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SECURITIES AND EXCHANGE COMMISSION
 
Washington, D.C.  20549
______________________
 
FORM 6-K
 
REPORT OF FOREIGN PRIVATE ISSUER
 
Pursuant to Rule 13a-16 or 15d-16 of the
Securities Exchange Act of 1934
 
For the month of November 2017
 
Commission File Number: 001-36349
 
                  MediWound Ltd.                  
(Translation of registrant’s name into English)
 
42 Hayarkon Street
Yavne, 8122745 Israel
 (Address of principal executive offices)

Indicate by check mark whether the registrant files or will file annual reports under cover Form 20-F or Form 40-F.
 
Form 20-F ☒          Form 40-F ☐
 
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1):   __
 
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7):   __
 

 
EXPLANATORY NOTE

On November 16, 2017, MediWound Ltd. (the “Company”) issued a press release entitled “MediWound Reports Third Quarter 2017 Financial Results”. A copy of this press release is attached to this Form 6-K as Exhibit 99.1.
 
In addition, pursuant to the Information Rights Agreement between the Company and Clal Biotechnology Industries Ltd. ("CBI"), dated March 3, 2014 (which was attached to the Company's registration statement as exhibit 4.3), the Company is required to provide CBI with certain information necessary for CBI to meet its obligations  under Israeli Securities Law. This Form 6-K includes an Un-Audited Interim Financial Statements as of September 30, 2017, attached as Exhibit 99.2, which was provided by the Company to CBI on November 15, 2017 pursuant to such contractual obligation.

2

 
SIGNATURE
 
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
 
 
MEDIWOUND LTD.
 
 
Date: November 16, 2017
By:
/s/ Sharon Malka
 
 
Name:
Sharon Malka
 
 
Title:
Chief Financial Officer
 

3


EXHIBIT INDEX

The following exhibit is filed as part of this Form 6-K:

Exhibit
Description
   
   

4

Exhibit 99.1
 
 
News Release          
 
MediWound Reports Third Quarter 2017 Financial Results

NexoBrid® sales grow 74% year-to-date

Raised gross proceeds of $25.2 million through public equity offering

Awarded additional $32 million from BARDA to support NexoBrid R&D programs

Conference call begins today at 8:30 a.m. Eastern Standard Time

YAVNE, Israel (November 16, 2017) MediWound Ltd. (Nasdaq: MDWD), a fully-integrated biopharmaceutical company bringing innovative therapies to address unmet needs in severe burn and wound management, today announced financial results for the three and nine months ended September 30, 2017.

Third Quarter 2017 Operational and Financial Highlights

·
Total revenues for the third quarter of 2017 were $0.74 million, a 43% increase from $0.52 million in the third quarter of 2016, underscoring the continued growth of NexoBrid® sales.
·
Raised total gross proceeds of $25.2 million through a public offering of 5.04 million shares, which included the exercise of the underwriters' option to purchase additional shares.
·
BARDA upsized contract with MediWound, committing an additional $32 million to support R&D activities, bringing total non-dilutive funding to up to $132 million.
·
Successfully completed the second cohort of the Phase 2 study evaluating EscharEx, MediWound’s topical biologic drug for the debridement of dead or damaged tissue in diabetic foot ulcers and venous leg ulcers. The study achieved its primary objective of demonstrating EscharEx’s safety over extended periods of application with no material safety concerns identified.
·
Awarded Best Poster Presentation in the 17th Annual European Burns Association (EBA) Congress. Overall 43 presentations of burn experts from across Europe on NexoBrid at the EBA conference.
·
New distribution agreement in Taiwan with Holy Stone Healthcare further expands NexoBrid’s® global reach.
·
Appointed Stephen T. Wills as Chairman of the Company’s Board of Directors and Assaf Segal as a new Board member.
·
Tel Aviv district court ordered MediWound to purchase approximately $1.5 million of PolyHeal shares; MediWound weighing an appeal.
·
Positive decision of European Commission on a five-year renewal of NexoBrid's Marketing Authorization.

“We continue to see growing enthusiasm among burn specialists for the benefits of NexoBrid and its place as the standard-of-care for debridement of severe burns. This is evidenced by increased demand for NexoBrid, by the 43 presentations from burn experts from across Europe on NexoBrid at the EBA conference, and by the endorsement of the European Burn Association granting the best poster award to a presentation of European consensus for 62 statements on the benefits of NexoBrid,” said Gal Cohen, MediWound’s President and Chief Executive Officer.

We remain excited about the commercial opportunity for EscharEx being developed for a large and growing market where enzymatic debridement is being used, sold and reimbursed for hundreds of millions of dollars every year. We were pleased to have successfully completed the second cohort of our Phase 2 study in EscharEx, which included 38 diabetic foot ulcer and venous leg ulcer patients treated over extended periods of application. Our recent successful public equity offering of $25.2 million in gross proceeds, combined with the recent increase of $32 million of non-dilutive financing from BARDA to support our NexoBrid R&D activities, provide us with the financial resources needed for the execution of our EscharEx pivotal program,” added Mr. Cohen.


"Following the November 12, 2017, ruling of the Tel Aviv District Court regarding certain PolyHeal shareholders claim, we are evaluating the court ruling and its implications and our options going forward, including a potential appeal” added Mr. Cohen.

Third Quarter Financial Results

Revenues for the third quarter of 2017 were $0.74 million, up 43% from the $0.52 million in revenues for the third quarter of 2016.

