for the company. We believe that once NexoBrid is approved, it will generate meaningful revenues in 2023 and significant growth going forward. Following the launch of NexoBrid, we will focus on a billion-dollar market opportunity presented to us with EscharEx, where we plan to initiate a phase III study next year. We have all the essential elements aligned for success, a mature pipeline, favorable data, large addressable markets, an experienced operational team, tier one partners, and a strong balance sheet.
Before I discuss the progress we made this quarter, I would like to address the capital raise we completed in October, where we have added an additional $30 million to our balance sheet through a combined registered direct and PIPE offering. This significant addition of funds will support our activities through 2025. It was important for us to complete this raise now ahead of our expected positive news to better position MediWound for success. We saw participation of our current shareholders, and as an additional benefit, we were able to bring in new validating investors for the company. Also, we were pleased with the vote of confidence from both our management team and board members who participated in the offering, demonstrating commitment and firm support of our strategy.
Now, with the funding, we will be able to accelerate our clinical progress for EscharEx, scale up manufacturing to address the increasing demand for NexoBrid, and support our global operations. We are in a strong fundamental position for the future, both the near and long term. In addition to securing our financing, we have established a strategic advisory board comprised of highly esteemed industry leaders, Dr. John Lantis, Samuel Moed, and Eric Shem-Tov. They will contribute their experience and insights to our strategic and operational activities by sharing their medical expertise in all aspects of wound care, providing the knowledge of life science innovation, and supporting us to scale up our manufacturing facilities and optimize our manufacturing processes. As the CEO, I believe engaging with such talents is essential in advancing MediWound into becoming a world-class biopharmaceutical company.
Moving to our clinical development program, let me start with an update on EscharEx, where we have demonstrated the tremendous unmet medical need and our belief in the significant commercial opportunity. We are now more certain than ever of its potential to become a blockbuster. Our phase two results from both clinical studies were robust. EscharEx was proven to be safe, well-tolerated, effective, and superior to the non-surgical standard of care across all key parameters, including the incidence of complete debridement, the number of applications that are required, the time to achieve complete debridement, et cetera. We also saw reduction of biofilm and bacterial burden, which further demonstrated EscharEx's superiority over the other debridement modalities. These results were highlighted in two poster presentations at the Symposium on Advanced Wound Care in Las Vegas.
We were honored when one of the poster presentations was selected out of the 290 abstracts to be the one featured as an oral presentation. The data were very well-received. Our next step in the coming few weeks is to meet with the FDA to discuss the phase III study design. We will provide an update once we gain clarity of the regulatory path forward. In the meantime, we are on track and prepared to initiate our planned pivotal phase III study in the first half of 2023. We believe that our EscharEx clinical development program is de-risked, not only due to the robust data we've generated to date, but also due to the fact that EscharEx has the same API as NexoBrid, and we have seen NexoBrid used as a commercial product to successfully treat over 11,000 patients worldwide.
We continue to generate interest from strategic players. A topical debridement agent with the competitive quality demonstrated by EscharEx in the phase II studies is something most players in the wound care market are following very closely. We are evaluating all of our options, from collaborating with a strategic partner to developing EscharEx on our own. We are pleased to be very well-positioned with the flexibility to create significant shareholder value. We believe we have a winner here. Turning to NexoBrid. As we announced in our last call, the NexoBrid BLA resubmission was accepted for review by the FDA and given a PDUFA date of January 1st, 2023. The FDA's review of the BLA is progressing, and inspection of our manufacturing facilities in Taiwan and in Israel are underway. Our partner, Vericel, continues to actively plan for a potential NexoBrid launch in the first half of 2023.
Our expanded access program, NEXT, continues to enroll patients and help physicians gain important firsthand experience with NexoBrid. To date, 183 burn patients have been treated with NexoBrid at 24 of the leading burn centers in the United States. These sites have been very supportive of NexoBrid. The patient and physician experiences confirm our belief that NexoBrid will become an important part of the standard of care practice in the United States. Additionally, I'm pleased to report that our collaboration with the United States Department of Defense for the development of NexoBrid as a non-surgical solution for the treatment of burns in the field remains on track. In Europe, sales of NexoBrid steadily grow. We see that NexoBrid is embraced as the standard of care in more and more countries.
Last quarter, we submitted a pediatric label extension request to the European Medicines Agency, and we anticipate a decision in Q1 of 2023. Pediatric patients represent about 25% to 30% of the total burn population. They often face painful surgery, which can be very traumatic to the young patients and their families. An approval will allow pediatric patients to have safe, fast, and effective debridement options without having to undergo a painful surgery. The growing interest in burn mass casualty incidents preparedness in Europe is another opportunity for NexoBrid. This is fueled in part by the Ukrainian-Russian conflict and by mass casualty events that have occurred just recently. While we are unable to quantify the magnitude of this opportunity, we believe that the preparedness strategy that FDA endorsed in the United States will be embraced in Europe as well.
