EX-99.2 3 exhibit_99-2.htm EXHIBIT 99.2
 
 
Exhibit 99.2
 
MEDIWOUND LTD. AND ITS SUBSIDIARIES

INTERIM CONDENSED FINANCIAL STATEMENTS

AS OF JUNE 30, 2018

IN U.S. DOLLARS IN THOUSANDS

UNAUDITED

INDEX

 
Page
   
2
   
3
   
4 - 6
   
7 - 8
   
9 - 12

MEDIWOUND LTD. AND ITS SUBSIDIARIES
 
CONDENSED INTERIM CONSOLIDATED BALANCE SHEETS
U.S. dollars in thousands
 
   
June 30,
    
December 31,
  
   
2018
    
2017
    
2017
  
   
Unaudited
    
Audited
  
CURRENT ASSETS:
                  
Cash and cash equivalents
    
5,659
      
2,775
      
36,069
  
Short‑term bank deposits
    
21,345
      
18,147
      
-
  
Trade receivables
    
779
      
612
      
369
  
Inventories
    
1,871
      
1,124
      
1,886
  
Other receivables
    
4,445
      
2,477
      
3,196
  
                         
     
34,099
      
25,135
      
41,520
  
LONG‑TERM ASSETS:
                        
Long term deposits
    
65
      
75
      
56
  
Property, plant and equipment, net
    
2,051
      
1,425
      
1,924
  
Intangible assets, net
    
528
      
685
      
635
  
                         
     
2,644
      
2,185
      
2,615
  
                         
     
36,743
      
27,320
      
44,135
  
CURRENT LIABILITIES:
                        
Trade payables and accrued expenses
    
3,327
      
2,121
      
3,251
  
Other payables
    
2,339
      
2,115
      
2,182
  
                         
     
5,666
      
4,236
      
5,433
  
LONG‑TERM LIABILITIES:
                        
Deferred  revenues
    
1,178
      
966
      
988
  
 Liabilities in respect of IIA grants
    
7,793
      
7,153
      
7,380
  
Contingent consideration for purchase of shares
    
14,737
      
15,082
      
14,381
  
Liability in respect of discontinued operation
    
6,003
      
-
      
6,003
  
Severance pay liability, net
    
336
      
239
      
330
  
                         
     
30,047
      
23,440
      
29,082
  
SHAREHOLDERS' EQUITY (DEFICIENCY):
                        
Ordinary shares of NIS 0.01 par value:
                        
Authorized: 37,244,508 shares as of June 30, 2018, and 32,244,508 shares as of December 31, 2017 and June 30, 2017; Issued and Outstanding: 27,178,839 as of June 30, 2018 and  27,047,737 as of December  31, 2017 and 21,954,078 as of June 30, 2017
    
75
      
60
      
75
  
Share premium
    
139,359
      
115,646
      
138,992
  
Foreign currency translation adjustments
    
(30
)
    
(26
)
    
(38
)
Accumulated deficit
    
(138,374
)
    
(116,036
)
    
(129,409
)
                         
     
1,030
      
(356
)
    
9,620
  
                         
     
36,743
      
27,320
      
44,135
  

The accompanying notes are an integral part of the interim consolidated financial statements.
 
2
MEDIWOUND LTD. AND ITS SUBSIDIARIES
 
CONDENSED INTERIM CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
U.S. dollars in thousands (except share data and per share data)

   
Six months ended
June 30,
    
Three months ended
June 30,
    
Year ended
December 31,
  
   
2018
    
2017
    
2018
    
2017
    
2017
  
   
Unaudited
    
Audited
  
Revenues
    
1,551
      
1,227
      
1,031
      
687
      
2,496
  
Cost of revenues
    
1,010
      
824
      
629
      
484
      
1,578
  
                                         
Gross profit
    
541
      
403
      
402
      
203
      
918
  
                                         
Research and development, net of participations
    
2,729
      
3,435
      
1,536
      
1,664
      
5,462
  
Selling and marketing
    
2,319
      
2,693
      
1,248
      
1,306
      
5,362
  
General and administrative
    
1,831
      
1,641
      
842
      
936
      
3,781
  
Other expenses
    
662
      
-
      
62
      
-
      
-
  
Total operating expenses
    
7,541
      
7,769
      
3,688
      
3,906
      
14,605
  
                                         
Operating loss
    
(7,000
)
    