Gross profit for the third quarter of 2017 was $0.40 million, compared to a gross profit of $0.04 million in the prior year period.

Research and development expenses, net of participations, for the third quarter of 2017 were $0.8 million, compared with $2.4 million for the third quarter of 2016. The decrease in net research and development expenses was primarily due to a decrease of $0.5 million related to EscharEx clinical trials and non-clinical development and an increase of $1.0 million in participation by BARDA and Israeli Innovation Authority.

Selling, and general and administrative expenses decreased to $2.4 million for the third quarter of 2017 from $2.6 million for the third quarter of 2016.

Operating loss for the third quarter of 2017 was $2.8 million, down 43% from $4.9 million in the third quarter of 2016. The decrease was primarily due to improvements in gross margins and a decrease of about $1.8 million in operating expenses compared to the third quarter of 2016.

The Company posted a net loss of $11.0 million, or $0.49 per share, for the third quarter of 2017 compared with a net loss of $5.7 million, or $0.26 per share, for the third quarter of 2016. The increase in net loss was as a result of a full provision for the PolyHeal's shares purchase price plus the accrued interest, in the amount of $7.5 million that was recorded within the loss from discontinued operation as a result of the district court ruling. This was offset by a decrease of $2.2 million in net loss from continuing operation, primarily due to the decrease of $1.8 million in operating expenses.
 
Adjusted EBITDA, as defined below, for the third quarter of 2017 was a loss of $2.3 million, compared with a loss of $4.2 million for the third quarter of 2016.

Year-to-Date 2017 Financial Results

Total revenue for the first nine months of 2017 was $2.0 million compared with $1.1 million for the first nine months of 2016, an increase of 74%.

Gross profit for the first nine months of 2017 was $0.8 million, compared with a gross loss of $0.2 million in the prior year period, an improvement of approximately $1.0 million.

Research and development expenses, net of participations, were $4.3 million for the first nine months of 2017, compared with $6.3 million for the first nine months of 2016. The decrease was primarily due to a decrease of $1.3 million related to EscharEx clinical trials and non-clinical development, and an increase of $0.7 million in participation by BARDA and the Israeli Innovation Authority.

Selling, general and administrative expenses in the first nine months of 2017 decreased $2.5 million to $6.7 million from $9.2 million during the same period in 2016, primarily due to a reduction of $1.6 million related to marketing expenses associated with launch activities and a $0.9 decrease in non-cash share based compensation.

Operating loss for the first nine months of 2017 was $10.2 million, an improvement of 35% versus an operating loss of $15.6 million in the first nine months of 2016. The decrease was primarily due to the positive change in gross profit in the first nine months of 2017 and the decrease in operating expenses compared to the prior year period.

For the nine months ended September 30, 2017, the Company posted a net loss of $19.8 million, or $0.90 per share, compared with a net loss of $17.0 million, or $0.78 per share, for the same period in 2016. The change in net loss comprised of: (i) a decrease in net loss from continuing operation, primarily due to a $5.5 million decrease in operating loss which was offset by an increase of $0.8 million net financial expenses, largely comprised of non-cash revaluation of contingent liabilities; and (ii) a loss from discontinued operation of $7.5 million, following a full provision for the shares purchase price plus the accrued interest, that was recorded as a result of the district court ruling.


Adjusted EBITDA, as defined below, for the first nine of 2017 was a loss of $8.7 million, compared with a loss of $12.9 million for the first nine months of 2016.

Balance Sheet Highlights

As of September 30, 2017, the Company had cash and short-term deposits of $40.6 million, which includes the $22.8 million of net proceeds generated from the Company’s recent public offering. The Company remained on budget and utilized $13.1 million in cash to fund operating activities during the first nine months of 2017.

For the remainder of 2017, the Company intends to allocate its cash resources to advance the development of EscharEx while the NexoBrid development plans are fully funded by BARDA. We currently anticipate that existing cash resources, together with BARDA's funding and procurement, will be sufficient to enable us to complete our ongoing Phase 3 clinical program for NexoBrid and our planned Phase 3 clinical program for EscharEx.

Expected cash use to support ongoing operating activities in 2017 will remain toward the lower end of the Company’s guidance range for 2017 of $15.0 million to $17.0 million. The Company may bear an additional $1.5 million expense to purchase shares of PolyHeal pursuant to the District Court ruling in the fourth quarter of 2017.
 
Conference Call

MediWound management will host a conference call for investors today, November 16, 2017 beginning at 8:30 a.m. Eastern time to discuss these results and answer questions.  Shareholders and other interested parties may participate in the call by dialing (888) 715-1402 (domestic) or (719) 325-2204 (international) and entering passcode 7237105. The call also will be broadcast live on the Internet on the Company's website at www.mediwound.com.

A replay of the call will be accessible two hours after its completion through November 30, 2017 by dialing (844) 512-2921 (domestic) or (412) 317-6671 (international) and entering passcode 7237105. The call will also be archived on the Company website for 90 days at www.mediwound.com.

Non-IFRS Financial Measures

To supplement consolidated financial statements prepared and presented in accordance with IFRS, the Company has provided a supplementary non-IFRS measure to consider in evaluating the Company's performance. Management uses Adjusted EBITDA, which it defines as earnings before interest, taxes, depreciation and amortization, impairment, one-time expenses, restructuring and stock-based compensation expenses.

