Unaudited Condensed Interim Consolidated Statements of Financial Position Financial Position Overview The company's financial position improved significantly as of June 30, 2023, with substantial growth in total assets and a reversal of the prior year's shareholders' deficit Key Financial Position Indicators (USD in thousands) | Indicator | June 30, 2023 | December 31, 2022 | June 30, 2022 | | :--- | :--- | :--- | :--- | | Cash and cash equivalents | 19,166 | 33,895 | 7,729 | | Short-term bank deposits | 31,956 | - | 2,509 | | Trade receivables | 3,228 | 9,332 | 3,759 | | Inventories | 3,113 | 1,963 | 1,991 | | Total current assets | 58,053 | 45,840 | 16,809 | | Total assets | 64,366 | 50,016 | 21,106 | | Total current liabilities | 8,309 | 12,057 | 10,416 | | Warrants liability | 9,683 | 15,606 | - | | Total liabilities | 29,437 | 39,102 | 23,341 | | Additional paid-in capital | 205,642 | 178,882 | 154,119 | | Accumulated deficit | (170,883) | (168,106) | (156,450) | | Shareholders' equity (deficit) | 34,929 | 10,914 | (2,235) | - As of June 30, 2023, the company's cash and cash equivalents were $19,166 thousand, a decrease from $33,895 thousand on December 31, 2022, while short-term bank deposits increased from zero to $31,956 thousand, indicating a shift in liquidity allocation strategy3 - Total assets grew by approximately 28.7% to $64,366 thousand as of June 30, 2023, from $50,016 thousand on December 31, 20223 - Shareholders' equity surged by approximately 220% to $34,929 thousand as of June 30, 2023, from $10,914 thousand on December 31, 2022, primarily due to an increase in additional paid-in capital3 Unaudited Condensed Interim Consolidated Statements of Profit or Loss and Other Comprehensive Income or Loss Profit or Loss Overview The company's net loss narrowed significantly for the six months ended June 30, 2023, driven by a substantial increase in financial income despite a slight revenue decline Key Profit or Loss Indicators (USD in thousands) | Indicator | Six Months Ended June 30, 2023 | Six Months Ended June 30, 2022 | Three Months Ended June 30, 2023 | Three Months Ended June 30, 2022 | | :--- | :--- | :--- | :--- | :--- | | Revenues from product sales | 2,358 | 2,771 | 1,206 | 1,669 | | Revenues from development services | 6,149 | 5,866 | 3,534 | 2,777 | | Revenues from license agreements | 65 | 438 | 33 | 222 | | Total revenues | 8,572 | 9,075 | 4,773 | 4,668 | | Cost of product sales | 1,436 | 1,539 | 628 | 1,148 | | Cost of development services | 5,170 | 4,932 | 3,005 | 2,391 | | Cost of license agreements | 3 | 31 | 3 | 16 | | Total cost of revenues | 6,609 | 6,502 | 3,636 | 3,555 | | Gross profit | 1,963 | 2,573 | 1,137 | 1,113 | | Research and development expenses | 4,126 | 4,599 | 2,024 | 2,191 | | Selling and marketing expenses | 2,438 | 1,854 | 1,332 | 935 | | General and administrative expenses | 3,770 | 2,769 | 1,788 | 1,352 | | Total operating expenses | 10,334 | 9,531 | 5,144 | 4,787 | | Operating loss | (8,371) | (6,958) | (4,007) | (3,674) | | Financial income | 7,480 | 11 | 5,828 | 11 | | Financial expenses | (1,869) | (988) | (893) | (687) | | Net financial income (expenses) | 5,611 | (977) | 4,935 | (676) | | Profit (loss) before taxes | (2,760) | (7,935) | 928 | (4,350) | | Net profit (loss) | (2,777) | (7,943) | 916 | (4,354) | | Basic and diluted net profit (loss) per share - USD | (0.32) | (1.79) | 0.10 | (0.92) | - For the six months ended June 30, 2023, total revenues were $8,572 thousand, a 5.5% decrease from $9,075 thousand in the prior-year period, with product sales and license agreement revenues declining by 15% and 85% respectively, while development services revenue grew by 4.8%4 - The net loss for the six months ended June 30, 2023, narrowed significantly to $2,777 thousand from $7,943 thousand in the prior-year period, primarily due to net financial income of $5,611 thousand compared to a net expense of ($977) thousand previously4 - For the three months ended June 30, 2023, the company reported a net profit of $916 thousand, a significant turnaround from a net loss of $4,354 thousand in the same period last year, with earnings per share improving from ($0.92) to $0.104 Unaudited Condensed Interim Consolidated Statements of Changes in Shareholders' Equity (Deficit) Shareholders' Equity Changes Shareholders' equity increased substantially as of June 30, 2023, primarily driven by a public offering of ordinary shares and share-based compensation Overview of Changes in Shareholders' Equity (USD in thousands) | Indicator | June 