The Biomedical Advanced Research and Development Authority (BARDA) has notified MediWound Ltd. (Nasdaq:MDWD) that it is exercising its option to increase its investment by $22 million in the company's research and development for expanding the uses of its NexoBrid product for treatment of burns. BARDA is part of the Office of the Assistant Secretary for Preparedness and Response in the US Department of Health and Human Services. Controlled by Clal Biotechnology Industries Ltd. (TASE: CBI), Mediwound is developing and marketing a preparation for treatment of severe burns and chronic wounds.
Mediwound and BARDA signed a five-year $112 million agreement in 2015. The current investment follows a previous commitment by BARDA to invest $24 million in development, and spend at least $16 million purchasing the product following its approval for marketing in the US. Under this agreement, BARDA also has an option to buy more of the product for $50 million.
Boosted by the agreement with BARDA and good results in a Phase II trial of its product for treatment of chronic wounds, Mediwound's share price has risen 36% this year, pushing the company's market cap up to $158 million. On Friday, however, following the announcement that BARDA was exercising its option, the share price plunged 7.4% on Nasdaq.
The share price of Clal Biotechnology, which has a 43% stake in Mediwound, is remaining steady. Clal Biotechnology's market cap is NIS 562 million, following a 52% surge in its share price this year. NexoBrid is already being marketed in Europe, but is generating little revenue there (only $500,000 in the first quarter of 2017). Revenue is small because the entire market is small - only several hundred million dollars - and because the company has not succeeded in penetrating the work process of hospital doctors and obtaining government reimbursement for patients who use its product. The company is pinning greater hopes on its product for chronic wounds, for which the market is significantly larger, and which has successfully passed Phase II trials.
At the same time, the company is conducting trials of its burns treatment product in order to obtain approval for marketing the product in the US, and for treatment of children, and the financing from BARDA is designed to support these trials. The company lost $4.3 million in the first quarter, leaving it with $25 million in cash as of the end of the quarter. The company is projected to burn up to $17 million in 2017.
Good blood clot results
In addition to the announcement about Mediwound, Clal Biotechnology also published another announcement today concerning the success of a Phase I clinical trial by Exithera of a drug for treatment of blood clots. Clal Biotechnology has a 54% holding in Exithera. The company reported that it had met all the targets for the trial (the detailed results, which have not yet been published, will be presented at a professional conference in the second half of 2017).
Sales of existing drugs for the treatment of blood clots amount to billions of dollars annually, and there has been a significant breakthrough in this market in recent years. In some cases, however, these drugs still cause potentially fatal bleeding as a side effect. Exithera's product was born when a population group was identified with a rare genetic mutation that reduces the risk of stroke by 87%. As far as is known, this mutation has no negative effects. It turns out that the genetic mutation prevents encoding of the clotting factor by a factor of 11, and the company believes that it will also be able to intervene with the encoding of this factor with the general population, thereby preventing blood clots (i.e. thinning the blood) without severe side effects. The trial tested the effect of the drug on blood clotting in 60 health volunteers, and according to the company, the desired results were achieved. The company is now likely to seek funding or partners for entering Phase II trials.
Published by Globes [online], Israel Business News - www.globes-online.com - on June 25, 2017
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