Prepared remarks
Good day, and welcome to the MediWound First Quarter 2026 Earnings Conference Call. Please note today's event is being recorded. I'd now like to turn the conference over to Dan Ferry of Lifesci Advisors. Please go ahead.
Thank you, operator, and welcome, everyone. Earlier today, pre-market open, MediWound issued a press release announcing financial results for the first quarter ended March 31, 2026. You may access this press release on the company's website under the Investors tab. I would ask you to review the full text of our forward-looking statements within this morning's press release. 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. These statements may involve risks and uncertainties that could cause actual results to differ materially from expectations and are described more fully in our filings with the SEC. In addition, all forward-looking statements represent our views only as of today, and MediWound assumes no obligation to update or supplement any forward-looking statements, whether as a result of new information, future events or otherwise. This conference call is the property of MediWound, and any recording or rebroadcast is expressly prohibited without the written consent of MediWound. With us today are Ofer Gonen, Chief Executive Officer of MediWound; and Hani Luxenburg, Chief Financial Officer. Barry Wolfenson, EVP of Strategy and Corporate Development, is also participating in today's call. Following our prepared remarks, we will open the call for Q&A. Now I would like to turn the call over to Ofer Gonen, Chief Executive Officer of MediWound. Ofer?
Thank you, Dan, and good morning, everyone. During the first quarter of 2026, we continue to execute against our key strategic priorities, advancing EscharEx towards commercialization and expanding the global role of NexoBrid. While the timeline for EscharEx Phase III VALUE study has shifted by one quarter, the underlying momentum behind the program continues to strengthen. During this quarter, we expanded our chronic wound collaboration network, generated additional clinical and scientific validation for both EscharEx and NexoBrid and continue to see strong engagement from strategic collaborators and the broader wound care community. We continue to advance our expanded NexoBrid manufacturing facility towards commercial readiness and further strengthen long-term opportunities with industry leaders and government partners across our portfolio. Let me start with an update on EscharEx. Enrollment continues in the global Phase III VALUE study in venous leg ulcers with more than 30 sites active across the United States, Europe and Israel. Recruitment has progressed more gradually than originally anticipated, primarily due to two operational factors. First, certain European sites required ancillary-related regulatory adjustments, which have now been completed, and we expect the study to reach the targeted 40 active sites within weeks. Second, the travel and visit requirements associated with the protocol created participation challenges for the older and medically complex VLU patient population. To support enrollment and reduce participation burden, we implemented patient assistance measures, including hotel reimbursements, transportation services and facilitated access to enhanced care. Importantly, given how quickly EscharEx works, the protocol requires daily wound assessment to determine the exact day complete debridement is achieved. This represents a shift from measuring debridement outcomes over weeks. While this creates operational complexity in the study, it may ultimately reflect one of EscharEx's key clinical and commercial advantages in real-world practice. Investigator engagement and site participation remains strong across all regions, and we expect the interim sample size reassessment and the enrollment completion by the end of the first quarter of 2027. At the same time, we continue to see expanding commercial, clinical and scientific validation supporting the broader opportunity of EscharEx across the chronic wound care market. Medline, a global leader in medical surgical and wound care products, has joined our collaboration network. Together with Coloplast/Kerecis, Convatec, Essity, Mölnlycke, Solventum, B. Braun and MIMEDX, our collaborators now include essentially all the major advanced wound care companies relevant to the program. As part of the collaboration, Medline will provide its class-leading skin protectant, Marathon, for the upcoming DFU Phase II study. Marathon is designed to protect tissue surrounding the wound, while EscharEx performs its debridement activity within the wound bed. A peer-reviewed U.S. expert consensus document published in Wound Journal emphasized the need for effective, easy-to-use and less invasive debridement approaches in chronic wound care, a conclusion that aligns closely with the clinical profile and positioning of EscharEx. We also presented new clinical data and new preclinical data at the WHS, SAWC and EWMA conferences, highlighting EscharEx's clinical benefits, distinct mechanism of action and broad potential across venous leg ulcers, diabetic foot ulcers and pressure ulcers. Turning to NexoBrid. During the quarter, we continue to see growing commercial adoption, clinical recognition and strategic interest in NexoBrid across both traditional burn care settings and government preparedness initiatives. Vericel reported continued growth in both ordering centers and total orders across the United States burn care market, reflecting ongoing adoption trends. Most importantly, Vericel was also awarded a 10-year BARDA contract valued at up to $197 million to support NexoBrid procurement, vendor management inventory services, potential blast trauma indication development and next-generation manufacturing and formulation capabilities. We expect BARDA-related procurement and development to begin during the second half of 2026. This new 10-year BARDA contract builds on approximately $138 million already received from BARDA and the Department of Defense over the past decade, further solidifying the significance of NexoBrid as a strategic asset in mass casualty burn response and national preparedness. Importantly, the burn care community continues to move in the same direction. Newly published national consensus guidelines from Japan and the U.K. now add to existing recommendations from the WHO and countries including Italy, Spain, Romania and Poland. To support this global demand, we remain focused on bringing our expanding manufacturing facility online. We are implementing modifications identified during a recent EMA pre-audit, and we expect to complete those implementation activities during the second half of 2026. With that, I'll turn the call over to Hani.