(7,366
)
    
(3,286
)
    
(3,703
)
    
(13,687
)
                                         
Financial income
    
182
      
174
      
115
      
87
      
406
  
Financial expense
    
(1,898
)
    
(1,584
)
    
(994
)
    
(846
)
    
(1,252
)
                                         
Loss from continuing operation
    
(8,716
)
    
(8,776
)
    
(4,165
)
    
(4,462
)
    
(14,533
)
Loss from discontinued operation
    
-
      
-
      
-
      
-
      
(7,616
)
Net loss
    
(8,716
)
    
(8,776
)
    
(4,165
)
    
(4,462
)
    
(22,149
)
Other comprehensive income (loss):
                                        
                                         
Foreign currency translation adjustments
    
8
      
(17
)
    
18
      
(14
)
    
(29
)
                                         
Total comprehensive loss
    
(8,708
)
    
(8,793
)
    
(4,147
)
    
(4,476
)
    
(22,178
)
                                         
Basic and diluted net loss per share from continuing operations
    
(0.32
)
    
(0.40
)
    
(0.15
)
    
(0.20
)
    
(0.62
)
Basic and diluted net loss per share from discontinued operations
    
-
      
-
      
-
      
-
      
(0.33
)
Total Basic and diluted net loss per share
    
(0.32
)
    
(0.40
)
    
(0.15
)
    
(0.20
)
    
(0.95
)
                                         
Weighted average number of ordinary shares used in the computation of basic and diluted loss per share (in thousands)
    
27,050
      
21,938
      
27,052
      
21,946
      
23,341
  
 
The accompanying notes are an integral part of the interim consolidated financial statements.
 
3
MEDIWOUND LTD. AND ITS SUBSIDIARIES
 
CONDENSED INTERIM CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (DEFICIENCY)
U.S. dollars in thousands
 
   
Share capital
    
Share premium
    
Foreign currency translation reserve
    
Accumulated
deficit
    
Total
Equity
  
                               
Balance as of December 31, 2017
    
75
      
138,992
      
(38
)
    
(129,409
)
    
9,620
  
Cumulative effect adjustment on accumulated deficit as a result of adopting IFRS 15
    
-
      
-
      
-
      
(249
)
    
(249
)
                                         
Balance as of January 1, 2018
    
75
      
138,992
      
(38
)
    
(129,658
)
    
9,371
  
                                         
Loss for the period
    
-
      
-
      
-
      
(8,716
)
    
(8,716
)
Other comprehensive loss
    
-
      
-
      
8
      
-
      
8
  
                                         
Total comprehensive loss
    
-
      
-
      
8
      
(8,716
)
    
(8,708
)
                                         
Exercise of options
    
(*
 )    
(*
 )    
-
      
-
      
-
  
                                         
Share-based compensation
    
-
      
367
      
-
      
-
      
367
  
                                         
Balance as of  June 30, 2018 (unaudited)
    
75
      
139,359
      
(30
)
    
(138,374
)
    
1,030
  
 
   
Share capital
    
Share premium
    
Foreign currency translation reserve
    
Accumulated
deficit
    
Total
Equity (Deficiency)
  
                               
Balance as of January 1, 2017
    
60
      
114,979
      
(9
)
    
(107,260
)
    
7,770
  
                                         
Loss for the period
    
-
      
-
      
-
      
(8,776
)
    
(8,776
)
Other comprehensive loss
    
-
      
-
      
(17
)
    
-
      
(17
)
                                         
Total comprehensive loss
    
-
      
-
      
(17
)
    
(8,776
)
    
(8,793
)
                                         
Exercise of options
    
-
      
2
      
-
      
-
      
2
  
                                         
Share-based compensation
    
-
      
665
      
-
      
-
      
665
  
                                         
Balance as of  June 30, 2017 (unaudited)
    
60
      
115,646
      
(26
)
    
(116,036
)
    
(356
)
 
(*)   Represents less than $1.
 
