Israeli company MediWound (Nasdaq: MDWD), which has developed a treatment for burns and wounds based on material produced from the pineapple plant, has announced the signing of a strategic commercialization agreement for its NexoBrid burn treatment product. US company Vericel will market the product in North America.
Vericel will pay MediWound a $17.5 million advance, plus $132.5 million in milestone payments, and royalties.
The share price of Clal Biotechnology Industries, which holds 35% of MediWound, has not responded to today's news. Clal Biotechnology's market cap is NIS 444 million. The market was already aware that a strategic deal for MediWound was in the works following a report by the company, but no details whatsoever about the deal were known.
MediWound has a $145 million market cap on Nasdaq. No trading has taken place yet since the deal was announced.
The amount is the deal is fairly large, considering that Vericel is receiving rights only in North America, and only for the relatively small burns market, estimated at $200 million in North America. MediWound retains the rights to other markets around the world, including Europe, where the product has already been approved for marketing and is being sold. Nor is MediWound's product for the wounds market included in the current deal.
Vericel, formerly called Aastrom, has an $806 million market cap on Nasdaq. Vericel has two main products in tissue regeneration: artificial cartilage, and an artificial skin implant for replacing skin after severe burns. The latter product is produced from a skin biopsy taken from the patient. There is synergy between the two companies' activity, because NexoBrid is designed to prepare burn patients for a skin implant by removing dead tissue from the wound (a procedure called debridement). The NexoBrid ointment shortens the waiting time before an artificial skin implant. Cooperation between the companies is also beneficial for Vericel, which can control many more stages in the treatment of burns.
MediWound also has a joint development and acquisition agreement with the Biomedical Advanced Research and Development Authority (BARDA), a US government agency responsible for counter-measures against bioterrorism, which wants to procure the product for emergencies. Under the agreement with Vericel, R&D support under the BARDA agreement will continue going directly to MediWound. In the agreement, BARDA also undertook to procure the product, and this element of the agreement is being transferred to Vericel in the framework of the new agreement. Vericel will receive the proceeds from the purchase of the product, while MediWound will receive royalties, but more than the royalties on sales of the product in the civilian market. The market potential from the agreement with BARDA is in addition to the estimated $200 million potential in the civilian market.
The NexoBrid product, which is already being sold in Europe, is in advanced clinical trials in the US. The results in the Phase III trials of the product were good, and the company hopes that they will be enough to submit the product to the US Food and Drug Administration (FDA) for approval by the end of this year, so that sales can begin in the US next year under the most optimistic scenario.
Sales in Europe are only $3.4 million. MediWound CEO Sharon Malka, who recently replaced outgoing CEO Gal Cohen, said, "In Europe, we lacked the resources to develop large revenues, but Europe serves us, and will serve us, as a site for proving feasibility. It enables us to recruit support from medical specialists, and generates real information from the market for us. We are now concentrating on promoting our product for chronic wounds, and the money we have in the bank, together with the advance from Vericel and the scheduled payments from Barda, will enable us to reach the market with the other product."
MediWound is pinning its main hopes on its EscharEx product, designed for a wound treatment market amounting to billions of dollars, and a wound debridement market amounting to hundreds of millions of dollars. This product is due to enter Phase III clinical trials in the coming months.
Published by Globes, Israel business news - en.globes.co.il - on May 7, 2019
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