MediWound Ltd. — FY2021 Form 20-F Summary
Reporting period: Year ended December 31, 2021. The filing is an annual Form 20-F rather than a quarterly filing; it does not provide a separate 2021 fourth-quarter financial presentation. Financial statements are prepared under IFRS as issued by the IASB and reported in U.S. dollars.
Business context
MediWound is an Israeli biopharmaceutical company developing, manufacturing and commercializing enzymatic therapies for burn care, chronic wounds and tissue repair. Its marketed product, NexoBrid, is approved in Europe and various international markets for eschar removal in adults with deep partial- and full-thickness burns. EscharEx is in U.S. Phase 2 development for chronic and hard-to-heal wounds, while MW005 is in an early-stage study for low-risk basal cell carcinoma.
Revenue remains highly dependent on NexoBrid, BARDA procurement and BARDA-funded development services. BARDA accounted for 76% of 2021 revenue, compared with 83% in 2020.
Key financial metrics
| U.S. dollars in thousands, except per-share data | 2021 | 2020 | Change |
|---|---|---|---|
| Product revenue | 9,613 | 7,445 | +29% |
| Development-services revenue | 12,372 | 13,935 | -11% |
| License-agreement revenue | 1,778 | 383 | +1,395 |
| Total revenue | 23,763 | 21,763 | +9% |
| Gross profit | 8,771 | 7,545 | +16% |
| Gross margin | 36.9% | 34.7% | Improved |
| Operating loss | (11,221) | (8,840) | Loss increased 27% |
| Net loss | (13,551) | (9,196) | Loss increased 47% |
| Basic and diluted loss per share | (0.50) | (0.34) | Worsened |
| Net cash used in operating activities | (8,916) | (6,700) | Use increased 33% |
| Cash and cash equivalents | 11,046 | 17,376 | -36% |
| Capital expenditures | 489 | 923 | -47% |
Calculated margins were approximately -47.2% operating margin and -57.0% net margin in 2021. The company had an accumulated deficit of $148.5 million and total shareholders’ equity of negative $4.6 million at year-end.
Material changes versus 2020
- Total revenue increased by $2.0 million, driven primarily by higher NexoBrid product procurement revenue and license revenue.
- BARDA’s NexoBrid emergency-stockpile procurement generated approximately $5.5 million of net product revenue in 2021 versus $3.8 million in 2020.
- Development-services revenue declined by $1.6 million as NexoBrid clinical studies progressed toward completion.
- Research and development expense increased 34% to $10.3 million, primarily due to EscharEx development.
- General and administrative expense increased 15% to $6.3 million, mainly due to rent, maintenance allocation and legal consulting.
- Net financial expense increased to $2.3 million from $0.4 million, reflecting Teva contingent-liability revaluation, IIA grant interest, foreign-exchange effects and lease revaluations.
- Cash declined by $6.3 million during 2021. Operating cash use was only partly offset by $3.5 million of investing cash inflows and was followed by $1.1 million of financing cash outflows.
Debt, obligations and liquidity
The company states that it has no long-term debt exposure to interest-rate risk; however, it had significant contractual and quasi-debt obligations. At December 31, 2021, current maturities of long-term liabilities were $2.4 million, lease liabilities totaled $2.0 million, IIA grant liabilities totaled $8.1 million, and liabilities related to the purchase of shares were approximately $5.9 million under the liquidity maturity analysis.
Management stated that existing cash, cash equivalents and short-term bank deposits were expected to satisfy liquidity requirements for at least the next 24 months. This assessment predates the March 2022 equity offering and depends on future operating cash inflows, BARDA funding and continued access to capital.
In March 2022, after the reporting date, the company issued 5,208,333 ordinary shares at $1.92 per share, generating approximately $8.7 million of net proceeds after expenses. The underwriters also received a 30-day option for up to 781,249 additional shares.
Guidance, outlook and management commentary
- MediWound expected to continue incurring substantial operating losses as it funds EscharEx, MW005, NexoBrid regulatory activities and international commercialization.
- The company planned to resubmit the NexoBrid BLA to the FDA in mid-2022 following an October 2021 Type A meeting. The FDA’s June 2021 Complete Response Letter cited additional CMC information, required manufacturing-facility inspections and GCP inspection observations; approval timing remained uncertain.
- The company expected to request an FDA end-of-Phase 2 meeting for EscharEx in the second half of 2022 to discuss a potential Phase 3 program.
- Subject to NexoBrid BLA approval, MediWound planned to scale manufacturing capacity in 2023 at an estimated cost of approximately $8 million to $10 million.
- BARDA expanded funding by approximately $9 million in February 2022 for the NexoBrid BLA resubmission and expanded-access program. BARDA contracts may be terminated at BARDA’s convenience and future options or procurement commitments are not assured.
- The company expects continued exposure to COVID-19-related clinical, regulatory, supply-chain and manufacturing disruptions, as well as foreign-exchange risk from Israeli shekel and euro-denominated costs.
Risks, contingencies and unusual items
- Regulatory risk: NexoBrid remains unapproved in the United States, and the FDA’s required inspections and requested information could delay or prevent approval.
- Concentration risk: BARDA represented most revenue, creating dependence on government procurement and development funding.
- Funding risk: The company has recurring losses, negative equity and operating cash burn and may require additional equity, debt, partnership or licensing financing.
- Manufacturing and supply risk: MediWound relies on a single Yavne manufacturing facility and a sole supplier, Challenge Bioproducts Corporation, for bromelain SP, a key intermediate drug substance.
- Contractual obligations: Teva-related liabilities were approximately $5.9 million at year-end, and the company may owe future payments under the Teva settlement, subject to its terms and revenue conditions. The company also has royalty obligations to the IIA and Mark Klein license-related obligations.
- Accounting estimates: The $8.1 million IIA grant liability was identified as a critical audit matter because its measurement depends on forecasts of regulatory approval, market demand and future revenue.
- Clinical and commercial risk: EscharEx and MW005 remain investigational and may fail to achieve clinical, regulatory or commercial objectives.
- Shareholder dilution and control: The March 2022 offering increased shares outstanding, while Clal Biotechnology Industries and affiliates controlled approximately one-third of the company’s shares.
Investor verification checklist
- Verify the current status and timing of the resubmitted NexoBrid BLA, FDA inspections and any subsequent FDA action.
- Reconcile BARDA’s remaining funding, procurement options, termination rights and the portion of revenue dependent on BARDA.
- Assess cash runway after the March 2022 offering against projected operating losses, clinical spending and the planned $8 million–$10 million manufacturing expansion.
- Review the terms, maturity schedule and cash requirements for Teva obligations, IIA royalties, lease liabilities and other purchase-related liabilities.
- Track EscharEx Phase 3 planning and MW005 clinical results, including whether positive Phase 2 or early-stage data translate into regulatory progress.
- Evaluate exposure to the sole bromelain SP supplier and the single Yavne manufacturing facility, including contingency inventory and capacity plans.
- Confirm the impact of the March 2022 equity issuance and any underwriter option on dilution and future capital needs.