Lastly, we were pleased by the warm reception we received at the nineteenth European Burn Association Congress in Italy. NexoBrid was highlighted in 45 posters and presentations. Leading burn specialists and practitioners from around the world shared their positive experiences and patient outcomes using NexoBrid in a wide range of settings. Internationally, we anticipate additional approval in large meaningful markets such as Japan and India by the end of this year. To date, NexoBrid is approved in 41 countries, and we look forward to the expansion.
Turning to MW-zero zero five, we continue to move forward in the development of the topical treatment for the patients with basal cell carcinoma or BCC. We saw positive initial results from our U.S. phase I/II study. MW-005 was shown to be safe and well-tolerated, with the majority of patients who completed the study achieving clinical and histological clearance of the target lesions.
We anticipate announcing the study results by the end of this year. In conclusion, we are very well-positioned to continue to excel across the board. We anticipate the potential approval and commercial launch of NexoBrid in the United States. This will also enable us to generate meaningful revenues in the near term. We are eager to launch our phase three pivotal program in EscharEx, and we continue to develop a compelling pipeline of follow-on therapies such as MW-005. We have all the resources to do that. I'm very optimistic about MediWound's future and look forward to updating you on our progress. Let me now turn the call over to Boaz for a brief review of our financials. Boaz?
Thank you, Ofer, and good morning, everyone. We are pleased with the recent fundraising despite the turbulent capital markets, which has significantly strengthened our balance sheet. Along with the expected $7.5 million milestone payment from Vericel upon the BLA approval planned in January 2023 and NexoBrid commercial sales growth, we believe that we have sufficient funding to support our EscharEx clinical development program. Moving to our financial statement. Total revenues for the Q3 of 2022 were $5.8 million, compared to $6.4 million for the Q3 of 2021. Revenues from products in the Q3 of 2022 were $1.4 million, compared to $2.6 million. This was primarily the result of a $1 million decrease in emergency stockpile procurement by BARDA.
Gross profit for the Q3 of 2022 was $2.4 million or 42% of net revenues, compared to a gross profit of $2.5 million or 39% of net revenue. Research and development expenses for the Q3 of 2022 were $2.9 million, same as in the prior year period. SG&A expenses for the Q3 of 2022 were $3.1 million, compared to $2.4 million. The increase was primarily a result of approximately $0.2 million of share-based compensation costs and $0.3 million in one-time marketing expenses related to EscharEx market research activities in the European Burns Association Congress. Operating loss for the Q3 of 2022 was $3.5 million, compared to $2.9 million.
Our financial expenses, which are non-cash in nature, were $0.7 million, compared to $0.5 million in the Q3 of 2021. The increase was primarily due to $0.4 million, resulting from warrants expenses allocation related to our recent fundraising. This allocation is dictated by IFRS regulation, which is different than the U.S. GAAP. This has affected our loss per share by $0.02. The company posted a net loss for the Q3 of 2022 of $4.2 million or $0.13 per share, compared to a net loss of $3.3 million or $0.12 per share. Adjusted EBITDA for the Q3 of 2022 was a loss of $2.5 million, compared to a loss of $2.2 million. Moving now to year-to-date 2022 financial results.
Total revenues for the first nine months of 2022 were $14.9 million, compared to $18.3 million in the first nine months of 2021. Revenues from products in the first nine months of 2022 were $4.2 million, compared to $7.7 million. This was primarily the result of a decrease of $3.3 million in emergency stockpile procurement by BARDA. Operating loss for the first nine months of 2022 was $10.5 million, compared to an operating loss of $7.7 million. Net loss for the first nine months of 2022 was $12.1 million or $0.38 per share, compared to a net loss of $9.4 million or $0.34 per share.
Adjusted EBITDA for the first nine months of 2022 was a loss of $7.9 million, compared to a loss of $5.5 million. Moving to the balance sheet highlights. As of September 30, 2022, MediWound had $17.6 million in cash and short-term investments, compared with $11 million as of December 31, 2021. MediWound utilized $4.6 million in the Q3 of 2022 for its operational activities. The company reiterates its cash use for 2022 to be in the range of $13 million to $15 million.
In addition, $17.2 million in gross proceeds, $16.6 million in net proceeds were received in October from the $30.5 million equity offering, providing sufficient cash to fund the company's expected operation through 2025. With that, I have concluded the financial overview and will now turn the call back to Ofer. Ofer?