Thank you, Ofer, and good morning, everyone. Let's turn to our financial results for the first quarter of 2026. Revenue for the quarter was $1.5 million compared to $4 million in the first quarter of 2025. The decrease was primarily attributable to timing of BARDA-related revenue as well as postponed shipment related to regional conflict. Gross profit for the quarter was $0.3 million, representing a gross margin of 21.9% compared to gross profit of $0.7 million or a gross margin of 18.7% in the prior year period. Research and development expenses were $5.2 million compared to $2.9 million in the first quarter of 2025, primarily reflecting continued investment in the EscharEx VALUE Phase III study. SG&A expenses totaled $3.6 million compared to $3.1 million in the same period last year. Operating loss for the quarter was $8 million compared to $5.2 million in the first quarter of 2025. Net loss was $3 million or $0.23 per share compared to a net loss of $0.7 million or $0.07 per share in the prior year period. Adjusted EBITDA loss was $7 million compared to a loss of $4 million in the first quarter of 2025. Turning to our balance sheet. As of March 31, 2026, we had $45 million in cash, cash equivalents and deposits compared to $54 million at year-end 2025. During the first quarter, net cash used in operating activity was $9.6 million, including the impact of foreign exchange movement between the U.S. dollar and the Israeli shekel. Our balance sheet also benefited from $1.2 million received under the European Innovation Council (EIC) Accelerator grant program as well as $0.7 million received from the exercise of Series A warrants subsequent to quarter end. That concludes my review of the financials. Ofer, back to you.
Thank you, Hani. We continue to make meaningful progress across our core strategic priorities, advancing EscharEx VALUE study, broadening industry validation, expanding NexoBrid commercial and government footprint and preparing our expanded manufacturing facility for commercial readiness. Based on the expected timing of the government-related procurement and the development revenue in the second half of the year, we are reaffirming our full year 2026 revenue guidance of $24 million to $26 million. Our focus remains on disciplined execution as we position the company for a potential inflection point in the next phase of commercial growth.
Questions and answers
Thank you. We will now begin the Q&A session. Today's first question comes from Josh Jennings at TD Cowen.
I wanted to just ask on the VALUE study and understand that there is some complexities in terms of evaluating some of the older patients and you described that well. But are there any other risks in terms of getting the interim analysis done by the end of 1Q '27? And has these adjustments been made already? And what are you seeing to date that gives you confidence that 1Q '27 is the appropriate new timeline?
Josh, good to speak to you. As I said, indeed, the enrollment has progressed more gradually than originally anticipated. But importantly, this is not related to safety, efficacy or protocol concern. As I said in my prepared remarks the slower pace is primarily reflected by operational factors that we believe are behind us. They are associated with running a very large multinational VLU study, the largest in a few decades. Those operational challenges were ancillary-related regulatory adjustments at certain European sites, and it is done. We estimate that we reach approximately 40 active sites within weeks. We have also implemented targeted measures to support recruitment momentum with transportation support, reimbursement programs and additional patient assistance initiatives. So according to what we see and understand from how this study runs, we expect the enrollment to be completed by the end of 2027. I have to emphasize that we are focusing on making sure that the right patients are included in the study, not patients that placebo can cure the wound or patients that even EscharEx cannot move the needle for. So it takes time, but we feel that we are nearing the end.
Thanks for the extra detail. I appreciate it. And just in terms of the expanded manufacturing capacity for NexoBrid and looking at the regulators and the updates that you shared on the call, just the FDA inspection is planned in early 2027. Any next steps on getting the FDA in there? I mean what are the steps in front of that inspection occurring in 2027? And when should we expect that facility to come online to be able to supply NexoBrid product in the U.S.?