Although Adjusted EBITDA is not a measure of performance or liquidity calculated in accordance with IFRS, we believe the non-IFRS financial measures we present provide meaningful supplemental information regarding our operating results primarily because they exclude certain non-cash charges or items that we do not believe are reflective of our ongoing operating results when budgeting, planning and forecasting and determining compensation, and when assessing the performance of our business with our  senior management.

However, investors should not consider these measures in isolation or as substitutes for operating income, cash flows from operating activities or any other measure for determining the Company's operating performance or liquidity that is calculated in accordance with IFRS. In addition, because Adjusted EBITDA is not calculated in accordance with IFRS, it may not necessarily be comparable to similarly titled measures employed by other companies. The non-IFRS measures included in this press release have been reconciled to the IFRS results in the tables below.


About MediWound Ltd.

MediWound is a fully-integrated biopharmaceutical company focused on developing, manufacturing and commercializing novel therapeutics based on its patented proteolytic enzyme technology to address unmet needs in the fields of severe burns, chronic and other hard-to-heal wounds. MediWound’s first innovative biopharmaceutical product, NexoBrid®, received marketing authorization from the European Medicines Agency as well as the Israeli and Argentinian Ministries of Health, for removal of dead or damaged tissue, known as eschar, in adults with deep partial and full-thickness thermal burns and was launched in Europe and Israel and Argentina. NexoBrid® represents a new paradigm in burn care management, and clinical trials have demonstrated, with statistical significance, its ability to non-surgically and rapidly remove the eschar earlier and, without harming viable tissues.

MediWound's second innovative product, EscharEx® is a topical biological drug being developed for debridement of chronic and other hard-to-heal wounds and is complementary to the large number of existing wound healing products, which require a clean wound bed in order to heal the wound. EscharEx® contains the same proteolytic enzyme technology as NexoBrid®, and benefits from the wealth of existing development data on NexoBrid®.  In two Phase 2 studies, EscharEx® has demonstrated safety and efficacy in the debridement of chronic and other hard-to-heal wounds, within a few daily applications. For more information, please visit www.mediwound.com.
 
Cautionary Note Regarding Forward-Looking Statements

This release includes forward-looking statements within the meaning of Section 27A of the U.S. Securities Act of 1933, as amended, Section 21E of the US Securities Exchange Act of 1934, as amended, and the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements are statements that are not historical facts, such as statements regarding assumptions and results related to the regulatory authorizations and launch dates. In some cases, you can identify forward-looking statements by terminology such as “believe,” “may,” “estimate,” “continue,” “anticipate,” “intend,” “should,” “plan,” “expect,” “predict,” “potential,” or the negative of these terms or other similar expressions. Forward-looking statements are based on MediWound’s current knowledge and its present beliefs and expectations regarding possible future events and are subject to risks, uncertainties and assumptions. Actual results and the timing of events could differ materially from those anticipated in these forward-looking statements as a result of several factors. In particular, you should consider the risks discussed under the heading “Risk Factors” in our annual report on Form 20-F for the year ended December 31, 2016 and information contained in other documents filed with or furnished to the Securities and Exchange Commission. You should not rely upon forward-looking statements as predictions of future events. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee that future results, levels of activity, performance and events and circumstances reflected in the forward-looking statements will be achieved or will occur. The forward-looking statements made herein speak only as of the date of this announcement and MediWound undertakes no obligation to update publicly such forward-looking statements to reflect subsequent events or circumstances, except as otherwise required by law.

Contacts:
Bob Yedid
Sharon Malka
Managing Director
Chief Financial and Operations Officer
LifeSci Advisors
MediWound
646-597-6989
ir@mediwound.co.il
bob@lifesciadvisors.com

– Tables to Follow –


CONDENSED CONSOLIDATED BALANCE SHEETS
U.S. dollars in thousands

   
September 30,
   
December 31,
 
   
2017
   
2016
   
2016
 
   
Unaudited
       
Cash, cash equivalents and short term deposits
   
40,593
     
33,956
     
30,029
 
Accounts and other receivable
   
4,238
     
2,606
     
2,739
 
Inventories
   
1,637
     
1,063
     
844
 
Total current assets
   
46,468
     
37,625
     
33,612
 
Long term deposits
   
60
     
103
     
103
 
Property, plant and equipment, net
   
1,834
     
1,362
     
1,276
 
Intangible assets, net
   
649
     
831
     
773
 
Total long term assets
   
2,543
     
2,296
     
2,152
 
Total assets
   
49,011
     
39,921
     
35,764
 
Trade payables and accrued expenses
   
3,289
     
2,505
     
3,320
 
Other payables
   
2,190
     
2,476
     
2,060
 
Other payables from discontinued operation
   
7,500
     
-
     
-
 
Total current liabilities
   
12,979
     
4,981
     
5,380
 
Deferred revenues
   
937
     
1,067
     
1,023
 
Liabilities in respect of Israeli Innovation Authority grants net of current maturities
   
7,395
     
7,637
     
6,839
 
Contingent consideration for the purchase of shares net of current maturities
   
15,673
     
17,265
     
14,533
 
Severance pay liability, net
   
242
     
99
     
219
 
Total long term liabilities
   
24,247
     
26,068
     
22,614
 
                         
Shareholders' equity
   
11,785
     
8,872
     
7,770
 
Total liabilities & shareholder equity
   
49,011
     
39,921
     
35,764
 
 

 
CONDENSED CONSOLIDATED UNAUDITED STATEMENTS OF COMPREHENSIVE LOSS (UNAUDITED)
U.S. dollars in thousands (except share and per share data)
 
