Greetings and welcome to the PolyPid First Quarter 2022 Conference Call. At this time, participants are in a listen-only mode. As a reminder, this call is recorded. And I would now like to – introduce our host for today’s conference, Bob Yedid from LifeSci Advisors. Mr. Yedid, you may begin.

Thank you all for participating in PolyPid’s First Quarter 2022 Conference Call. Joining me on the call today will be Amir Weisberg, Chief Executive Officer; Dikla Czaczkes Akselbrad, Executive Vice President and Chief Financial Officer of PolyPid; and Ori Warshavsky, the Chief Operating Officer for PolyPid’s US Operations. Earlier today, the company released financial results for the three months ended March 31st, 2022. The copy of the press release is available in the Investors section of 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. For example, management is making forward-looking statements when it discusses the conditions for the drawdown of the second and third tranches of the Kreos Capital loan, how the loan agreement broadens the company’s financing options and provides it with access on a non-dilutive basis to significant additional capital, the company’s pipeline, the expected benefits from recent executive appointments, the expected timing and recruitment for trials, the interim data analysis, expected timing, the release of its results and their potential implications. In addition, forward-looking statements include future commercialization of the company’s products, potential use and benefits of D-PLEX100 and OncoPLEX, market opportunity for D-PLEX100, the US addressable market for D-PLEX100, its ongoing pre-commercialization preparations and prelaunch activities, the company’s potential partners, additional publications and presentations and important scientific conferences and sufficiency of the company’s cash to fund future operations into the second quarter of 2023. Forward-looking statements are subject to numerous risks and uncertainties, many of which are beyond our control, including the risks described from time to time in our SEC filings. Our results may differ materially from those projections. These statements involve material risks and uncertainties that could cause the actual results or events to materially differ. Accordingly, you should not place undue reliance on these statements. I encourage you to review the company’s filings with the SEC, including, without limitation, the company’s Form 20-F, which identifies specific factors which may cause actual results or events to differ materially from those described in the forward-looking statements. PolyPid describe – disclaims any intention or obligation, except as required by law, to update or revise any financial projections or forward-looking statements, whether because of new information, future events or otherwise. This conference call contains time-sensitive information speaks only as of the live broadcast today, May 11th, 2022. A copy of the slides the management team will review on this call can be found under the Investors section of the company’s website at investors.polypid.com. With completion of 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 quarter 2022 earnings call. As this will be my final earnings conference call as the CEO, I would like to take this opportunity to thank the Board and our shareholders for their support and confidence in allowing me to serve as a CEO of PolyPid for over 11 years. I am also grateful to all of my colleagues at PolyPid for their hard work and commitment during this development stage, which allow us to accomplish much over the years. PolyPid is now a position of strength clinically, operationally and financially. As we advance with our Phase 3 trial, and there are near potential commercialization, it is current time to Dikla to lead the company into its next phase of growth. Therefore, once again, I would like to congrats Dikla on her well-deserved appointment as a CEO, which will become effective July 1st. Since joining PolyPid 7 years ago, Dikla has been key guiding the company towards our objectives. As a shareholder, along with our other shareholders on this call, I look forward to the DMC recommendation on our SHIELD I trial, once the interim data on 750 patients is fully analyzed and to the continuous development of our promising pipeline product candidate, OncoPLEX for the treatment of solid tumors. With that, I will now turn the call over to Dikla to provide a detailed update, including a discussion of upcoming key milestones and a review of our financial results. Following this, she will open the call for your questions. Dikla?

Thank you, Amir, and thank you all for joining us on the call. On behalf of the entire PolyPid team, thank you, Amir for your steadfast leadership over the past 11 years. Your guidance has been invaluable to me as we have prepared for the upcoming CEO transition together over the last several months. Next slide, please. With that, I will begin by providing a brief update on the status of our pipeline. First, we remain extremely pleased with the rate of enrollment in SHIELD I, our Phase 3 study evaluating D-PLEX100 for prevention of abdominal soft tissue surgical site infection or SSI. We now have approximately 900 patients enrolled into the study across about 60 centers in the United States, Europe and Israel. Importantly, you will recall from our first quarter announcement, that the FDA agreed to PolyPid’s request for the addition of an unblinded interim analysis in SHIELD I. Our request was based on the FDA’s recently published guidance for pharmaceutical companies to address the impact of COVID-19 on meeting enrollment and study objectives for clinical trials conducted during the ongoing pandemic. The interim analysis is expected to occur very shortly, once 750 patients complete their 30-days follow-up and the statistical analysis is concluded, which will allow for early trial stopping due to efficacy, futility, or for sample size reassessment. An early stop to the trial can occur if the efficacy results on the SSI rate exceed expectations. As we said on our last call, this interim analysis is an exceptional opportunity for PolyPid to more precisely define the targeted patient enrollment range for the SHIELD I study and the timeline for our NDA submission. As a reminder, the 750 patients was enrolled into SHIELD I in early March 2022. Next slide, please. Before I move on from the development program for D-PLEX100, I would like to remind you that one of the key priorities for 2022 that we discussed on our last call was a focus on building the significant value of evidence and support of the safety and efficacy of this promising product candidate throughout peer-reviewed publication and data presentation at important medical meeting. To this end, we recently presented positive clinical data on D-PLEX100 from our Phase 2 clinical trial at both SAGES 2022 Conference and the Surgical Infection Society 2022 Annual Meeting. Before we continue to discuss PolyPid’s financial and our activities to strengthen commercial readiness and enhance our clinical development function, Ori will give some color on market opportunities for D-PLEX100, our ongoing pre-commercialization preparation and potential partnership in the US. Ori?