Yes. So indeed, the U.S. inspectors are supposed to come very early 2027. But in order to do that, we need to finalize with the EMA first. As you know, it's a very complex biologic manufacturing and the transfer includes all kinds of process validations, comparability, stability and regulatory reviews. These activities are progressing, but they require very careful and disciplined execution. During the quarter, we completed an on-site pre-audit from EMA. They identified several recommendations that are operational modifications. We are now implementing them. And as I said in the call, we expect to complete these activities during the second half of 2026. The feedback is operational in nature. It doesn't have anything related to product quality, safety or comparability concerns. So we think that we are on the right track.
And our next question today comes from Jeff Jones at Oppenheimer.
This is Mira on for Jeff. Thanks for the update. Just a couple of questions regarding the manufacturing facility and the EMA pre-audit. Just wanted to understand sort of the impact of the recommended modifications by the EMA to the facility on material already manufactured. And what is your confidence in being able to sell that material out of the new facility before year-end and sort of that timeline to complete the implementation of these fixes? And would the EMA have to reinspect this?
Good to have you on. So as I said, it wasn't an inspection. It was a pre-audit by the EMA. And they identified several recommended operational modifications. When the agency recommends something, you need to address it. So we are now implementing it. According to what we understand, we can finish everything as we planned during the second half of 2026. The feedback was only operational, nothing related to the comparability of the product or the safety of it. Those are the things that are really worrying in manufacturing transfer of biologics. So we think that we are in a good place.
Great. Just one additional question on the BARDA contract. I was wondering if you could comment on the portion of the base BARDA contract, that $35 million that goes to NexoBrid procurement and how you would expect that to flow to MediWound versus Vericel.
So the only thing that I can share at this stage about the BARDA contract is that the $197 million is a 10-year contract between BARDA and Vericel. It contains five components: procurement, which we share with Vericel, VMI management, which Vericel is running, manufacturing readiness and next-generation formulation, and another indication for blast trauma, where we have a significant role in bringing that to market. Certain elements in the BARDA framework also include the room temperature stable formulation, which is a program that was initiated previously by the Department of Defense. We expect those revenues to kick in at the beginning of the second half of 2026. Unfortunately, I cannot tell you at this stage what is the exact share or portion that MediWound will receive versus Vericel.
And our next question comes from RK at H.C. Wainwright.
A couple of questions from me. So just thinking through the program with EscharEx beyond the current study, just trying to have an idea of how the additional studies which you are planning, especially on the indication expansion, the DFU and the IIT on pressure ulcer, how are those plans for those studies and how are those studies progressing?
Thanks for joining. So as we mentioned, the Phase III VALUE study in VLU remains the primary focus of the EscharEx development program, and this is the company's key value driver, as you can imagine. In parallel, we are conducting required studies for regulatory submission, including a PK study and human factors studies that we plan to start in the second half of the year. We are also advancing a head-to-head Phase II study versus collagenase (SANTYL) and other non-surgical standard-of-care modalities to strengthen the differentiation and to support future market access discussions. Beyond VLU, we are expanding EscharEx into additional chronic wound indications. As we already communicated, we're about to start a Phase II study in diabetic foot ulcers in the second half of 2026 as well as an investigator-initiated trial in pressure ulcers, which is also planned for the second half of 2026. This structured program is designed to support regulatory approval, competitive positioning of EscharEx and the long-term commercial expansion across the major chronic wound segments.
The second question is on the revenues. There is a statement saying some of the shipments had to be postponed because of the regional conflict. So just trying to understand how these shipments are going to be moved into the next three quarters? And also, as you reconfirmed your guidance for the year, $24 million to $26 million, which means quite a bit of it is going to show up in the next nine months. Out of that, how much is NexoBrid revenue-based income? And how much is the income that you can get from the BARDA contract approval?
RK, the first quarter revenue was relatively low, primarily due to timing. We did not have BARDA-related revenue in the quarter and certain shipments were indeed postponed due to the regional conflict. Those postponed shipments have already been completed, so this was a timing issue. Looking ahead, we expect revenue to be weighted towards the second half of 2026, driven primarily by the expected ramp-up in government-related development services and procurement activities. Our reaffirmed 2026 guidance of $24 million to $26 million is supported by expected government-related development services and mass casualty preparedness procurement. We are confident that the second half of the year will show the ramp-up, and we are reaffirming our guidance for the year.