 
Nine months ended
   
Three months ended
 
   
September 30,
   
September 30,
 
   
2017
   
2016
   
2017
   
2016
 
                         
Revenues
   
1,966
     
1,128
     
739
     
518
 
Cost of revenues
   
1,162
     
1,303
     
338
     
474
 
Gross profit (loss)
   
804
     
(175
)
   
401
     
44
 
Operating expenses:
                               
Research and development, gross
   
10,068
     
11,420
     
3,446
     
3,947
 
Participation by IIA & BARDA
   
(5,789
)
   
(5,135
)
   
(2,602
)
   
(1,592
)
Research and development, net
   
4,279
     
6,285
     
844
     
2,355
 
Selling, general & administrative
   
6,688
     
9,188
     
2,354
     
2,633
 
Total operating expenses
   
10,967
     
15,473
     
3,198
     
4,988
 
Operating loss
   
(10,163
)
   
(15,648
)
   
(2,797
)
   
(4,944
)
Financial income (expenses), net
   
(2,117
)
   
(1,348
)
   
(707
)
   
(767
)
Loss from continuing operations
   
(12,280
)
   
(16,996
)
   
(3,504
)
   
(5,711
)
Loss from discontinued operation
   
(7,500
)
   
-
     
(7,500
)
   
-
 
Loss for the period
   
(19,780
)
   
(16,996
)
   
(11,004
)
   
(5,711
)
                                 
Foreign currency translation adjustments
   
(19
)
   
(4
)
   
(2
)
   
(1
)
Total comprehensive loss
   
(19,799
)
   
(17,000
)
   
(11,006
)
   
(5,712
)
                                 
Basic and diluted loss per share:
                               
Loss from continuing operations
   
(0.56
)
   
(0.78
)
   
(0.16
)
   
(0.26
)
Loss from discontinued operation
   
(0.34
)
   
0.00
     
(0.33
)
   
0.00
 
Net loss per share
   
(0.90
)
   
(0.78
)
   
(0.49
)
   
(0.26
)
                                 
Weighted average number of ordinary shares used in the computation of basic and diluted loss per share:
   
22,105
     
21,853
     
22,438
     
21,857
 


 
CONDENSED CONSOLIDATED UNAUDITED STATEMENTS OF CASH FLOWS (UNAUDITED)
U.S. dollars in thousands

 
Nine months ended
   
Three months ended
 
   
September 30,
   
September 30,
 
   
2017
   
2016
   
2017
   
2016
 
Cash Flows from Operating Activities:
                       
Net loss
   
(19,780
)
   
(16,996
)
   
(11,004
)
   
(5,711
)
                                 
Adjustments to reconcile net loss to net cash used in continuing operating activities:
                               
Adjustments to profit and loss items:
                               
Loss from discontinued operation
   
7,500
     
-
     
7,500
     
-
 
Depreciation and amortization
   
430
     
386
     
128
     
133
 
Share-based compensation
   
1,013
     
2,400
     
348
     
613
 
Revaluation of liabilities in respect of IIA grants
   
351
     
(190
)
   
(51
   
(167
Revaluation of contingent consideration for the purchase of shares
   
1,672
     
1,180
     
552
     
641
 
Increase in severance liability, net
   
23
     
-
     
3
     
-
 
Net financing expenses (income)
   
(319
)
   
(367
)
   
(54
)
   
(107
)
     
10,670
     
3,409
     
8,426
     
1,113
 
Changes in asset and liability items:
                               
Decrease (increase) in trade receivables
   
(225
)
   
(245
)
   
16
     
(90
)
Decrease (increase) in inventories
   
(793
)
   
642
     
(514
)
   
96
 
Decrease (increase) in other receivables
   
(1,548
)
   
425
     
(1,271
)
   
754
 
Increase (decrease) in trade payables
   
(46
)
   
1,377
     
1,164
     
935
 
Increase (decrease) in other payables & deferred revenues
   
(328
)
   
(827
)
   
131
     
(1,467
)
     
(2,940
)
   
1,372
     
(474
)
   
228
 
Net cash flows used in operating activities
   
(12,050
)
   
(12,215
)
   
(3,052
)
   
(4,370
)
                                 
Cash Flows from Investment Activities:
                               
Purchase of property and equipment
   
(864
)
   
(642
)
   
(499
)
   
(202
)
Interest received
   
52
     
45
     
25
     
4
 
Proceeds from (investment in) short term bank deposits, net of investments
   
(13,837
)
   
(25,239
)
   
3,000
     
(1,505
)
Net cash provided by (used in) investing activities
   
(14,649
)
   
(25,836
)
   
2,526
     
(1,703
)
                                 
Cash Flows from Financing Activities:
                               
Proceeds from exercise of options
   
7
     
-
     
5
     
-
 
Proceeds from issuance of shares, net
   
22,794
     
2
     
22,794
     
2
 
Proceeds from IIA grants, net of repayments
   
328
     
658
     
365
     
658
 
Net cash provided by financing activities
   
23,129
     
660
     
23,164
     
660
 
                                 
Exchange rate differences on cash and cash equivalent balances
   
106
     
71
     
(11
)
   
1
 
Increase (decrease) in cash and cash equivalents
   
(3,464
)
   
(37,320
)
   
22,627
     
(5,412
)
Balance of cash and cash equivalents at the beginning of the period
   
28,866
     
42,502
     
2,775
     
10,594
 
Balance of cash and cash equivalents at the end of the period
   
25,402
     
5,182
     
25,402
     
5,182
 
 

