Good day and thank you for standing by, and welcome to the Quarter One MediWound 2021 conference call. I would now like to turn the conference over to your speaker today, Mr. Jeremy Feffer. Please go ahead, sir.
Thank you, and good morning, everyone. Earlier today, MediWound issued a press release announcing financial results and provided a business update for the first quarter of 2021. You may access that release on the company's website under the Investors tab. With us today are Sharon Malka, Chief Executive Officer of MediWound, and Boaz Gur-Lavie, Chief Financial Officer. Following management's 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 results, 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 broadcast is expressly prohibited without the written consent of MediWound.
Now, I would like to turn the call over to Sharon Malka, Chief Executive Officer of MediWound. Sharon?
Thank you, Jeremy. Good morning to our U.S. listeners and good afternoon to our listeners in Israel. Welcome to MediWound's first quarter 2021 conference call to discuss our financial results and business updates and highlights. This quarter, we continued to generate product revenue growth compared with prior, driven by the procurement of NexoBrid by BARDA for emergency response preparedness and out-of-U.S. sales as we continue to execute on our global expansion strategy of expanding the use of NexoBrid in additional international markets. In addition, we have gained progress across each of our ongoing clinical programs, highlighted by the enrollment of the first patient in our phase II pharmacology study of EscharEx and the launch of our new program in non-melanoma skin cancer. We continue to advance our U.S. phase II adaptive design study of EscharEx for the treatment of venous leg ulcers.
Let me now provide you with more color on the progress we made and review of the first quarter highlights. Starting with NexoBrid, we continue to enroll new patients to the NEXT expanded access program at leading U.S. burn centers with 82 burn victims who were already treated with NexoBrid to date. The expanded access study runs through approval, and there is plenty of opportunity to continue to enroll patients across over 20 sites, which will continue to increase burn surgeons' experience with NexoBrid. The pediatric study is fully enrolled, and we expect to report top-line results from this study in the first quarter of 2021. On the commercial front, BARDA procurement for emergency stockpile continue to drive product revenue growth, We are expecting to recognize the remaining revenue related to BARDA procurement of NexoBrid in 2021.
We are satisfied with NexoBrid global expansion into new international markets, supporting our top line, signing additional distribution agreements in Europe and Asia, and receiving marketing approvals for NexoBrid in Taiwan and Chile. Turning to the BLA, in September 2020, the FDA accepted for review our BLA for NexoBrid for severe burns and assigned a PDUFA goal date of June 29, 2021. However, as is apparent from recent FDA actions across the industry, travel restrictions related to COVID-19 pandemic are impacting the FDA ability to complete manufacturing facility inspections and review processes have been affected.
Recently, the FDA has informed us that due to these travel restrictions, it may be unable to conduct the required inspections of our manufacturing facilities in Israel and Taiwan by the PDUFA date, and that it is unlikely that the additional CMC information provided in support of our BLA will be reviewed during the current review cycle. The PDUFA goal date remains June 29, 2021, and FDA review is ongoing as we continue to work closely with the agency. At this time, we expect that the timing of potential approval and the commercial launch of NexoBrid to be impacted. We are committed to bringing NexoBrid to the U.S. market as our North American commercial partner, Vericel, continue to make significant progress with respect to its commercial and medical affairs pre-launch activity.
Given its robust clinical data package, we believe that NexoBrid remains well-positioned to replace surgical excision as the standard of care for eschar removal in patients with severe burns, and we look forward, upon approval, to bringing NexoBrid to the U.S. market. Moving to our product candidate EscharEx, where our development program is well underway. We continue to actively recruit patients for our U.S. phase II adaptive design study for the treatment of venous leg ulcers. We are on track to reach the target of 80 patients required for the interim assessment, and reiterate our expectation for an interim assessment around mid-2021, and anticipate completion of patient enrollment by year-end 2021. As part of the EscharEx development program, we are conducting a phase II pharmacology study to explore the potential clinical benefits of EscharEx associated with chronic wound management.