Is it possible to ask one more question, please?
Sure.
Yes. So on the Medline partnership, how does that relationship help in the overall development of the product itself? And what do they bring to the table so that we understand their contribution to this development cycle?
Sure, absolutely. RK, thanks for the question. Generally, we believe that the level of industry engagement around EscharEx is highly significant. As Ofer mentioned, with Medline joining this quarter, our collaboration network essentially comprises all of the major relevant advanced wound care companies. So along with Medline, it's Coloplast/Kerecis, Convatec, Essity, Mölnlycke, Solventum, B. Braun and MIMEDX. These collaborations reflect growing recognition that chronic wound care continues to need an optimally effective, easy-to-use nonsurgical debridement solution, which we offer with EscharEx. Standardizing key products used in both arms of the study allows us to only change one thing—active versus control—helps to minimize variability in the studies and thus yield the best results. Regarding Medline specifically, the product that they're going to provide is for the DFU study and it's their class-leading cyanoacrylate-based product, Marathon. Its job is to protect the healthy skin that surrounds the wound, which is an important component of standard of wound care, and that allows EscharEx to do its job within the wound bed itself. The collaborators get the benefit of having their products as standard of care in some of the largest clinical studies in the field of advanced wound care, which could have meaningful commercial impact for their brands. Medline will look at data after the study regarding the health of the periwound tissue to see if use of their product in a large-scale study helped to keep the periwound in very good condition. From our perspective, the relationships with the research collaborators are strong, and any one of them could develop into a key strategic partner as EscharEx approaches commercialization.
And our next question today comes from Chase Knickerbocker at Craig-Hallum.
Maybe just to start, could you elaborate a little bit more on that regulatory change causing some issues in Europe? I know you talked a little bit about it last quarter, but maybe if you could just remind us. And then is this responsible for the entirety of that difference between the current kind of 30-ish sites versus the 40 target? Is that delta of ten all in Europe?
Chase, good to have you with us. Yes. First of all, the ten sites we are speaking about are all European, and they will be open within weeks. Specifically, some of the ancillary products that we need to import to certain European countries, especially some cellular tissue products, were not allowed in specific countries and it was difficult to bring them in. Even when we had local resolutions, making it work on a broader scale was complicated. We are addressing those issues now and all the sites are being opened and will be executed. What was the second part of the question, sorry?
Yes, both are. Maybe just secondly, as far as what the 1Q '27 timeline kind of assumes for an enrollment rate, does it assume kind of an acceleration? I mean, maybe just talk about the assumptions you're making within that. And then secondly, just as it relates to some of those changes around the travel reimbursement, etc., have you seen kind of an improvement in enrollment rate already from that?
So our assumption for end of Q1 2027 is that the enrollment per site, the number of patients enrolled per site per month, will be maintained. We will have more sites and eventually we'll get there. Our main motivation is that there is a huge need for biologics in the market. We just need to make it to the finish line and make sure the trial is successful. So there is no compromise in adding patients who do not meet the inclusion criteria—for example, patients that placebo could heal or patients for whom EscharEx could not move the needle. We are keeping them out. We have already screened more than thousands of patients for this study, so there isn't a lack of patients. We just need to make sure that the patients enrolled are the right ones to replicate the data from previous studies. Barry, do you mind addressing the second part of the question?
Sure. Chase, the question was whether these changes have impacted enrollment. I would say not likely. As Ofer mentioned, we've had many patients screened already. It's not for lack of patients, and talking to the sites over the last year, none of them said that reimbursement changes were impacting their ability to enroll patients. The change in the Medicare Physician Fee Schedule at the end of last year reclassified skin substitutes to be paid on a per-square-centimeter basis, which significantly reduced overall spending in that segment. CMS itself stated the change is expected to reduce Medicare spending on those skin substitutes substantially. That translates to a large reduction in the U.S. chronic wound care market. Over the last month or so, we've heard leading CTP companies reporting year-over-year declines in sales of around 60%. As Medicare closes that loophole, differentiated products outside this reimbursement construct will stand out. EscharEx, if approved, enters a segment where a legacy product generates $400 million per year, placing it as one of, if not the most valuable near-term assets in the field of wound care. Given the dramatic decline of some CTPs, the larger global wound care companies will likely shift attention to products with higher regulatory approval levels. Ours is one of the very few in late stages of clinical development and the only one heading into an existing proven category. This change is enormous for us.