The accompanying notes are an integral part of the interim consolidated financial statements.
 
4
MEDIWOUND LTD. AND ITS SUBSIDIARIES
 
CONDENSED INTERIM CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (DEFICIENCY)
U.S. dollars in thousands

   
Share capital
    
Share premium
    
Foreign currency translation reserve
    
Accumulated
deficit
    
Total
Equity
  
                               
Balance as of April 1, 2018
    
75
      
139,210
      
(48
)
    
(134,209
)
    
5,028
  
                                         
Loss for the period
    
-
      
-
      
-
      
(4,165
)
    
(4,165
)
Other comprehensive loss
    
-
      
-
      
18
      
-
      
18
  
                                         
Total comprehensive loss
    
-
      
-
      
18
      
(4,165
)
    
(4,147
)
                                         
Exercise of options
(*
 )    
(*
 )    
-
      
-
      
-
  
                                         
Share-based compensation
    
-
      
149
      
-
      
-
      
149
  
                                         
Balance as of  June 30, 2018 (unaudited)
    
75
      
139,359
      
(30
)
    
(138,374
)
    
1,030
  
 
 
Share capital
    
Share premium
    
Foreign currency translation reserve
    
Accumulated
deficit
    
Total
Equity (Deficiency)
  
                             
Balance as of April 1, 2017
    
60
      
115,307
      
(12
)
    
(111,574
)
    
3,781
  
                                       
Loss for the period
    
-
      
-
      
-
      
(4,462
)
    
(4,462
)
Other comprehensive loss
    
-
      
-
      
(14
)
    
-
      
(14
)
                                         
Total comprehensive loss
    
-
      
-
      
(14
)
    
(4,462
)
    
(4,476
)
                                         
Exercise of options
    
-
      
2
      
-
      
-
      
2
  
                                         
Share-based compensation
    
-
      
337
      
-
      
-
      
337
  
                                         
Balance as of  June 30, 2017 (unaudited)
    
60
      
115,646
      
(26
)
    
(116,036
)
    
(356
)
 
(*)   Represents less than $1.
 
The accompanying notes are an integral part of the interim consolidated financial statements.
 
5
MEDIWOUND LTD. AND ITS SUBSIDIARIES
 
CONDENSED INTERIM CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (DEFICIENCY)
U.S. dollars in thousands

   
Share capital
    
Share premium
    
Foreign currency translation reserve
    
Accumulated
deficit
    
Total
equity
  
                               
Balance as of December 31, 2016
    
60
      
114,979
      
(9
)
    
(107,260
)
    
7,770
  
                                         
Loss for the period
    
-
      
-
      
-
      
(22,149
)
    
(22,149
)
Other comprehensive loss
    
-
      
-
      
(29
)
    
-
      
(29
)
                                         
Total comprehensive loss
    
-
      
-
      
(29
)
    
(22,149
)
    
(22,178
)
                                         
Exercise of options
    
(*
)
    
7
      
-
      
-
      
7
  
Issuance of ordinary shares of NIS 0.01 par value net of issuance expenses
    
15
      
22,643
      
-
      
-
      
22,658
  
Share-based compensation
    
-
      
1,363
      
-
      
-
      
1,363
  
                                         
Balance as of December 31, 2017
    
75
      
138,992
      
(38
)
    
(129,409
)
    
9,620
  
 
(*)    Represents less than $1.

The accompanying notes are an integral part of the interim consolidated financial statements.

6
MEDIWOUND LTD. AND ITS SUBSIDIARIES
 
CONDENSED INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS
U.S. dollars in thousands

   
Six months ended
June 30,
    
Three months ended
June 30,
    
Year ended
December 31,
  
   
2018
    
2017
    
2018
    
2017
    
2017
  
   
Unaudited
    
Audited
  
Cash flows from operating activities:
                              
Net loss
    
(8,716
)
    
(8,776
)
    
(4,165
)
    
(4,462
)
    
(18,885
)
                                         
Adjustments to reconcile net loss to net cash used in continuing operating activities:
                                        
                                         
Adjustments to profit and loss items:
                                        
