MediWound Ltd. FY2020 Form 20-F Summary
Business context and reporting period
MediWound is an Israeli biopharmaceutical company developing, manufacturing and commercializing enzymatic therapies for burn care, wound care and tissue repair. Its marketed product, NexoBrid, is approved in Europe and several other international markets for eschar removal in adults with deep partial- and full-thickness thermal burns. EscharEx and MWPC005 remain investigational candidates.
The filing is the annual report for the fiscal year ended December 31, 2020, prepared under IFRS as issued by the IASB. The source does not provide separate fourth-quarter financial statements; the relevant period is the full fiscal year.
Financial performance and position
| Metric | 2019 | 2020 | Change |
|---|---|---|---|
| Total revenue | $31.789 million | $21.763 million | Down 31.5% |
| Product sales | $3.611 million | $7.828 million | Up 117% |
| Development-services revenue | $10.678 million | $13.935 million | Up 30.5% |
| License revenue | $17.500 million | — | One-time 2019 Vericel upfront payment absent in 2020 |
| Gross profit | $19.940 million | $7.545 million | Down 62.2% |
| Gross margin | 62.7% | 34.7% | Down 28.0 percentage points |
| Operating profit (loss) | $4.493 million | $(8.840) million | Declined $13.333 million |
| Net profit (loss) | $4.955 million | $(9.196) million | Declined $14.151 million |
| Basic and diluted loss per share | $0.18 profit | $(0.34) | Turned to loss |
Revenue was highly concentrated: BARDA contributed 83% of 2020 revenue, compared with 34% in 2019. U.S. customers accounted for $18.030 million, or approximately 83% of total revenue, while international customers contributed $3.733 million.
- Research and development expense increased 55% to $7.698 million, primarily because of the EscharEx clinical program.
- Selling and marketing expense decreased 21% to $3.228 million, partly because of restructuring at the European subsidiary.
- General and administrative expense increased 4% to $5.459 million.
- Total share-based compensation was $1.322 million, compared with $1.234 million in 2019.
- Profit from discontinued operations was $80,000 in 2020, compared with $2.889 million in 2019, reflecting the winding down of PolyHeal-related matters.
Cash flow, liquidity and obligations
| Metric | 2019 | 2020 |
|---|---|---|
| Cash from continuing operating activities | $9.888 million | $(6.700) million |
| Cash from continuing investing activities | $(5.658) million | $17.385 million |
| Cash from continuing financing activities | $(1.006) million | $(0.629) million |
| Capital expenditures | $0.792 million | $0.923 million |
| Cash and cash equivalents | $7.242 million | $17.376 million |
| Short-term bank deposits | $22.036 million | $4.024 million |
Cash, cash equivalents and short-term deposits totaled approximately $21.6 million at December 31, 2020, down from approximately $29.3 million at December 31, 2019. Management stated that existing cash, cash equivalents and short-term deposits should satisfy liquidity requirements for at least the next 24 months.
The company reported no long-term debt exposure in the conventional borrowing sense, but had lease liabilities of $2.307 million, IIA grant liabilities of $7.528 million, and liabilities related to the Teva share repurchase and settlement arrangements. The company also has an Israeli Innovation Authority royalty obligation tied to future sales and an indemnification obligation to Teva of up to $10.2 million for specified PolyHeal-related claims received by December 31, 2023.
Material changes versus the prior comparable period
- Revenue declined because the $17.5 million Vericel upfront license payment recognized in 2019 did not recur.
- Product revenue more than doubled, primarily because BARDA began purchasing NexoBrid for an emergency stockpile. Approximately $5.8 million of product was supplied to BARDA during 2020, with revenue recognized net of Vericel’s gross-profit share.
- Development-services revenue increased as BARDA funding was classified as revenue following the Vericel collaboration structure.
- The company moved from operating profit of $4.493 million and net profit of $4.955 million in 2019 to an operating loss of $8.840 million and net loss of $9.196 million in 2020.
- Operating cash flow shifted from a $9.888 million inflow to a $6.700 million outflow, largely because the 2019 Vericel upfront payment did not recur.
- The company increased its NexoBrid-related option pool and granted 1.274 million options in 2020 at an exercise price of $1.75 per share.
Guidance, outlook, commentary and risks
No formal revenue, earnings or margin guidance is provided. Management expects substantial expenses and operating losses for the foreseeable future as it funds EscharEx, MWPC005 and other pipeline programs, expands NexoBrid commercialization, and scales manufacturing. The company expects additional BARDA deliveries through the end of 2021 and plans to spend approximately $8 million to $10 million to scale manufacturing capacity by the end of 2022, subject to regulatory approval and cGMP audits.
- The FDA accepted the NexoBrid BLA in September 2020 and assigned a PDUFA goal date of June 29, 2021. The FDA requested additional information, and COVID-19-related inspection delays could affect timing. Approval was not assured.
- The DETECT Phase 3 study met its primary and secondary endpoints. The study reported complete eschar removal in 93.3% of NexoBrid patients versus 4.0% for gel vehicle, lower surgical eschar removal than standard of care, and substantially lower blood loss. These results do not eliminate regulatory or commercialization risk.
- In January 2021, the company reduced the EscharEx Phase 2 enrollment target from 174 to 120 patients because of COVID-19-related enrollment delays. The study remained in Phase 2 and had not established regulatory approval.
- BARDA contracts have potential aggregate value of up to $202 million, but BARDA may terminate contracts at its convenience and may not exercise procurement or development options. BARDA represented 83% of 2020 revenue, creating significant customer and funding concentration.
- The company relies on a single Yavne, Israel manufacturing facility and a sole supplier, Challenge Bioproducts Corporation, for bromelain SP. Management estimated available bromelain inventory could support approximately two years of full-capacity operations, but supply interruptions could affect production and clinical programs.
- COVID-19 may continue to affect clinical enrollment, FDA inspections, manufacturing, supply chains, customer orders and access to capital.
- Other material risks include failure to obtain regulatory approvals, adverse clinical or safety results, pricing and reimbursement pressure, competition from surgery and existing products, intellectual-property challenges, foreign-exchange exposure, Israeli geopolitical or military disruption, and the need for additional financing.
Most important facts for investors to verify
- Whether FDA approved NexoBrid by the June 29, 2021 PDUFA date and the scope of any approval conditions or post-approval commitments.
- The timing, amount and profitability of remaining BARDA procurement deliveries and development funding.
- Whether NexoBrid commercial sales outside BARDA are growing sufficiently to reduce customer concentration.
- Actual cash burn, remaining liquidity and the need for equity, debt or partnership financing.
- Progress, enrollment, interim results and regulatory plans for EscharEx and MWPC005.
- Execution and cost of the planned manufacturing expansion, including FDA and other regulatory inspections.
- The company’s continuing obligations to Teva, the IIA, Mark Klein and other licensors, including royalty and contingent-payment amounts.