Thank you, Dikla. Next slide, please. In the US, we believe the total addressable market for D-PLEX100 is just over 12 million surgeries per year based on IQVIA data, the leading industry source on procedure and prescription data. There are approximately 4.4 million abdominal soft tissue surgeries annually, both open and minimally invasive procedures, principally comprised of hernia repair, appendectomy and colorectal surgeries. We also believe that there is an opportunity for the use of D-PLEX100 in an additional 2.1 million abdominal procedures, principally in gynecology and urology, including hysterectomies and other related procedures. Other D-PLEX100 relevant surgeries, which either have high SSI rate or a high-risk surgeries include sternotomies, joint replacements and vascular surgeries. As part of our prelaunch activities, we examined pricing in the range of $200 to $600 per vial was tested in market research in line with other local therapies used in the surgery suite such as Exparel and Zynrelef. Moreover, we are doing additional diligence to analyze pricing requirements for D-PLEX100 to qualify for additional reimbursement when used in in-patient and out-patient settings which would facilitate more rapid uptake of our drug by healthcare facilities. From an execution standpoint, we are advancing our go-to-market plan, which includes the patient and surgeon journey defining our differentiation levers, value drivers and a tactical plan for launch. We are also making significant efforts in the medical affairs area, including onboarding a number of key opinion leaders as well as planning for additional publications and presentations at important scientific conferences. Finally, on the business development front, we continue our discussions with potential partners for the US as well as ex-US with companies with established presence in the hospitals, a number of them with established surgeon and surgery focused sales team. And with that, I will hand the call over back to Dikla. Dikla?

Thank you, Ori. Next slide, please. We continue to strengthen our management team with the recent appointment of Evgeny Valdman as the company’s new EVP of Operations and the promotion of Dalit Hazan to EVP, Research and Development and Clinical and Regulatory Affairs. We believe Evgeny will meaningfully enhance our technical operations and Dalit will have an extended positive impact on our clinical development initiatives. Evgeny will lead technical operations for PolyPid, including manufacturing, engineering, supply chain, logistics and quality affairs. His – expertise span FDA approval prerequisite, operational optimization, supply chain management and sterile pharmaceutical manufacturing. Dalit has served as PolyPid’s Senior Vice President, Research and Development and Regulatory Affairs since June 2021 and has been with the company since 2016 in roles of increasing responsibility. Her new role as Executive Vice President, heading R&D and Clinical and Regulatory affairs is the recognition of her important contribution to PolyPid. Next slide, please. From the perspective of balance sheet, we have made excellent progress over the last quarter. We were pleased to recently obtain an up to $15 million non-dilutive secured term loan facility. This agreement broadens our financing options and provide us with access on a non-dilutive basis to significant additional capital, which strengthens our ability to invest in our commercial capabilities for D-PLEX100 as well as fund future advancement of our unique PLEX technology platform. The loan facility is comprised of three tranches in the amount of $10 million, $2.5 million and $2.5 million, respectively. The first tranche of $10 million was drawn in April 2022, the second tranche of $2.5 million will be available subject to any positive results from the planned unblinded interim analysis of SHIELD I. Drawdown of the third and final tranche of $2.5 million will be available subject to obtaining positive top line results from the SHIELD I trial or if other conditions are met. Drawdown of the second and third tranche can potentially be made by the end of this year. Also, as it relates to our balance sheet, during the first quarter of 2022, we sold approximately $4 million worth of ordinary shares from our existing at-the-market facility or ATM. This action, combine with the loan agreement with Kreos Capital extended our cash runway into the second quarter of 2023. As of March 31st, 2022, the company had cash, cash equivalents and short-term deposits of $23.6 million, excluding the first tranche of $10 million of Kreos loan, which was drawn in April 2022. Next slide, please. Now let’s turn to our income statement. Research and development expenses for the three months ended March 31st, 2022, were $8.7 million compared to $6 million in the same three-month period of 2021. The increase in R&D expenses resulted primarily from the increased costs and activities related to the expedited recruitment in the ongoing SHIELD I Phase 3 clinical trial in soft tissue abdominal surgery. Marketing and business development expenses for the first quarter of 2022 were [technical difficulty]

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[technical difficulty] slightly higher than the $2.1 million recorded in the prior year period. For the first quarter of 2022, the company had a loss of $11.9 million as compared to $8.7 million in the prior year period. This was primarily driven by a strong rate of patient recruitment in the SHIELD I Phase 3 clinical trial. We will now open the call to your questions. Operator?