The study is an open-label, single arm study assessing the pharmacological effect of EscharEx in up to 15 patients with both VLUs and DFUs. This study will provide us with a better understanding of what is happening in the wound bed during and after debridement with EscharEx, and more specifically, it will enable to assess the effect on reduction in biofilm burden, the reduction in inflammation, and initiation of healing process. We enrolled the first patient in this study last month and expect data from this study in the second half of 2021. We were proud to host an EscharEx Analyst Day in March, featuring four prominent key opinion leaders who discussed the current U.S. wound debridement practices and how EscharEx, upon approval, has the potential to change the current standard of practice and care of chronic wounds.
Our three key opinion leaders, Doctors Kirsner, Singer, and Snyder, spoke about the need for better therapeutics and improving upon the current standard of care. With a billion-dollar market opportunity in each the VLU and DFU markets, a clear opportunity in the hospital outpatient setting, and potential for meaningful improving on the current standard of care, we believe EscharEx can have a meaningful impact on chronic wound management, offering significant benefits for patients, healthcare professionals, and payers. Moving now to our product candidate, MW005 . We submitted a protocol to the FDA for a phase I/II clinical study for the treatment of basal cell carcinoma, and we are advancing the initiation, which is planned for the second quarter 2021.
This study is designed to evaluate safety and tolerability using different schedules of administration, as well as to provide a preliminary evaluation of its efficacy as measured by the percentage of target lesion with complete histological clearance. In tandem, an investigator-initiated phase II trial will be conducted at the Soroka Medical Center in Israel, designed to evaluate the safety and efficacy of MW005 in removing non-melanoma skin cancer and pre-cancerous lesions like actinic keratosis, basal cell carcinoma, and squamous cell carcinoma. We expect that data from both studies will be generated by the end of this year, 2021. We believe that MW005 has a reasonable path to market with a clear unmet medical need, and the clinical plan we have laid out carries relatively low development costs given its active substance, which is the same like NexoBrid and EscharEx, and the intended indication.
In closing, we anticipate 2021 to have multiple data readouts in EscharEx and MW005 clinical trials, and excited about the NexoBrid opportunity in the U.S. as we continue to work closely with the FDA. We remain focused on continuing to drive growth and further strengthen our company with a deep pipeline of biotherapeutic solutions for tissue repair and regeneration. Now, I would like to turn the call over to Boaz for a summary of our financials. Boaz?
Thank you, Sharon, and good morning, everyone, and good afternoon to our listeners in Israel. I'd like to start our financial review noting that we continue to generate strong product and license revenue growth from both the U.S. and ex-U.S. markets, as NexoBrid continues to support our balance sheet and clinical development program. Now I'd like to provide you with an update on our financial results for the first quarter of 2021. Revenues for the first quarter of 2021 were $5.8 million, compared with $4.4 million for the first quarter of 2020, an increase of 32%. Revenues from product and licenses were $2.9 million, an increase of 300% compared to the first quarter of 2020, primarily driven by BARDA's procurement for emergency stockpile and sales increase outside of the U.S.
Gross profit was $2.4 million, or 41% of net revenues, compared with a gross profit of $1.2 million, or 28% of net revenues for the first quarter of 2020. Research and development expenses were $2.2 million, compared with $1.7 million for the first quarter of 2020. The increase was primarily driven by EscharEx clinical development program. Selling, general, and administrative expenses were $2.1 million, compared with $1.7 million in the first quarter of 2020. This was as a result of directors and officers' insurance premiums increase. As a percentage of revenues, SG&A expenses were 36%, reflecting 300 basis points decrease versus the prior quarter of 2020. Operating loss was $1.9 million, reflecting a 13% decrease in operating loss compared to the $2.2 million in the first quarter of 2020.