Thank you, Boaz. Our momentum continues to build. We believe that we are on a very positive trajectory through this year and into 2023. As I mentioned, we have significant catalysts ahead. We anticipate NexoBrid marketing approvals in India, Japan, and the United States, and expect meaningful revenues to follow. As our revenues continue to increase, we are scaling up our manufacturing facility to ensure we are able to meet the growing demand. We are ready to confirm our phase III design and move it to a pivotal development program next year with EscharEx. This billion-dollar market opportunity will definitely be our focus. Finally, we look forward to sharing more about our MW-005 development plan in basal cell carcinoma. With that, it is now my pleasure to open the call for your questions. Operator?
Thank you. We will now begin the Q&A session. To ask a question, you may press star then one on your telephone keypad. If you're using a speakerphone, you may need to pick up your handset before pressing the keys. To withdraw your question, please press star then two. At this time, we'll pause momentarily for the first question. Our first question today will come from Josh Jennings with TD Cowen. Please go ahead.
Hi. Good morning, Ofer and Boaz. Thanks for taking the questions. I wanted two questions, first on EscharEx. Sounds like you're making nice progress there and about to get in front of the FDA and propose the final design of the phase III program. Just wanted to see whether there's any push/pull in terms of the timing there and moving forward with the FDA locking in a trial design in front of locking in a strategic that may want to be involved in the program and have their own team contribute to that, to the design parameters.
Just on NexoBrid, maybe for Boaz, it'd be helpful to just remind us on just the revenue generation potential of FDA approval and then any milestone payments that we should have on our radar as Vericel gets ready to launch in the United States. Also just any timing in just terms of revenue contributions for NexoBrid launches in India and Japan would be helpful. Thanks for taking the questions.
Hi, Josh. Very good question. Thank you for asking. So as we said, our next step in the upcoming weeks is to meet with the FDA and discuss the study design. What you can assume that we will run for the VLU indication to begin with, but the discussion is basically around the sample size, the study design, protocol, et cetera. We will provide an update once we get clarity of the regulatory pathway forward. As you can imagine, strategic partners that are interested in being part of that are also very interested in the answers of what we get from regulatory agencies.
By the way, after that, we will go also for the DFU, but also we need to get some clarity from the agency about how they see the future development plan. As for NexoBrid, I think Boaz you should answer the question.
Yeah. Hi, Josh. Regarding NexoBrid, I think, you know, what you should expect into 2023 first is a BLA milestone payment of $7.5 million from Vericel. That hopefully right after the BLA approval. In addition to that, we mentioned that we're expecting marketing approval in Japan and India. We're starting to see first orders and kind of forecast for next year, and I believe that should be in the $1.5 million to $2 million range. That's probably kind of the key milestone that we should look. Aside from, you know, Vericel, as you know, they haven't yet issued any forecast, but, you know, expecting launching in the first half of 2022.
in addition to that, we have European sales, which we anticipate that will, like, if you, in the last few years, you have a consistent growth and additional marketing approvals we received, the smaller countries that will contribute to the product's revenue.
That's helpful. Thanks so much. That's absolute. That was great. Thank you.
Our next question will come from François Brisebois with Oppenheimer. Please go ahead.
Hi. Thanks for taking the question. Just in terms of the update that you'll give on the design with the end of phase II coming up here, is there any big questions or should this be kind of a no surprise, similar maybe design as a successful phase II? Just on that note, is there any debate about how many pivotals you're gonna need?
Excellent question. Regarding a debate, you know, we are trying to have as similar phase III study to the phase II study that we succeeded in a very robust manner. This is what we aim for. We are discussing it with the agency, and hopefully it will be very clear once we provide you with an update about the regulatory path going forward. Definitely, our aim is that the study design will be very close to the one that we already succeeded. What was the next question?
Just in terms of the number, potential number of pivotal trials, and then just on that note. Sorry, I'll let you take that. Yeah.
Yeah, yeah. I understand. As I said, the development costs of the additional territories other than United States are marginal, so we decided to go for a global approval. In Europe it is very clear-cut. In Europe, you need to do one pivotal study. The guidelines are very clear. We don't need anything other than a single phase three study. Based on the FDA guidelines and the fact that NexoBrid and EscharEx® contain the same API, and the same products are intended to use both for debridement, we believe that the single phase three with the existing available data will be the basis of the approval.
Okay, great. Then you mentioned venous leg ulcers. Any discussion about maybe the market, maybe if you can help remind us VLUs versus DFUs and you know why use the VLUs in the phase III design here?
Okay, this is also a very good question. We have the data that supports both VLU and DFU, the phase III study. We know that EscharEx® works for debridement the same for both indications. The markets are almost similar. You have 1.1 million eligible patients with VLU, for VLUs and 1.something million for DFUs. The markets are quite the same. The unmet medical need for VLU is much bigger because VLU wounds are very, very painful. You can't even get close to them. A sharp debridement is not a solution. DFU, the patients do not feel the wound at all, so you can debride it with a knife.