 
ADJUSTED EBITDA
U.S. dollars in thousands

   
Nine months ended
   
Three months ended
 
   
September 30,
   
September 30,
 
   
2017
   
2016
   
2017
   
2016
 
Loss for the period
   
(12,280
)
   
(16,996
)
   
(3,504
)
   
(5,711
)
Adjustments:
                               
Financial (expenses) income, net
   
(2,117
)
   
(1,348
)
   
(707
)
   
(767
)
Loss from discontinued operation
   
(7,500
)
   
-
     
(7,500
)
   
-
 
Depreciation and amortization
   
(430
)
   
(386
)
   
(128
)
   
(133
)
Share-based compensation expenses
   
(1,012
)
   
(2,401
)
   
(347
)
   
(614
)
Total adjustments
   
(11,059
)
   
(4,135
)
   
(8,682
)
   
(1,514
)
Adjusted EBITDA
   
(8,721
)
   
(12,861
)
   
(2,322
)
   
(4,197
)




Exhibit 99.2


MEDIWOUND LTD. AND ITS SUBSIDIARIES

INTERIM CONDENSED FINANCIAL STATEMENTS

AS OF SEPTEMBER 30, 2017

U.S. DOLLARS IN THOUSANDS

UNAUDITED

INDEX

 
Page
   
F-2
   
F-3
   
F-4 - F-6
   
F-7 - F-8
   
F-9 - F-11


 
MEDIWOUND LTD. AND ITS SUBSIDIARIES

CONDENSED INTERIM CONSOLIDATED BALANCE SHEETS
U.S. dollar in thousands (expect share data)

   
September 30,
   
December 31,
 
   
2017
   
2016
   
2016
 
   
Unaudited
   
Audited
 
CURRENT ASSETS:
                 
Cash and cash equivalents
   
25,402
     
5,182
     
28,866
 
Short-term bank deposits
   
15,191
     
28,774
     
1,163
 
Trade receivables
   
616
     
491
     
332
 
Inventories
   
1,637
     
1,063
     
844
 
Other receivables
   
3,622
     
2,115
     
2,407
 
                         
     
46,468
     
37,625
     
33,612
 
LONG‑TERM ASSETS:
                       
Long term deposits
   
60
     
103
     
103
 
Property, plant and equipment, net
   
1,834
     
1,362
     
1,276
 
Intangible assets, net
   
649
     
831
     
773
 
                         
     
2,543
     
2,296
     
2,152
 
                         
     
49,011
     
39,921
     
35,764
 
CURRENT LIABILITIES:
                       
Trade payables and accrued expenses
   
3,289
     
2,505
     
3,320
 
Other payables
   
2,190
     
2,476
     
2,060
 
Other payables from discontinued operation
   
7,500
     
-
     
-
 
     
12,979
     
4,981
     
5,380
 
LONG‑TERM LIABILITIES:
                       
Deferred  revenues
   
937
     
1,067
     
1,023
 
Liabilities in respect of IIA grants
   
7,395
     
7,637
     
6,839
 
Contingent consideration for the purchase of shares
   
15,673
     
17,265
     
14,533
 
Severance pay liability, net
   
242
     
99
     
219
 
                         
     
24,247
     
26,068
     
22,614
 
SHAREHOLDERS' EQUITY:
                       
Ordinary shares of NIS 0.01 par value:
                       
Authorized: 32,244,508 shares; Issued and Outstanding: 27,047,737 as of September 30, 2017, 21,930,449 as of December 31, 2016 and 21,871,055 as of September 30, 2016
   
75
     
60
     
60
 
Share premium
   
138,778
     
114,203
     
114,979
 
Foreign currency translation adjustments
   
(28
)
   
(20
)
   
(9
)
Accumulated deficit
   
(127,040
)
   
(105,371
)
   
(107,260
)
                         
     
11,785
     
8,872
     
7,770
 
                         
     
49,011
     
39,921
     
35,764
 

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

F - 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)

   
Nine months ended
September 30,
   
Three months ended
September 30,
   
Year ended
December 31,
 
   
2017
   
2016
   
2017
   
2016
   
2016
 
   
Unaudited
   
Audited
 
                               
Revenues
   
1,966
     
1,128
     
739
     
518
     
1,558
 
Cost of revenues
   
1,162
     
1,303
     
338
     
474
     
2,158
 
                                         
Gross profit (loss)
   
804
     
(175
)
   
401
     
44
     
(600
)
                                         
Operating expenses:
                                       
Research and development, net of participations
   
4,279
     
6,285
     
844
     
2,355
     
7,068
 
Selling and marketing
   
4,107
     
6,214
     
1,414
     
1,686
     
8,403
 
General and administrative
   
2,581
     
2,974
     
940
     
947
     
4,084
 
                                         
Operating loss
   
(10,163
)
   
(15,648
)
   
(2,797
)
   
(4,944
)
   
(20,155
)
                                         
Financial income
   
243
     
492
     
69
     
95
     
2,166
 
Financial expense
   
(2,360
)
   
(1,840
)
   
(776
)
   
(862
)
   
(896
)
Loss from continuing operation
   
(12,280
)
   
(16,996
)
   
(3,504
)
   
(5,711
)
   
(18,885
)
                                         
Loss from discontinued operation
   
(7,500
)
   
-
     
(7,500
)
   
-
     
-
 
                                         
Net loss
   
(19,780
)
   