Loss from discontinued operation
    
-
      
-
      
-
      
-
      
7,616
  
Depreciation and amortization
    
305
      
302
      
170
      
146
      
567
  
Share-based compensation
    
367
      
665
      
149
      
337
      
1,363
  
Revaluation of liabilities in respect of IIA grants
    
404
      
402
      
218
      
221
      
229
  
Revaluation of contingent consideration for the purchase of shares
    
1,112
      
1,120
      
569
      
570
      
351
  
Increase (decrease) in severance liability
    
6
      
20
      
(5
)
    
12
      
111
  
Net financing income
    
(182
)
    
(174
)
    
(115
)
    
(88
)
    
(349
)
Un-realized foreign currency (gain) loss
    
126
      
(91
)
    
85
      
(39
)
    
(185
)
                                         
     
2,138
      
2,244
      
1,071
      
1,159
      
9,703
  
Changes in asset and liability items:
                                        
    Decrease (increase) in trade receivables
    
(421
)
    
(241
)
    
(494
)
    
(201
)
    
28
  
Decrease (increase) in inventories
    
15
      
(279
)
    
149
      
(132
)
    
(1,042
)
Decrease (increase) in other receivables
    
(1,572
)
    
(277
)
    
(1,690
)
    
278
      
(1,227
)
Increase (decrease) in trade payables
    
74
      
(1,210
)
    
(51
)
    
(2,487
)
    
(135
)
Increase (decrease) in other payables and deferred revenues
    
(336
)
    
(459
)
    
(507
)
    
1,606
      
(70
)
                                         
     
(2,240
)
    
(2,466
)
    
(2,593
)
    
(936
)
    
(2,446
)
                                         
Net cash flows used in operating activities
    
(8,818
)
    
(8,998
)
    
(5,687
)
    
(4,239
)
    
(14,892
)
Net cash used in discontinued operating activities
    
-
      
-
      
-
      
-
      
(1,563
)
     
(8,818
)
    
(8,998
)
    
(5,687
)
    
(4,239
)
    
(16,455
)
 
The accompanying notes are an integral part of the interim consolidated financial statements.

7
MEDIWOUND LTD. AND ITS SUBSIDIARIES
 
CONSOLIDATED STATEMENTS OF CASH FLOWS
U.S. dollars in thousands
 
   
Six months ended
June 30,
    
Three months ended
June 30,
    
Year ended
December 31,
  
   
2018
    
2017
    
2018
    
2017
    
2017
  
   
Unaudited
    
Audited
  
                               
Cash Flows from Investing Activities:
                              
                               
Purchase of property and equipment
    
(313
)
    
(365
)
    
(197
)
    
(169
)
    
(1,045
)
Purchase of intangible assets
    
(13
)
    
-
      
(13
)
    
-
      
(30
)
Interest received
    
2
      
27
      
2
      
12
      
349
  
Proceeds from (investment in) short term bank deposits, net
    
(21,165
)
    
(16,837
)
    
1,680
      
3,007
      
1,163
  
                                         
Net cash provided by (used in) investing activities
    
(21,489
)
    
(17,175
)
    
1,472
      
2,850
      
437
  
                                         
Cash Flows from Financing Activities:
                                        
                                         
Proceeds from exercise of options
    
(*
 )     
2
      
(*
 )    
2
      
7
  
Proceeds from issuance of shares, net
    
-
      
-
      
-
      
-
      
22,658
  
Proceeds from IIA grants, net of repayments
    
30
      
(37
)
    
-
      
(65
)
    
330
  
                                         
Net cash provided by (used in) financing activities
    
30
      
(35
)
    
-
      
(63
)
    
22,995
  
                                         
Exchange rate differences on cash and cash equivalent balances
    
(133
)
    
117
      
(117
)
    
76
      
226
  
                                         
Increase (decrease) in cash and cash equivalents from continuing activities
    
(30,410
)
    
(26,091
)
    
(4,332
)
    
(1,376
)
    
8,766
  
                                         
Decrease in cash and cash equivalents from discontinued activities
    
-
      
-
      
-
      
-
      
(1,563
)
                                         
Balance of cash and cash equivalents at the beginning of the period
    
36,069
      
28,866
      
9,991
      
4,151
      
28,866
  
                                         
Balance of cash and cash equivalents at the end of the period
    
5,659
      
2,775
      
5,659
      
2,775
      
36,069
  
 
(*)     Represents less than $1.
 
