Greetings and welcome to the PolyPid Second Quarter 2020 Conference Call. At the time, all participants are in a listen-only mode. As a reminder, this call is being recorded today. I'd now like to introduce your host for today's conference Mr. Bob Yedid from LifeSci Advisors. Mr. Yedid, you may begin.

Thank you all for participating in PolyPid second quarter 2020 earnings conference call. Joining me on the call today will be Amir Weisberg, Chief Executive Officer; Dikla Czaczkes, Executive Vice President and Chief Financial Officer; and Taunia Markvicka, Chief Operating Officer. Earlier today, PolyPid released financial results for the three and six months ended June 30, 2020. A copy of the press release is available in the Investors section on the Company's website, www.polypid.com. I'd like to remind you that on this call, management will make forward-looking statements within the meaning of the federal securities laws. Forward-looking statements are subject to numerous risks and uncertainties, many of which are beyond our control, including the risks and uncertainties described from time to time in our SEC filings. Our results may differ materially from those projections. These statements involve materials, risks, and uncertainties that could cause actual results or events to materially differ. Accordingly, you should not take undue reliance on these statements. I encourage you to review the Company's filings with the Securities and Exchange Commission, including without limitation, the Company's form F1 and FK, which identifies specific factors that may cause actual results or events to differ materially from those described in the forward-looking statements. PolyPid disclaims any intention or obligation, substance required by law to update or revise any financial projections or forward-looking statements because of new information, future events, or otherwise. This conference call contains time sensitive information and speaks only as a live broadcast today, August 19, 2020. With those prepared remarks, it’s my pleasure to turn the call over to Amir Weisberg, CEO, Amir?

Thank you, Bob. On behalf of our team at PolyPid, I would like to welcome everyone to our first earnings call. Now that we are a public company, we look forward to conducting these calls with investor and analyst each quarter. I will begin today with some brief introductory, comments and then Dikla will provide a detailed update of our business and will review our financial results. We are excited to successfully complete our IPO on NASDAQ at the end of June. We raised $62.8 million in the net proceeds from the IPO and added several well respected new investors. This is a very exciting milestone for our company that further strengthens our balance sheet as we enroll forward becoming a commercial company. Moving on for those of you new to our story, I would like to take a moment to provide some brief background on our company and technology and review our growth strategy. I joined PolyPid in October 2010, as one of the initial investors to manage the Company together with my partner Dr. Noam Emanuel, who founded PolyPid in 2008, and he is inventor of our model technology platform that we call PLEX. Our technology focused on optimizing the local delivery of medicine to significantly improve clinical outcomes including in the surgical settings. Our lead product is focused on optimal local delivery of the broad-spectrum antibiotic in the prevention of surgical site infection, SSI, are -- and will continue to be a global health issue and impose a heavy burden on healthcare system even with use of systemic antibiotic, which are the current standard of care for the prevention of SSI. Indeed, systemic antibiotics while begin [hair fall] are still limited. The reason is that once a patient has a surgical incision, it interrupts the local blood…

Thank you, Amir, and welcome again to our new investor as well as other who invested in PolyPid in our private financings for joining us on the call. As this is our first earnings calls, I would like to take a few minutes to describe the uniqueness of our PLEX technology. First, our product from a matriX based on combination of polymers and lipids plus our main PolyPid. This combination fully protects the drug to release in a constant linear manner over a prolonged time, which for us means weeks to months, not that hours to few days you may see with other technologies. Their release rate dictates the exposure to the drug and the duration, both of which are predetermined to optimize the efficacy and safety. Once the body fluids betrayed the outer metrics layer, they disintegrate and broken down to release the medication. This process continuously repeats each time and new outer layer comes in contact with the body fluids. Second, D-PLEX100 was optimized to release doxycycline, a broad-spectrum antibiotic active against both gram-negative and gram-positive bacteria with decades of known efficacy and safety. D-PLEX platform allows for a constant linear release of the drug and does maintain a high local concentration of doxycycline within the surgical incision for up to four weeks, which is sufficient to eradicate bacteria, including resistant one over the sensitive wound healing period. Finally, it is important to understand that with D-PLEX100 we are able to achieve these high local concentrations with relatively small doses of doxycycline overall, which is not achievable with systemic delivery without risking causing organ damage or toxicity to the patient. The placement of D-PLEX100 directly into the surgical site not only avoids the dilution of the antibiotic in the systemic circulation when administrated systemically, but also overcomes limited…

Thank you very much. [Operator Instructions] Our first question we have on the line comes from the line of Gary Nachman from BMO Capital Markets. Please go ahead.