(16,996
)
   
(11,004
)
   
(5,711
)
   
(18,885
)
                                         
Other comprehensive income (loss):
                                       
Items to be reclassified to profit or loss in subsequent periods:
                                       
Foreign currency translation adjustments
   
(19
)
   
(4
)
   
(2
)
   
(1
)
   
7
 
                                         
Total comprehensive loss
   
(19,799
)
   
(17,000
)
   
(11,006
)
   
(5,712
)
   
(18,878
)
                                         
Basic and diluted loss per share:
                                       
   Loss from continuing operations
   
(0.56
)
   
(0.78
)
   
(0.16
)
   
(0.26
)
   
(0.86
)
   Loss from discontinued operation
   
(0.34
)
   
-
     
(0.33
)
   
-
     
-
 
Net loss per share
   
(0.90
)
   
(0.78
)
   
(0.49
)
   
(0.26
)
   
(0.86
)
Weighted average number of Ordinary shares used in the computation of basic and diluted loss per share
   
22,105
     
21,853
     
22,438
     
21,857
     
21,862
 
 
The accompanying notes are an integral part of the condensed interim consolidated financial statements.

F - 3


MEDIWOUND LTD. AND ITS SUBSIDIARIES

CONDENSED INTERIM CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
U.S. dollar in thousands

   
Share capital
   
Share premium
   
Foreign currency translation reserve
   
Accumulated
deficit
   
Total
equity
 
                               
Balance as of January 1, 2017 (audited)
   
60
     
114,979
     
(9
)
   
(107,260
)
   
7,770
 
                                         
Loss for the period
   
-
     
-
     
-
     
(19,780
)
   
(19,780
)
Other comprehensive loss
   
-
     
-
     
(19
)
   
-
     
(19
)
                                         
Total comprehensive loss
   
-
     
-
     
(19
)
   
(19,780
)
   
(19,799
)
                                         
Exercise of options
   
(*
)
   
7
     
-
     
-
     
7
 
Share-based compensation
   
-
     
1,013
     
-
     
-
     
1,013
 
Issuance of ordinary shares of NIS 0.01 par value net of issuance expenses
   
15
     
22,779
     
-
     
-
     
22,794
 
                                         
Balance as of September 30, 2017 (unaudited)
   
75
     
138,778
     
(28
)
   
(127,040
)
   
11,785
 
 
   
Share capital
   
Share premium
   
Foreign currency translation reserve
   
Accumulated
deficit
   
Total
equity
 
                               
Balance as of January 1, 2016 (audited)
   
60
     
111,801
     
(16
)
   
(88,375
)
   
23,470
 
                                         
Loss for the period
   
-
     
-
     
-
     
(16,996
)
   
(16,996
)
Other comprehensive loss
   
-
     
-
     
(4
)
   
-
     
(4
)
                                         
Total comprehensive loss
   
-
     
-
     
(4
)
   
(16,996
)
   
(17,000
)
                                         
Exercise of options
   
(*
)
   
2
     
-
     
-
     
2
 
Share-based compensation
   
-
     
2,400
     
-
     
-
     
2,400
 
                                         
Balance as of September 30, 2016 (unaudited)
   
60
     
114,203
     
(20
)
   
(105,371
)
   
8,872
 
 
(*)
Represent less than $1.

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

F - 4

MEDIWOUND LTD. AND ITS SUBSIDIARIES

CONDENSED INTERIM CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
U.S. dollar in thousands

   
Share capital
   
Share premium
   
Foreign currency translation reserve
   
Accumulated
deficit
   
Total
equity
 
    Unaudited  
Balance as of July 1, 2017
   
60
     
115,646
     
(26
)
   
(116,036
)
   
(356
)
                                         
Loss for the period
   
-
     
-
     
-
     
(11,004
)
   
(11,004
)
Other comprehensive income
   
-
     
-
     
(2
)
   
-
     
(2
)
                                         
Total comprehensive loss
   
-
     
-
     
(2
)
   
(11,004
)
   
(11,006
)
                                         
Exercise of options
   
(*
)
   
5
     
-
     
-
     
5
 
Share-based compensation
   
-
     
348
     
-
     
-
     
348
 
Issuance of ordinary shares of NIS 0.01 par value net of issuance expenses
   
15
     
22,779
     
-
     
-
     
22,794
 
                                         
Balance as of September 30, 2017
   
75
     
138,778
     
(28
)
   
(127,040
)
   
11,785
 
 
   
Share capital
   
Share premium
   
Foreign currency translation reserve
   
Accumulated
deficit
   
Total
equity
 
   
Unaudited
 
Balance as of July 1, 2016
   
60
     
113,588
     
(19
)
   
(99,660
)
   
13,969
 
                                         
Loss for the period
   
-
     
-
     
-
     
(5,711
)
   
(5,711
)
Other comprehensive income (loss)
   
-
     
-
     
(1
)
   
-
     
(1
)
                                         
Total comprehensive loss
   
-
     
-
     
(1
)
   
(5,711
)
   
(5,712
)
                                         
Exercise of options
   
(*
)
   
2
     
-
     
-
     
2
 
Share-based compensation
   
-
     
613
     
-
     
-
     
613
 
                                         
Balance as of September 30, 2016
   
60
     
114,203
     
(20
)
   
(105,371
)
   
8,872
 
 
 (*)
Represent less than $1.