The accompanying notes are an integral part of the interim consolidated financial statements.

8
 
MEDIWOUND LTD. AND ITS SUBSIDIARIES
 
NOTES TO CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands

NOTE 1:
GENERAL

a.
General description of the company and its operations:

MediWound Ltd. (the "Company" or "MediWound"), is a fully integrated biopharmaceutical company focused on developing, manufacturing and commercializing novel products to address unmet needs in the fields of severe burns, as well as chronic and other hard to heal wounds, connective tissue disorders and other indications.

The Company's innovative biopharmaceutical product, NexoBrid, received marketing authorization from the European Medicines Agency ("EMA") and the Israeli, Argentinean and South Korean ministries of health for removal of dead or damaged tissue, known as eschar, in adults with deep partial and full thickness thermal burns. The Company sells NexoBrid in Europe and in Israel through its commercial organization and in other territories through local distributers.

b.
The Company has two wholly owned subsidiaries: MediWound Germany GmbH, acting as Europe (“EU”) marketing authorization holder and EU sales and marketing arm and MediWound UK Limited, an inactive company. In addition, the Company owns approximately 8% of PolyHeal Ltd., a private life sciences company ("PolyHeal").

c.
The Company's securities are listed for trading on NASDAQ since March 2014. In September 2017, the Company completed a follow-on public offering. A total of 5,037,664 new ordinary shares were issued in consideration to net proceeds of $22,658, after deducting underwriter’s discounts, commissions and other offering expenses.

d.
The Company has a contract with the U.S. Biomedical Advanced Research and Development Authority ("BARDA"), which was modified in July 2017, for the advancement of the development and manufacturing, as well as the procurement of NexoBrid, as a medical countermeasure as part of BARDA preparedness for mass casualty events. The modified contract includes $56,000 of funding to support development activities to complete the U.S. Food and Drug Administration (FDA) approval process for NexoBrid for use in thermal burn injuries, as well as $16,000 for procurement of NexoBrid, which is contingent upon FDA Emergency Use Authorization (EUA) and/or FDA marketing authorization for NexoBrid. In addition, the contract includes options for further funding of up to $10,000 for expanding NexoBrid’s indications and of up to $50,000 for additional procurement of NexoBrid.

As of June 30, 2018 the Company recorded $ 21,200 in funding from BARDA under the contract.

9
MEDIWOUND LTD. AND ITS SUBSIDIARIES
 
NOTES TO CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands
 
NOTE 2:
SIGNIFICANT ACCOUNTING POLICIES
 
The following accounting policies have been applied consistently in the financial statements for all periods presented unless otherwise stated.

a.
Basis of presentation of financial statements:

These financial statements have been prepared in accordance with International Financial Reporting Standards ("IFRS") as issued by the International Accounting Standards Board ("IASB").
 
b.
Basis of preparation of the interim consolidated financial statements:

The interim condensed consolidated financial statements for the six months ended June 30, 2018 have been prepared in accordance with IAS 34 "Interim Financial Reporting".
The interim condensed consolidated financial statements do not include all the information and disclosures required in the annual financial statements, and should be read in conjunction with the Company's annual financial statements as of December 31, 2017 that were included in the Annual Report on Form 20-F filed on March 19, 2018.

The accounting policies adopted in the preparation of the interim condensed consolidated financial statements are consistent with those followed in the preparation of the Company’s annual consolidated financial statements for the year ended December 31, 2017 that were included in the Annual Report on Form 20-F filed on March 19, 2018, except than the change discussed below.

c.
Changes in significant accounting policies

IFRS 15, "Revenue from Contracts with Customers":

IFRS 15 establishes a comprehensive framework for determining whether, how much and when revenue is recognized. It replaced IAS 18 Revenue, IAS 11 Construction Contracts and related interpretations and it applies to all revenue arising from contracts with customers, unless those contracts are in the scope of other standards.