The company posted a net loss of $2.9 million, or $0.10 per share, compared with a net loss of $2.5 million, or $0.09 per share, for the first quarter of 2020. Adjusted EBITDA was a loss of $1.3 million, compared with a loss of $1.8 million for the first quarter of 2020, reflecting a decrease in adjusted EBITDA loss of 28%. Moving now to the balance sheet. As of March 31st, 2021, MediWound had $17.9 million in cash and short-term investments, compared with $21.6 million as of December 31st, 2020, and no debt. MediWound remained on budget, utilizing $3.7 million in the first quarter of 2021 for its operational activities. The company reiterates its expectation for cash use in 2021 to be in the range of $5 million-$7 million. With that, I have concluded the financial overview and will now turn the call back over to Sharon. Sharon?
Thank you, Boaz. As you can see, we have several tremendous opportunities before us. We will continue our commercialization activities with our partner, Vericel, and we continue to work with FDA for the regulatory review process for NexoBrid. We are actively recruiting patients for the EscharEx phase II adaptive design study, and we are excited to initiate the new clinical study in non-melanoma skin cancer. With that, it is my pleasure to open the call for your questions. Operator?
Thank you. As a reminder, to ask a question, please press star and then the number one on your telephone keypad. Again, that's star and then the number one on your telephone keypad. To withdraw your question, please press the pound key. Please stand by while we compile the question-and-answer roster. Your first question comes from the line of Kevin from Oppenheimer.
Hi.
Is your line open?
Yes. Hi, good morning. This is Susan calling on behalf of Kevin DeGeeter, Oppenheimer. My first question is a clarification on a comment you said earlier. You mentioned that the FDA will not be able to inspect the manufacturing facilities for Taiwan and Chile. Can you comment on how that will affect the regulatory timeline for BLA approval?
Good morning, Susan, and thank you for the question. As we communicated during the call, the FDA accepted the review of the BLA and provided us with a PDUFA goal date of June 29. However, as we see in the industry from recent FDA action, travel restriction related to COVID-19 pandemic are impacting the FDA ability to complete manufacturing facility inspection on time, and review processes have been affected.
Okay.
As communicated, the FDA had informed us that due to this travel restriction, it may be unable to conduct the required inspection of our manufacturing facility in Israel and Taiwan, and that it's unlikely to review the CMC information provided by the PDUFA date or within the current review cycle. The PDUFA goal date remains June 29th. The FDA review is still ongoing as we continue to work closely with the agency. At this time, we expect the timing of the potential approval and commercial launch of NexoBrid to be impacted. Given the different potential scenarios, and we cannot speak for the FDA, although there are several of scenarios, we cannot predict how long the FDA may take to complete the review of the BLA.
We are committed to bring NexoBrid to the U.S. market while our partner, Vericel, continue to make significant progress with the preparation for launch. Given its robust clinical data package, we believe that NexoBrid remains well positioned to become standard of care when we look both the inspection and the additional information provided are just potential timing issues.
Got it. Thanks for the clarification. Just one more question from me. You're planning to initiate the BCC study in the next, I guess, couple months. Can you provide any color on the study protocol, potential enrollment rates, anything?
Yes. We submitted already the protocol as a communicate to the FDA for a phase I/II study. This study is for treatment of basal cell carcinoma, nodular and superficial basal cell carcinoma, and we plan to initiate this study in this quarter, the second quarter of 2021. The study objective is to evaluate safety and tolerability using different schedule of administration as well as to provide us with a preliminary evaluation of its efficacy, as measured by the percentage of target lesions with complete histological clearance. We will have two cohort of patients while we assess the first cohort and adjust accordingly to the second cohort regarding the administration regimen.
We believe that MW005 has a reasonable path to market with a clear unmet need, as this clinical plan that we laid out carries relatively low development costs, given the active substance and the intended indication.
Got it. Thank you. That's all for me.
Thank you. Your next question comes from the line of Swayampakula Ramakanth. Your line is open. You can ask your question.