30, 2023 | December 31, 2022 | June 30, 2022 | | :--- | :--- | :--- | :--- | | Share capital | 184 | 143 | 93 | | Additional paid-in capital | 205,642 | 178,882 | 154,119 | | Foreign currency translation reserve | (14) | (5) | 3 | | Accumulated deficit | (170,883) | (168,106) | (156,450) | | Total equity (deficit) | 34,929 | 10,914 | (2,235) | Key Changes (December 31, 2022 to June 30, 2023) | Change Item | Amount (USD in thousands) | | :--- | :--- | | Balance as of December 31, 2022 | 10,914 | | Loss for the period | (2,777) | | Other comprehensive loss | (9) | | Issuance of ordinary shares (net of issuance costs) | 25,469 | | Share-based compensation | 1,331 | | Balance as of June 30, 2023 | 34,929 | - As of June 30, 2023, the company's shareholders' equity was $34,929 thousand, an increase of $24,015 thousand from $10,914 thousand on December 31, 2022358 - Additional paid-in capital increased from $178,882 thousand on December 31, 2022, to $205,642 thousand on June 30, 2023, mainly due to the issuance of ordinary shares and share-based compensation358 - The accumulated deficit increased from ($168,106) thousand on December 31, 2022, to ($170,883) thousand on June 30, 2023, reflecting the net loss for the period358 Unaudited Condensed Interim Consolidated Statements of Cash Flows Cash Flows Overview For the six months ended June 30, 2023, net proceeds from financing activities offset increased investing outflows, while operating cash outflow improved Key Cash Flow Indicators (USD in thousands) | Indicator | Six Months Ended June 30, 2023 | Six Months Ended June 30, 2022 | Three Months Ended June 30, 2023 | Three Months Ended June 30, 2022 | | :--- | :--- | :--- | :--- | :--- | | Net cash from operating activities | (4,599) | (9,319) | (5,251) | (5,254) | | Net cash from investing activities | (33,521) | (2,797) | (26,078) | (2,637) | | Net cash from financing activities | 23,848 | 9,349 | (405) | (728) | | Effect of exchange rate changes | (457) | (550) | (120) | (303) | | Increase (decrease) in cash and cash equivalents | (14,729) | (3,317) | (31,854) | (8,922) | | Cash and cash equivalents at end of period | 19,166 | 7,729 | 19,166 | 7,729 | - For the six months ended June 30, 2023, net cash used in operating activities was $4,599 thousand, an improvement compared to $9,319 thousand in the prior-year period11 - Net cash used in investing activities for the six months ended June 30, 2023, increased significantly to $33,521 thousand, primarily due to a $31,830 thousand investment in short-term bank deposits and $2,570 thousand for the purchase of property and equipment13 - Net cash provided by financing activities for the six months ended June 30, 2023, was $23,848 thousand, a substantial increase from $9,349 thousand in the prior-year period, mainly driven by $24,909 thousand in net proceeds from the issuance of shares and warrants13 Notes to Unaudited Condensed Interim Consolidated Financial Statements Note 1: General This note details the company's operations, product commercialization, government contracts, and a recent product launch delay in the U.S Note 1a: Description of the Company and its operations - MediWound Ltd is a biopharmaceutical company focused on developing, manufacturing, and commercializing novel, cost-effective biotherapeutic non-surgical solutions for tissue repair and regeneration15 - The company's primary product, NexoBrid, received U.S. FDA approval in December 2022 and marketing authorizations in India, Switzerland, and Japan for the removal of eschar in patients with deep partial and full-thickness thermal burns16 - NexoBrid is commercialized in the EU, UK, and Israel through the company's commercial organization and in various international markets via local distribution channels1720 - The company is developing a second product, EscharEx, for the treatment of chronic and other hard-to-heal wounds, and is currently in discussions with the FDA regarding the design of a pivotal Phase III study18 - A third clinical-stage product, MW005, is a topical biologic drug for non-melanoma skin cancers; its Phase I/II study initiated in July 2021 reported positive final results in December 202219 Note 1b: NASDAQ Listing - The company's securities have been listed and traded on the NASDAQ since March 201423 Note 1c: Wholly Owned Subsidiaries - The company has three wholly-owned subsidiaries: MediWound Germany GmbH, MediWound UK Limited, and MediWound US, Inc (the latter two are currently inactive)23 Note 1d: BARDA Contracts - The company has two contracts with