The new standard establishes a five-step model to account for revenue arising from contracts with customers. Under IFRS 15, revenue is recognized at an amount that reflects the consideration to which an entity expects to be entitled in exchange for transferring goods or services to a customer.
The standard requires entities to exercise judgment, taking into consideration all of the relevant facts and circumstances when applying each step of the model to contracts with their customers.
The Company generates revenues from direct and indirect sales of its products and from license agreements with its distributors.

10
MEDIWOUND LTD. AND ITS SUBSIDIARIES
 
NOTES TO CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands

NOTE 2:
SIGNIFICANT ACCOUNTING POLICIES (Cont.)

1.
Revenue from the Sale of products:

The Company contracts with customers for the sale of products which generally include one performance obligation. The Company has concluded that revenue from sale of products should be recognized at the point in time when control of the asset is transferred to the customer, generally on delivery of the products. Therefore, the adoption of IFRS 15 did not have an impact on the timing of revenue recognition.

2.
Revenue from distribution agreements with Multiple- element:

According to the new Standard, entities need to determine whether the licenses for intellectual property is distinct from other goods and services included in the contract. An analysis of the Company's contracts with its distributors indicates that in the majority of contracts, the Company grants its distributors a right to access its intellectual property as it exists throughout the license period. Accordingly, the Company recognizes revenue from the granting of licenses over the license period which is identical to the legacy accounting treatment.

In addition, in accordance with terms of some license agreements, the Company is entitled for up-front payments which are accounted for as deferred revenues and recognized in profit and loss over the license period.  According to the new Standard, when long-term advances (exceeding one year) are received for a future service, the Company is required to accrue interest and recognize finance expense on the advances over the period of the contract. Under the legacy revenue recognition guidance the Company did not recognize finance expenses in respect of deferred revenue.
 
On January 1, 2018, the Company adopted the new standard for all its distribution agreements at the date of initial application, and applied the standard using the modified retrospective approach, with the cumulative effect of applying the new guidance recognized as an adjustment to the opening retained earnings balance. Results for reporting periods beginning after January 1, 2018 are presented under the new guidance, while prior period amounts are not adjusted and continue to be reported under the accounting standards in effect for the prior period. The Company recorded a net increase to opening accumulated deficit of $249 as of January 1, 2018 due to the cumulative impact of adopting the new guidance and an increase of deferred revenues by $249.

11
MEDIWOUND LTD. AND ITS SUBSIDIARIES
 
NOTES TO CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands
 
NOTE 2:
SIGNIFICANT ACCOUNTING POLICIES (Cont.)
 
The following table summarizes the impacts of adopting IFRS 15 on the Company’s interim statement of financial position as of June 30, 2018 and its interim consolidated statements of comprehensive loss for the three and six months period ended June 30, 2018 for each of the line items affected.
 
Impact on the condensed interim consolidated statement of financial position:
 
   
As reported
    
Adjustments
    
Amounts without adoption of
IFRS 15
  
                   
Deferred revenues*
    
1,365
      
(311
)
    
1,054
  
                         
Accumulated deficit
    
(138,374
)
    
311
      
(138,063
)
 
* Comprised of short term deferred revenues classified in other payable and long term deferred revenues.
 
Impact on the condensed interim consolidated statements of comprehensive loss for the six months period ended June 30, 2018:
 
   
As reported
    
Adjustments
    
Amounts without adoption of
IFRS 15
  
                   
Revenues
    
1,551
      
(20
)
    
1,531
  
Financial expense
    
(1,898
)
    
82
      
(1,816
)
Net loss
    
(8,716
)
    
62
      
(8,654
)
                         
Total Basic and diluted net loss per share
    
(0.32
)
    
(0.0
)
    
(0.32
)
 
Impact on the condensed interim consolidated statements of comprehensive loss for the three months period ended June 30, 2018:
 
   
As reported
    
Adjustments
    
Amounts without adoption of IFRS 15
  
                   
Revenues
    
1,031
      
(11
)
    
1,020
  
Financial expense
    
(994
)
    
41
      
(953
)
Net loss
    
(4,165
)
    
30
      
(4,135
)
 
Total Basic and diluted net loss per share
    
(0.15
)
    
(0.0
)
    
(0.15
)
 
 
12