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

F - 5

MEDIWOUND LTD. AND ITS SUBSIDIARIES

CONDENSED INTERIM CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
U.S. dollar in thousands

   
Share capital
   
Share premium
   
Foreign currency translation reserve
   
Accumulated
deficit
   
Total
Equity
 
                               
Balance as of January 1, 2016
   
60
     
111,801
     
(16
)
   
(88,375
)
   
23,470
 
                                         
Loss for the period
   
-
     
-
     
-
     
(18,885
)
   
(18,885
)
Other comprehensive income
   
-
     
-
     
7
     
-
     
7
 
                                         
Total comprehensive income (loss)
   
-
     
-
     
7
     
(18,885
)
   
(18,878
)
                                         
Exercise of options
   
(*
)
   
7
     
-
     
-
     
7
 
Share-based compensation
   
-
     
3,171
     
-
     
-
     
3,171
 
                                         
Balance as of December 31, 2016
   
60
     
114,979
     
(9
)
   
(107,260
)
   
7,770
 

(*)
Represent less than $1.
 
The accompanying notes are an integral part of the condensed interim consolidated financial statements.

F - 6

MEDIWOUND LTD. AND ITS SUBSIDIARIES

CONDENSED INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS
U.S. dollars in thousands

   
Nine months ended
September 30,
   
Three months ended
September 30,
   
Year ended December 31,
 
   
2017
   
2016
   
2017
   
2016
   
2016
 
   
Unaudited
   
Audited
 
                               
Cash flows from operating activities:
                             
                               
Net loss
   
(19,780
)
   
(16,996
)
   
(11,004
)
   
(5,711
)
   
(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
   
7,500
     
-
     
7,500
     
-
     
-
 
Depreciation and amortization
   
430
     
386
     
128
     
133
     
589
 
Share-based compensation
   
1,013
     
2,400
     
348
     
613
     
3,171
 
Revaluation of liabilities in respect of IIA grants
   
351
     
(190
)
   
(51
)
   
(167
)
   
(1,298
)
Revaluation of contingent consideration for the purchase of shares
   
1,672
     
1,180
     
552
     
641
     
(1,621
)
Increase in severance liability
   
23
     
-
     
3
     
-
     
125
 
Net financing income
   
(319
)
   
(367
)
   
(54
)
   
(107
)
   
(508
)
                                         
     
10,670
     
3,409
     
8,426
     
1,113
     
458
 
Changes in asset and liability items:
                                       
                                         
Decrease (increase) in trade receivables
   
(225
)
   
(245
)
   
16
     
(90
)
   
(107
)
Decrease (increase) in inventories
   
(793
)
   
642
     
(514
)
   
96
     
873
 
Decrease (increase) in other receivables
   
(1,548
)
   
425
     
(1,271
)
   
754
     
33
 
Increase (decrease) in trade payables
   
(46
)
   
1,377
     
1,164
     
850
     
2,195
 
Increase (decrease) in other payables and deferred revenues
   
(328
)
   
(827
)
   
131
     
(1,382
)
   
(1,012
)
                                         
     
(2,940
)
   
1,372
     
(474
)
   
228
     
1,982
 
                                         
Net cash flows used in operating activities
   
(12,050
)
   
(12,215
)
   
(3,052
)
   
(4,370
)
   
(16,445
)
 
The accompanying notes are an integral part of the condensed interim consolidated financial statements.

F - 7

MEDIWOUND LTD. AND ITS SUBSIDIARIES

CONDENSED INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS
U.S. dollars in thousands

   
Nine months ended
September 30,
   
Three months ended
September 30,
   
Year ended December 31,
 
   
2017
   
2016
   
2017
   
2016
   
2016
 
   
Unaudited
   
Audited
 
                               
Cash flows from investing activities:
                             
                               
Purchase of property and equipment
   
(864
)
   
(642
)
   
(499
)
   
(202
)
   
(671
)
Purchase of intangible assets
   
-
     
-
     
-
     
-
     
(30
)
Interest received
   
52
     
45
     
25
     
4
     
407
 
Proceeds from (investment in) short term bank deposits, net
   
(13,837
)
   
(25,239
)
   
3,000
     
(1,505
)
   
2,110
 
                                         
Net cash (used in) provided by investing activities
   
(14,649
)
   
(25,836
)
   
2,526
     
(1,703
)
   
1,816
 
                                         
Cash flows from financing activities:
                                       
                                         
Proceeds from exercise of options
   
7
     
2
     
5
     
2
     
7
 
Proceeds from issuance of ordinary shares of NIS 0.01 par value
net of expenses
   
22,794
     
-
     
22,794
     
-
     
-
 
Proceeds from IIA grants, net of repayments
   
328
     
658
     
365
     
658
     
900
 
                                         
Net cash provided by financing activities
   
23,129
     
660
     
23,164
     
660
     
907
 
                                         
Exchange rate differences on cash and cash equivalent balances
   
106
     
71
     
(11
)
   
1
     
86
 
                                         
Increase (decrease) in cash and cash equivalents
   
(3,464
)
   
(37,320
)
   
22,627
     
(5,412
)
   
(13,636
)
                                         
Balance of cash and cash equivalents at the beginning of the period
   
28,866
     
42,502
     
2,775
     
10,594
     
42,502
 
                                         
Balance of cash and cash equivalents at the end of the period
   
25,402
     
5,182
     
25,402
     
5,182
     
28,866
 

The accompanying notes are an integral part of the condensed interim consolidated financial statements.
F - 8