Hi guys. Congrats on your first earnings call. So, how is enrollment going so far for the first Phase 3 abdominal study? How much are you being impacted by COVID? And then, how many sites do you have activated and where are those sites? And how long before you can get all 60 sites up and running?

Hi, Gary, thank you. I appreciate your participation. So, as you all know, we open the trial about a month and a half ago, and up until now, which is running as planned. The plan is overall to open 60 centers in different countries globally, U.S, Europe and Israel, which relating to the second half of your question about COVID. This should also be helpful in terms of COVID, if in some country, there is a second way. At some point, we have enough centers and diversity in terms of countries, as well as number of centers to overcome this, and things that are going as planned. We're first opening the centers in Israel, in Europe, and later on, we'll be joined by the U.S. The first few weeks are more divided or more used to open the centers, but also patients are gathering, and up until now since we spent a lot of time before to prepare for this trial. So, we are quite confident, let say, we are on track based on our plan. We have a very detailed stand, looking at the number of patients that need to be recruited and we are on track there.

And then, are you on track to restart the cardiac Phase 3 study by the end of the year? And to talk about the rolling NDA to D-PLEX100, first, you're going to start with abdominal then you'll have the cardiac after supplemental? And how much Fast Track speed set up potentially?

So, the Fast Track that we announced this quarter that we received on abdominal, first allow us to submit the NDA on a rolling basis, which is a very good, potential shortening of time. And the idea is that you tend to submit the NDA based on the two abdominals, and the tenor will be then submitted post approval or as a supplement to the NDA. On the base IPO that we were planning, as we indicated, in our prospectus, we weren't thinking about pursuing the journal because we said, we need additional cash in order to proceed. And since we did raise more than we expected, more than to 50, we initially submitted for we are evaluating now the right timing to reinitiate the sternal. It's not really to open it because the trial is ongoing, but more to reinitiate the recruitment and the opening of additional centers. We will give an update towards the end of the year where we stand on that.

And then the last question, should we expect an update on the oncology program before the end of the year, you had mentioned that during the IPO? And what's a reasonable timeframe for when you might start clinical studies and what those might look like?

So, yes, we do. We do expect to be able before the end of the years to give more color and detail on the oncology program. As we said in the past, we're very encouraging preclinical data and we expect to be able before the end of the year to give additional information on this program, including timeline focus event.

Okay. And it's possible that that could happen sometime in 2021? I know it's early, and I don't want to hold you to it, but just to let people know.

Yes, if we were in a position to give the timeline, we will publish it now. It more depends on the type of models that we decide to go with in terms of the type of toxicity that the FDA will require from us. On that basis, what kind of IND we will need or IND package we will need in order to further to start first event. So if it's possible that it will be within 2021, yes, the answer is that it's possible. Since we're in the process of preparing all of this material and understanding the requirements, it’s hard to say today what is exactly the timeline, but it's definitely possible.

[Operator Instructions] The next question we have today come from Balaji Prasad for Barclays. Please go ahead.

Amir and Dikla congratulations on your first earnings call. Glad to be a part of it. Maybe just a couple of questions from me. Firstly, I know that you present recently at ASCRS, I want to see what kind of reactions you have from there, any feedbacks which influences your next step of clinical or commercial actions from those meetings in the presentation? And secondly, could you also speak a bit about how the second phase of your Phase 3 trials would look like in late 2020? Thanks.

Thank you for joining our call today. Taunia, would you like to take the first part of the conference and I will relate to the study.

Sure. Thanks Balaji. So the feedback, obviously, you know that presentation at the American Society of Colorectal Surgeons Annual Meeting was a virtual meeting and virtual presentation. I think that the feedback that our speaker had received was, generally exciting, folks have been encouraged and looking for an opportunity to directly address the surgical site, and surgical site infections remains an area of keen interest among the colorectal surgeon. So, I would say, the feedback we've got from behind the scenes was a positive reaction in the virtual format that we presented.

And regarding your second question about the Phase 3 abdominal, so as we indicated, this Phase 3 is between 600 to 900 patients, and we are running it with a primary endpoint of reduction of infection and mortality, which is similar to what we had in our Phase 2, the 201 patients, again, randomized, double-blinded multi centers. We are looking to show statistically significant reduction in the primary endpoint where we are following those patients for 30 days for the primary endpoint and additional 60 days for safety purposes. We all also of course looking at other parameters that later on to see supportive of our commercial strategy in terms of potential health economics, and in more or less, and we allow for mainly in this trial mainly open abdominal surgery, relatively a small portion of minimally invasive. The second Phase 3 have a more substantial portion of minimally invasive operation, and because of that, it's a larger trial in terms of the size.