The unmet medical need for VLU is extremely bigger than the DFU. Add to that, if you look, if you go into ClinicalTrials.gov, you will see that there are something like 100 clinical trials now on DFU patients, not for debridement. All kind of devices and appliances that are supposed to ease their pain or to make it heal quicker. As for the VLU, you can see that there is also nothing out there. We believe that we will be able to recruit patients quicker and the unmet medical need is bigger. After having the VLU indication approved, moving to the DFU population will be easier.
Excellent. That's very helpful. Thank you very much.
Welcome.
Our next question will come from Swayampakula Ramakanth with H.C. Wainwright & Co. Please go ahead.
Thank you. This is RK from H.C. Wainwright. Good morning, Ofer and Boaz. Congratulations on getting this far on the NexoBrid approval situation. You know, getting the FDA to do your inspection. It's a good sign. In terms of the EAP program, you know, where you said there are 183 patients who have been treated so far, how do you see this, you know, in terms of launching the product, how is this experience helping both Vericel and yourselves in terms of how to manage detailing and, you know, what are you learning from that process itself?
Thank you for the question, RK, and it was nice seeing you last week. The next program is an extended access program. It's quite of a standard FDA program that enable clinical sites to treat patients with drugs that are currently in the FDA review. As we can see, it keeps on enrolling patients in a very good pace. We get a lot of feedback from patients and physicians that still that makes us believe that it is going to be the standard of care in the United States. We don't see anything that we didn't see in Europe. The reported results from the study, you know, it's not a clinical trial, but it is actually treating patients.
The results that we see are very consistent with what we see in the 11,000 patients that we already treated worldwide. I think that the most important aspect that we have now, assuming that we are going to be approved in the United States in January, is that we keep on collecting data for pediatric population, which is also a very significant market in the United States. We are going to accelerate our effort in the United States to make sure that NexoBrid is going to increase substantially. This is one of the reasons that we said that we expect that after the BLA approval, the revenues from NexoBrid will become meaningful for MediWound.
Very good. In terms of the approval in India and Japan, you know, India is a market which is kind of spread and probably not as clear as either U.S. or Europe is. How are you planning to manage that market in the sense, you know, do you have distributorships in place? I think you have one. How are you going to manage, you know, that market? Japan is a little bit different as well, which probably has a different strategy there. If you can highlight, you know, your preparations in these two markets, that would be helpful.
Yeah. As I think, you know, we mentioned in the past, you know, in those two markets we have partners. In Japan, it's Kaken Pharmaceutical, which is a global healthcare company. I must admit, that, you know, given the demand that we already received from them for next year, I think we're very, you know, pleased with what we see in the Japanese market and the acceptance of NexoBrid as we view it. As for India, I believe you're also familiar with the company. It's called Serum Institute of India. It's also an Indian pharmaceutical company. We're working worldwide. That operation also in the U.S. and Germany. Well-established pharmaceutical company. They are also expecting and excited about NexoBrid. I think there is still, you know, more to learn about the Indian market.
On the one hand, they're probably the biggest amount of severe burn patients, given the size of the population, given the culture, but not all of them are under medical care. I think it's too premature to give kind of numbers. You know, assuming that together with, you know, India and Japan, both of them next year will look into 1.5 million to 2 million. Once we get more data in working together with BSV and Kaken, hopefully we'll be able to provide more details going forward into 2024 and onwards.
Okay, thank you for that. On the EscharEx, certainly this is, this has larger potential, you know, compared to what NexoBrid could have. In terms of thinking about potential partnerships, as you said, you know, you have already started receiving at least requests for conversation on the product. So what's the type of collaborators which are coming to the table at this point? You know, how do you plan to get through that and also make sure that you can initiate your study, your pivotal study within the next six months?
This is also a very good question. As I told you that the strategic players are very interested. They just cannot ignore our topical debridement agent with such qualities that was demonstrated in our phase II studies. We have all kind of options, you know, that all of them are in the textbooks. Licensing, collaborations, territorial licensing from all kind of companies. At this stage, since we were very lucky to be able to finalize financing, we are very flexible because we have the capital to do everything by our own. I'm very proud of MediWound that succeeded to date in 13 out of 13 clinical trials. Definitely the operational team in MediWound is capable of succeeding in another very significant trial.
The potential partners are aware of that. There is a lot of competition around the MediWound, but currently we are flexible and we think we have a winner in hand, so we are going to be very picky if and what partner we are going to choose.
Great. Thank you very much, Ofer and Boaz. Talk to you folks soon.
Thank you.
At this time, there are no further questions in the queue. I would like to turn the call back over to management for any closing remarks.
Okay. Thank you everyone for joining us today. We look forward to updating you again on our next call. Goodbye.
The conference is now concluded. Thank you for attending.