Thank you. This is RK from H.C. Wainwright. Good morning, Sharon and Boaz. It's quite unfortunate that FDA is unable to deal with the It's a huge backlog. It's not just for you folks. I understand it's an industry-wide situation, and even the GAO is looking into this. Having said that, how are the conversations going? I believe FDA is trying to figure out how to manage this, even accepting inspection reports from other regulatory agencies. You certainly have been inspected by BARDA at least a couple of times, if I remember it correctly, before the NexoBrid contract came through. Any commentary on that or anything that you can provide us?
Good morning, RK, and thank you for the question. Specifically, we are not going to discuss the specific details from the interaction of the ADN. We respect the FDA review process. However, with less than two months left before the PDUFA date, we feel that at this stage, the inspection is unlikely to occur before the PDUFA date, and this is the reason that we communicated. We can't speak for the FDA, although the FDA has some guidance and are assessing alternatives vehicle to conduct inspections. Although there are a number of scenarios, it is very difficult to predict the impact. We can look at two other recent examples across the industry.
As you mentioned, it's across the industry now, and now the FDA is handling these type of situations, and outcomes can range from a deferral, deferred action through major amendment with the extension of the review cycle and potentially of a CRL.
Yes.
Given the different potential scenarios, we cannot predict how long it will take the FDA to make or to complete the review. We do think that both the inspection and the CMC data provided, we believe, are just a potential timing issue, and hopefully, it will be resolved as soon. As you clearly stated, NexoBrid is approved in Europe and in other international market, with over 7,000 patients that were treated with the product. With BARDA procurement continue, and we continue to treat patients in the U.S. under the expanded access protocol NEXT. Given its robust clinical data, we believe that NexoBrid will be approved in the U.S., and our commercial partner, Vericel, continue to plan for launch.
Okay. Thanks for that. Just to clarify, I'm assuming that up until the PDUFA date, that you will not even know whether this is going to be a three-month CRL or a six-month delay, correct?
Correct.
Okay. Fair enough. Just staying within NexoBrid, on the pediatric study that you were talking about, your expectation for the data in third quarter, could you kind of highlight to us what sort of data we are expecting? Is this study enough for a label expansion, or would you need to do any additional work?
Yeah. Thank you. The pediatric study, as communicated, is fully enrolled. We completed the enrollment stage, and we expect to report the top-line data results, which will include the acute stage, safety, and the 12-month follow-up data in the third quarter of this year, 2021. We believe that this data is sufficient for a label extension. However, we believe that the submission of the pediatric indication expansion for NexoBrid will be subject, of course, to the review process that is ongoing, and we get more clarity regarding the BLA review outcome. In general, I can tell you that as an orphan drug, we are waived in the U.S. from paediatric investigation plan. This study was initiated based on our European Paediatric Investigation Plan. This study is conducted with two protocols from the FDA and EMA, and it will be used for both authorities for label extension.
One last question on NexoBrid, and I'll step back into the line. Regarding the global expansion that you have been conducting over the last six to eight months, what can you highlight out of that? Any insight into how we should think about revenues from other geographies?
We look at other geographies as ex-U.S. We have the U.S. geography currently with BARDA and later on upon approval with the commercial markets through Vericel. The ex-U.S. geography comprised of the European market and the international market. As we discussed during the call, we are satisfied with NexoBrid global expansion into new international markets, which support our top line primarily by advance payment or upfront payment as part of the distribution agreement, and later on by selling the product to distributor. We continue upon our strategy to sign additional distribution agreements in Europe and Asia. Just recently, in the last quarter, we already received two additional marketing approval for NexoBrid, one in Taiwan and one in Chile, and we are getting ready with the distributor for launch in these territories.
Thank you.
Thank you. Your next question comes from the line of Nathan Weinstein from Aegis. Sir, your line is open. You can ask your question.