          
MEDIWOUND LTD. AND ITS SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS
U.S. dollars in thousands (except share and per share data)

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 and Argentinean 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 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 EU marketing authorization holder and EU sales and marketing arm and MediWound UK Limited, an inactive company. In addition, the Company owns approximately 6.5% of PolyHeal Ltd., a private life sciences company ("PolyHeal").

c.
The Company's securities are listed for trading on NASDAQ since March 2014.

d.
On September 29, 2015, the Company was awarded a U.S. Biomedical Advanced Research and Development Authority ("BARDA") contract for development and procurement of NexoBrid for the U.S. The contract is 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. On July 19, 2017 BARDA had upsized the contract and exercised an option to fund further research and development activities relating to NexoBrid. The modified contract includes $56 million 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 million 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 million for expanding NexoBrid’s indications and of up to $50 million for additional procurement of NexoBrid.

As of September 30, 2017 the Company recorded $11,900 in funding from BARDA under the contract.

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MEDIWOUND LTD. AND ITS SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS
U.S. dollars in thousands (except share and per share data)

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 nine months and three months ended September 30, 2017 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, 2016 that were included in the Annual Report on Form 20-F filed on February 21, 2017.

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, 2016 that were included in the Annual Report on Form 20-F filed on February 21, 2017.

NOTE 3:
CONTINGENT LIABILITIES

In December 2010, the Company, Teva and PolyHeal, entered into a series of agreements to collaborate in the development, manufacturing and commercialization of PolyHeal's wound care product, or the PolyHeal Product (“2010 PolyHeal Agreement”). Under the 2010 PolyHeal Agreement, PolyHeal granted the Company an exclusive global license to manufacture, develop and commercialize all the Polyheal Products in consideration for royalty payments. Concurrently, the Company granted Teva an exclusive global sub license to commercialize the Polyheal Products in consideration for certain royalties and milestone payments. In addition, Teva undertook to finance the Company's future development of the Polyheal Product and all of its manufacturing costs. Under the 2010 PolyHeal Agreement, Teva initially invested $ 6,750 in the Company, and undertook to invest an additional $ 6,750 in the Company subject to the achievement of a development milestone. Concurrent with Teva's investment in the Company, the Company purchased shares of PolyHeal for total consideration of $ 6,750. Additionally, the Company undertook to purchase additional shares of PolyHeal for the same amount, subject to the achievement of the same abovementioned development milestone.
 
On November 15, 2012, the Company informed Teva of the commencement of a feasibility study for the next generation of the PolyHeal Product, which constituted a milestone under the 2010 PolyHeal Agreement. In accordance with the terms of the agreement, Upon achievement of this milestone, Teva was to invest an additional $ 6,750 in exchange of the Company's ordinary shares and the Company was to purchase, following and pending the consummation of this investment, for an identical amount, ordinary shares of PolyHeal from its existing shareholders. The Company has not received the milestone investment from Teva.

On September 15, 2014, a Statement of Claim was filed against the Company by some shareholders of Polyheal. The plaintiffs allege that the Company is obligated to pay them a total amount of $1,475 in exchange for their respective portion of PolyHeal's shares, following the commencement of a feasibility study for the next generation of the PolyHeal Product in November 15, 2012, which constituted a milestone under a buyout option agreement between the Company, PolyHeal and its shareholders.
 
On December 14, 2014, the Company filed its Petition for a Right to Defend, or the Petition, in which it: (i) rejected the arguments raised against it in the Statement of Claim; (ii) emphasized that its obligation under the 2010 PolyHeal Agreement to purchase the 7.5% of PolyHeal’s shares is subject to the consumption of the deferred closing, as defined in the buyout agreement, including the receipt of the funds from Teva on a “back to back” basis; and (iii) stated that since no such payment has been made by Teva, the Company is not subject to any obligation to purchase PolyHeal shares and/or make any payments to PolyHeal’s shareholders.

On November 12, 2017, the Tel Aviv District Court issued its ruling (see note 5).        

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MEDIWOUND LTD. AND ITS SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS
U.S. dollars in thousands (except share and per share data)

NOTE 4:
EQUITY

On September 21, 2017, the Company completed a follow-on public offering. A total of 4,400,000 new ordinary shares were issued in consideration to offering price of $5.00 per share. On September 29, 2017, the underwriters partially exercised their ‘green shoe’ option and purchased 637,664 additional ordinary shares. The net proceeds, including the underwriters' option, were approximately $22,790, after deducting underwriter’s discounts, commissions and other offering expenses.

NOTE 5:
SUBSEQUENT EVENTS

On November 12, 2017, the Tel Aviv District Court issued its ruling accepting the plaintiffs’ claim and ruled that the Company is obligated to purchase PolyHeal’s shares for approximately $6,750 plus applicable interest, which represents the purchase price for the total number of shares that the PolyHeal Agreements contemplate would be acquired by the Company from the shareholders of PolyHeal. The Court ordered that the Company is obligated to purchase shares in PolyHeal from the plaintiffs, on the basis of their actual share holdings in PolyHeal as of January 15, 2013, for approximately $1,500, within 15 days from the date of the Court's ruling.
 
Accordingly, a full provision for the shares purchase price plus the accrued interest, totaled $7,500 was recorded in respect of this claim and a full impairment of the royalties' rights arising from the Company's ownership of shares is included within the loss from discontinued operation.
 
The Company continues to evaluate the ruling and its legal and accounting implications and the Company’s options, including a potential appeal.
 
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