the U.S. Biomedical Advanced Research and Development Authority (BARDA) with a total value of up to $209,000 thousand for NexoBrid's development, manufacturing, and procurement as a medical countermeasure for mass casualty events23 - On May 9, 2023, BARDA awarded the company an additional $10,000 thousand to support R&D activities, replenish expired products, and facilitate a pediatric indication sBLA submission22 Note 1e: Vericel NexoBrid Commercialization Issue - The company's partner, Vericel Corporation Inc, received the first batch of NexoBrid for the U.S. commercial market in June 2023 but is currently unable to release it due to a deviation at a third-party testing laboratory23 - Both companies assess no additional risk to product quality and safety and are actively working with the FDA to resolve the issue; future production will not be affected as testing will be conducted directly by the company23 Note 1f: DoD Contract - In 2022, the company secured a $1,800 thousand contract with the U.S. Department of Defense (DoD) to develop NexoBrid as a non-surgical solution for U.S. Army field-of-care burn treatment23 - This contract was amended in April 2023, extending its total value to $2,700 thousand23 Note 2: Significant Accounting Policies This note outlines the basis of preparation for the financial statements in accordance with IFRS and their consistency with annual reports - The financial statements are prepared in accordance with International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB)24 - The interim condensed consolidated financial statements are prepared in accordance with International Accounting Standard 34, "Interim Financial Reporting"24 - The interim financial statements should be read in conjunction with the company's annual financial statements as of December 31, 202225 - The accounting policies applied in these interim condensed consolidated financial statements are consistent with those followed for the annual consolidated financial statements as of December 31, 202226 Note 3: Equity This note details equity-related activities in H1 2023, including a public offering, equity grants, and an increase in authorized shares Note 3.1: Public Offering - On February 7, 2023, the company completed a public offering of 1,964,286 new ordinary shares at a price of $14.0 per share, raising gross proceeds of $27,500 thousand28 Note 3.2: Share Options and RSUs Granted (February 2023) - On February 15, 2023, the company granted 130,600 share options (exercise price $13.32/share) and 9,100 RSUs to employees and officers, with an estimated total value of $1,129 thousand, vesting over four years28 Note 3.3: Share Options Granted (April 2023) - On April 3, 2023, the company granted 160,400 share options (exercise prices $11.89-$11.91/share) to board members and officers, with an estimated total value of $884 thousand, vesting over one to four years28 Note 3.4: Amendment to Articles of Association - On May 31, 2023, shareholders approved an amendment to increase the authorized share capital from 12,857,143 to 20,000,000 ordinary shares28 Note 3.5: Increase in Equity Incentive Plan Shares - On May 31, 2023, shareholders approved an increase of 1,000,000 shares available for issuance under the company's 2014 Equity Incentive Plan31 Note 3.6: Extension of Option Exercise Period - On May 31, 2023, shareholders approved a five-year extension of the exercise period for options granted to directors on April 23, 2020, resulting in a recognized expense of $146 thousand31 Note 4: Subsequent events This note discloses significant post-reporting period events, including a manufacturing expansion and a new long-term lease agreement Note 4.1: Turnkey Scale-up Agreement with Biopharmax Group Ltd. - On July 17, 2023, the company signed an agreement with Biopharmax Group Ltd to establish a GMP-compliant sterile manufacturing facility, aiming to increase NexoBrid production capacity six-fold to meet global demand29 - The project is estimated to cost $12,000 thousand and is expected to be completed by mid-2024, with full operation anticipated in 202529 Note 4.2: New Lease Agreement - The company entered a new lease agreement for its existing and planned manufacturing facilities in Yavne, Israel, with a term extending to 2035 and an option to extend to 203830 - The property covers approximately 32,500 square feet with an annual rent of about $625 thousand, linked to the Israeli CPI and subject to a 6% phased increase every three years30
MediWound(MDWD) - 2023 Q2 - Quarterly Report