And our next question today comes from Michael Okunewitch with Maxim Group.
I think to start off, I'd like to ask a little bit about the consensus document published in Wounds. In particular, if you could expand on what the driving rationale for the consensus on less aggressive methods earlier in the debridement course is and what this could mean for EscharEx adoption? Is this something that could further build on that expectation that something like EscharEx could expand the share of enzymatic debridement in the overall chronic wound debridement segment? I'd just like to get your thoughts on that.
Michael, thanks for the question. We view the recent consensus publication in Wounds as an important external validation of the direction the field is moving. The rationale for focusing on less invasive modalities earlier is to allow for broader access. More complex interventions require more training, and wounds are treated in many settings—from nursing homes and home care to wound clinics, physicians' offices and hospitals. The consensus chart described the approach as a 'Chutes and Ladders' model: start with easier-to-use products and progress to more complex interventions as needed. Current first-line products, such as autolytic hydrogels and the current enzymatic product, are not deemed optimally effective; debridement with those is measured in weeks, which often forces clinicians to move to more invasive approaches. EscharEx changes that dynamic by offering a product that is easy to use across settings but is optimally effective where debridement can be measured in days. Based on third-party research, we believe EscharEx will significantly increase the market size of the enzymatic debridement market. From a pricing perspective and relative desire to switch, while SANTYL is around $400 million a year, we believe EscharEx peak sales could reach up to around $831 million from venous leg ulcers and diabetic foot ulcers alone. So we anticipate significant market expansion.
Right. And then just one more for me before I hop into the queue. With the enrollment challenges in VALUE, are there any lessons learned that you think you can carry over to streamline future development for EscharEx, whether that's for the supplementary studies or for the potential expansion studies into DFU and pressure ulcers?
There are many tactical lessons learned. One change we will take into account in future trials is the enrollment rate per site. An assumption of half a patient per site per month was reasonable during COVID when patients were more willing to come in, but we should adjust that assumption going forward. We are counting on a lower per-site rate and ensuring we recruit the right patients. The other measures—additional funding for transportation and avoiding importing complicated ancillary products into Europe—are also lessons learned and we do not expect them to be issues in future trials.
And our next question today comes from Scott Henry at AGP.
A follow-up on RK's question, perhaps a little more specific. How dependent is 2026 revenue guidance on increasing manufacturing capacity? And if that comes in toward the back part in Q4, is that a risk? Or can you build inventory ahead such that you ship a lot in that quarter? Just trying to get a sense as we get later into the year.
Scott, good to hear from you. The forecast for 2026 is substantially dependent on development services from government-related agreements, but we have flexibility. Our guidance of $24 million to $26 million is not dependent specifically on manufacturing capacity coming online; we can realize revenue from development services or procurement. We feel comfortable with the guidance and are not specifically dependent on manufacturing capacity to meet it.
Okay. Great. And then when we think about the development services revenue, how should we think about 2Q? Should we expect that to sequentially go up through the year? Or should 2Q be perhaps a little bigger than that? Just trying to get a sense of timing.
Looking ahead, we expect revenue to be weighted towards the second half of 2026, primarily from government-related development services. We still have some revenue from development services in the first half, but it's relatively low compared to what we expect in the second half.
Don't forget that we still have agreements with the Department of Defense and other development services. So the assumption that it is zero in the first half is not correct, but the weighting will be toward the second half of the year.
Okay. And just one clarification. I thought I heard earlier in the remarks that the U.S. manufacturing capacity expansion somehow hinged on the EU manufacturing capacity expansion. Did I hear that correct? Because that would seem unusual that the two would be related, but I wanted to follow up on that.
Yes. It's a technical constraint. Every product that is shipped from Israel to the United States needs to get approval from the local agency; approval processes are related. So before we get approval from the EMA or the Israeli local agency, we cannot ship to the United States. These are not different requirements in substance, but the sequence matters. We need OK clearance from Israel and then we can ship to the United States and then the U.S. inspectors can audit.
And that concludes our Q&A session. I'd like to turn the conference back over to management for any closing remarks.
So thank you, everyone, for joining us today. We look forward to updating you again on our next quarterly call.
Thank you. That concludes today's conference call. We thank you all for attending today's presentation. You may now disconnect your lines, and have a wonderful day.