[Operator Instructions] The next question we have comes from the line of to Elliot Wilbur from Raymond James. Please go ahead.

Congratulations on getting across the IPO finish line. First question, I wanted to ask is with respect to secondary endpoints in the Phase 3. Obviously, we've all been very, very focused on the primary endpoint that seems rather well defined, but just let to get your thoughts impressions on some of the secondary endpoints things that maybe we haven't thought about as much in terms of wound healing, scarring, and issues as such that you think may be important in terms of differentiating asset that have gotten a little bit less attention perhaps than the infection rate itself?

So, thank you, Elliot, it's a good point. We didn't establish the secondary endpoint, but you are touching exactly what we are looking at in terms of both wound healing things that are relating to safety but are more relating to scarring and wound healing. This is something that we are evaluating. We are looking at the use of -- the level of use of use of antibiotic IV, which in our Phase 2 trial we've seen in all of our Phase 2 trials. We've seen quite substantial reduction in the use of antibiotic IV. This is another parameter that is important to show. And in some cases, at least in our Phase 2 trial, we saw the benefits that patients that didn't have infections per se or clinically defined as, having an infection, still benefited from either less readmission, shorter length of stay, less use your antibiotic IV, all of these parameters are looked at and these are parameters that we're gathering.

Okay. And then just one additional question here, as I think about SHIELD I being rolled out, how standard is the actual standard of care in the Phase 3 trials? I know that the protocol says, something along the lines that was institution specific, I assume that there's a fairly narrow range of treatments that are sort of defined as standard of care. But just curious, if you could weigh in with any commentary in terms of sort of the ranges of other antibiotic regimens that are allowed to be used in the standard of care or whether or not, it allows for oral versus intravenous? Just wondering, how much variability there may be in the SSI parameters in the clinical trial protocol?

Sure, so the standard, there are things that are very uniform, and things that are more viable between different centers and countries. So, everyone is using what we call systemic antibiotic, whether it's IV or PO and we allow for that. We allow for that both on the standards of care and in the treated arm. This is a standard of care which is very much uniform between different countries, geographies as well as different centers. And this is something that is part of the protocol. You do see some things that are not so much uniformed, usually line of bowel prep. There are places where it's very customary and places that it's less customary. And here, we give some more variability. We do allow for bowel prep. What we are avoiding is, bowel prep with antibiotics, because then we think this could be diversity to the patient population. So patients can get, all patients get systemic antibiotic whether IV or intravenous or PO, depending on the type of surgeon using this specific center. And we do allow for bowel prep, but without a pre-use of antibiotic IV for prolonged period of time prior to the surgery. So, there is just one shot prior to this surgery, usually about half an hour to an hour prior to the incision.

Okay. Thanks. And actually I have one more question. I don't think this was asked earlier, but obviously a little bit early to comment in terms of what the Fast Track Designation may ultimately do for the timeline and the path to ultimate NDA submission, but just wanted to get sort of your thoughts in terms of what the additional optionality may be in terms of more frequent interactions with the agency or interactions at specific points in time along the development pathway that maybe you didn't previously consider, during the course of the road show? And I guess, I won't really what I'm getting at is that, does this maybe make it possible to sit down and discuss the NDA with the agency around the time point of that initial sample size validation, opening up potentially earlier filing than previously expected?

Thank you, Elliot. So, there are a couple of points here that I think are worth mentioning. Generally, and not specifically for PolyPid, the Fast Track allow for more frequent interaction with the FDA as well as the NDA rolling on the basis of the rolling submission. And this is something that we will take advantage of and we've already, I think, have taken advantage in terms of more frequent communication and the ability to ask questions as we go along. We do have the possibility to go to the FDA after the first Phase 3 after SHIELD I, if the data is robust enough and ask for an NDA based on one trial. This is a possibility and it goes from the tests we are and also the QIDP. And we don't have any guarantee that even if the data is robust, that they will allow us to submit an NDA, but this exactly the type of communications we will be able to have with the agency due to the QIPP and the Fast Track once we have additional data. So, that it is possible.

Thank you very much. [Operator Instructions] There are no further questions in the queue at this stage. Please continue.

Thank you for joining our first quarterly conference call as a public company. I would like to reiterate how excited we are about the Company's Fast Track and declaration completion of our IPO. We are grateful to our team members and all of our external partners for their commitment to our mission and their cooperation, particularly during this uncertain time of the COVID-19 pandemic. Thank you.

Thank you very much. That does conclude the conference for today. Thanks for attending. You may all disconnect. Speakers please standby.