Thank you. We will now begin the question-and-answer session. [Operator Instructions] And the next question comes from the line of Balaji Prasad from Barclays. Please go ahead.

Hi, good morning. Just couple from me. Firstly, I was curious about – excuse me, how you would see the use case in an out-patient setting for the – for D-PLEX? I think Ori called out – called this out in his remarks. And an extension of that, will current trial readouts be sufficient for approval in an out-patient setting? Or if not, what are the requirements from a development perspective? Secondly, probably also for Ori, maybe could you offer some more insights into how the US partnership conversations are evolving maybe the key demand requirements from potential partners? And what are you looking for in your partners? Thanks.

Okay, I’ll –

Ori, would you like to first – go ahead. Take the first part. I’ll –

Yes, I’ll take the first one and Dikla take the next one. Thank you, Balaji. So on the out-patient piece, we are looking at surgeries that are done within the hospital out-patient, right. So it’s not – at least at this stage, it’s not the standalone ambulatory centers. These are surgeries that are done within, let’s call it, within the 23-hour before patients become an in-patient surgery. And most of these surgeries, not all of them, but most of them have an out-patient piece and in-patient piece. So for example, some of the hernia repairs, major open ones are in-patient, but some of the smaller ones, the more minimally invasive ones will be considered out-patient. They are still done within the hospital, they are still done with by the same surgeons. It’s more of a question of reimbursement. It’s a question of risk and a question of reimbursement. So if it’s a more higher-risk patient whether it’s an older patient or maybe a high BMI patient, the doctor will decide on an in-patient surgery versus a more healthy patient where the doctor will decide of doing a quicker to discharge surgery. From the product and from the risk of SSI, there is still a risk. The risk is different between an open surgery and a minimally invasive, but the risk still exists. And you know as a reminder, we are talking about the prevention here. So there’s a, let’s call it, an insurance regardless of – an insurance of you know try to prevent the infection, whether it’s in or out. There will be a question on payment for in-patient versus out-patient, and this is something that we are looking into in terms of the pass-through and getting a procedure code for out-patient payment.

Thank you, Ori. And as for your second question regarding the discussions, the partner and discussions that we have. So we are in active – actively engaged in multiple pharmaceuticals and medical device – with medical device companies, both in the US and out of US. We are happy with the level of discussions. We expect that those will be accelerated once we have the interim data. And there’s not much that we could say at this stage beside that we are actively engaged and quite happy with the discussion.

Thanks, Dikla. Good luck.

Thank you. Thank you, Balaji. Good morning.

Thank you. Next question comes from the line of Elliot Wilbur from Raymond James. Please go ahead.

Hi, guys. Good morning. This is actually Michael Parolari on for Elliot. So first question from me, just assuming a positive readout from the interim analysis for D-PLEX. Do you guys expect to see further FDA input before submission of the NDA? Or do you think that the efficacy data would largely be able to speak for itself in the submission process? And then, second one from me. You might have touched on this in prepared comments, apologies if I missed it, but just any update on the IND process or D-PLEX? Thank you.

Sure, sure. Good morning. So we do expect to meet the FDA for an end of Phase 3 meeting. We think that this especially with the breakthrough therapy designation that we have, this could be an opportunity for us to discuss some aspects of the NDA with the FDA and make sure what we submit on a rolling submission basis later on during 2023 is – accepted well, and there’s no need to add any information. This could also be an opening – an open to a discussion on next stage of commercialization and broadening the labeling. So we do expect to meet the FDA after the top line results. As for the OncoPLEX program, we are very pleased with where we are there. Of course, it’s a younger program, and it’s less of a priority at this stage compared to this large Phase 3 900 patient Phase 3, but we’ve published some nice data. We met the FDA for a pre-IND meeting a few months ago. I expect that we will be able to publish additional data and supporting conference. We are starting also discussions here with pharma companies around the platform as well as the product itself. And I expect we’ll be able to update you on more specific timelines and the indication and protocol towards the end of the year.

Got it, that’s helpful. Thank you. And best of luck with the CEO transition. And congrats, Amir for the retirement.

Thank you.

Thank you.

Thank you from both of us.

Thank you. Next question comes from the line of Gary Nachman from BMO Capital Markets. Please go ahead.