Yes. Thank you. Good morning, Sharon and Boaz. Thanks for taking my question. I just had one question, and it's a follow-up on the international opportunity, and specifically, I was thinking about BARDA and whether there's stockpiling opportunities from other ex-U.S. governments.
Thank you for the question, Nathan. You are totally right. We are working with BARDA, and BARDA procurement for emergency stockpile continue to drive product revenue growth for MediWound. As mentioned, we expect to recognize the remaining revenue from BARDA of approximately $6.5 million in 2021 related to the initial procurement of BARDA. We are pleased with the increase in sales of product and expect it to continue in 2021. Looking at other territories, we are exploring the options of having such a model in other countries worldwide. I can tell you that the ability or the budget allocated for such a procurement is different in U.S. and in other territories. However, we are in contact with several governmental authorities worldwide to have such kind of mechanism, but with less significant amount of procurement compared to BARDA $16 million procurement.
Thanks. That's very helpful. Appreciate it.
Thank you. Your next question comes from the line of Joshua Jennings from Cowen. Your line is open. You can ask your question.
Hi, this is Brian here for Josh. Thank you for taking my questions. I also have a couple on the FDA approval process for NexoBrid. Just to start, can you clarify the role of the manufacturing facility in Taiwan? I thought the Israel facility was the primary site responsible for manufacturing, and I guess where I'm going with this is, do you need both facilities inspected before a final decision, or could you start with just the Israel facility approved?
Good morning, Brian. To your question, MediWound is the primary manufacturing facility. We are manufacturing here in our facility in Israel, both the drug substance and the drug product, the API and the drug product, as well as the gel vehicle. Because the Taiwanese manufacturer or supplier is manufacturing the bromelain special production, which is the key raw material or intermediate drug substance, it is subject also or required also inspection. What we've been informed is that the FDA may be unable to conduct the required inspections of our manufacturing facilities both in Israel and Taiwan.
Okay. That's helpful. Just on any potential for estimates of time revisions, do you expect to receive any kind of estimate for when these facility inspections could occur? Also, if it turns out that the FDA does not make the June 29th PDUFA date, do you expect there to be an estimated time for a final decision if they do not make that June 29th date?
Yeah. First of all, currently the review is ongoing, and the PDUFA date is June 29. FDA communicated it anticipate to meet this June 29 PDUFA date. We can't speak for the FDA, and things are evolving in the last few months. Due to the backlog and other things that they have. Although there are number of scenarios, it is very difficult to us to predict now what will be the impact and what will be the result. We will wait for further communication for the FDA, whether it's alternative vehicles to conduct inspection or whether it's scheduling inspections, et cetera. Currently, given the different potential scenarios, we cannot predict now how long it will take them to complete the review, including, of course, the inspection of the facilities.
Okay. Thank you. Maybe just one more on the BARDA procurement process. You're about halfway done with the delivery there. Do you have insight yet into BARDA's plans for potentially additional procurement after this first tranche is completed?
Yes. As we said, we are on track with the BARDA procurement for emergency stockpile, which continue to drive the revenue growth of MediWound, and we expect to recognize the remaining revenue during 2021, which is about $6.5 million, our portion, out of the overall $10.5 million for 2021. Currently, we have no definitive decision by BARDA regarding the option. The option for additional procurement, it's a sole discretion of BARDA, and I assume it will be utilized only when the current procurement will be expired for rotation of expired stock. Alternatively, if they will be required to increase the level of safety stock or emergency stock.
Okay. Are you directly in those discussions, or is Vericel handling those primarily?
We are the primary contact with BARDA. We are the sponsor. Until the product will be approved, we are the sponsors in front of BARDA, of course, and with the FDA. We are the primary contact with BARDA.
Okay. Thank you.
Thank you.
Thank you. Again, There is no question at this time. Presenters, please continue.
Thank you everyone for joining us today. We look continuing to executing on our strategy and bringing new therapies to market, and to updating you again on our next update call. Thank you very much and have a great day. Bye-bye.
Thank you. That concludes today's conference call.