Hi, good morning. Congrats on the progress. So regarding the interim analysis for SHIELD I, what does it mean efficacy better than expected in order to stop it early? What’s the threshold for that? And then if you need more patients, what’s the maximum number you can add? And how long would that take? And will you take a statistical hit on the unblinded analysis? What did you agree with FDA on that?

Hi. Good morning, Gary. So thank you for all of this point. And please, excuse me if I missed any, there were three of them. So in terms of what does it mean better than expected efficacy. So you know that in all of our clinical trials today, we have shown at least 50% in most – in all of them more than 50% reduction of infection. So this is what we are hoping to see in terms of better than – and it’s not that 51% will be an overwhelming at this stage. But somewhere, we do not disclose on what is the parameter that will allow us to do overwhelming results. I can – the reason for that is that we can jeopardize the blinding this way. Of course, when everything is unblinded, we can show that. But as long as we are recruiting patients, we cannot be more specific than that, and this is quite amazing for this draft. With regards to the – what is the maximum that we could go after, and this is something that we’ve indicated in our annual report, the maximum that we can foresee under this protocol as a sample size adjustment could be 1,400 patients overall. And the last question was about the statistical. This was a minimal statistical hit. I think the overall instead of 5%, we went down to 4.1%. But let me go back to you on that in more particular, but it was 0.5% or something in that regard.

Okay. And then if you have to go up to the 1,400 let’s say, how long would that take? And also, you have 60 sites that enrolled the 900 patients. How comfortable are you with the quality control at these sites and their ability to measure the endpoint accurately, especially considering all the dynamics with COVID?

Sure. So I’ll start with the second part of the question, because here, we had a process to get to the 60 centers. And you know it as well as we do and part of it due to COVID, it took time to go – to come to the physicians that we have 60 active centers. But for about two quarters, we have it, and we see recruitment rate of 200 to 250 patients. We added to this call some slide that investors can see, how this graph grew along the year and it’s very nice to see. And we are now constantly – now for almost two quarters recruiting about 200 to 250 patients per quarter. So we had the time to build the processes for that. And we also have the privilege that we have adjudication committee that is reviewing each infection case, which is what we need. Those are the cases that are measured for the primary endpoint. So it’s not that a whole 750 patients that are now being analyzed for the interim are one that influenced the primary endpoint. So we’re very comfortable. We have a very good team here in our clinical department, really bringing years of experience in large trial and in small trial and in different type of medication. So we are comfortable with that. And remind me what was the second part about?

No, just the quality control at the site just with COVID and just in general. Yeah.

Yeah. So we’re very happy with that. And for now, I can tell you that in terms of the recruitment, now we do not see – for the last six months, we do not see any problem with that. I think you were also asking what well – if we have to go to the maximum, what will it mean in terms of timeline. So we expect, again, you could do the math very easily at the rate of 200 to 250 patients is additional few months of recruitment.

Yeah. Now, I assume that you answered that question. So that was helpful. And then just lastly, just what’s the status of SHIELD II? I guess, does that put on hold until completion of SHIELD I? Have you been enrolling any patients in that study? And maybe for Ori, you know just how important SHIELD II is for commercial purposes, just some of the numbers that you talked about, just the fact that that’s including more minimally invasive procedures. So, how much would you need that data to hit some of the targets that you’re talking about? Thanks.

So in terms of SHIELD II, as we reported in the previous quarter, we already recruited over 200 patients. And yes, we did put it currently on a reduced activity until we will have results from the plan SHIELD I, because, if you remember, we started the road with the understanding that we will need 2 Phase 3 for approval. And following the breakthrough therapy designation, the FDA agreed that 1 Phase 3 is sufficient. So, of course, on the basis of positive data from SHIELD I, we will like to strategically change some of the parameter on SHIELD II, not necessarily the minimally invasive compound of it, but, of course, we will not need additional 900 patients. So, it could be reduced, and this is the plan, and this will be part of the discussions with the FDA. Ori, you want to relate to the aspect of the minimally invasive?

Yes so – hi, Gary. So first, I would say that for launch, we less need the SHIELD II just from the fact and with kind of recent conversations with surgeons, we expect that the start, we’ll start with the more high-risk patients, which are usually in-patient open surgeries. But definitely, as we look to expand into minimally invasive into the out-patient into additional surgeries beyond the initial scope, we will need the data. SHIELD I – SHIELD II is part of this. But we are also working already on – what else is needed. What other smaller study, not necessarily full-blown clinical trials, but whether it’s an investigator initiated their research or some other settings partnering with some of the societies to see what else can we do, what type of data will be needed for successful adoption.

Okay, great. That’s helpful. Thank you.

Thank you. Next question comes from the line of Brandon Folkes from Cantor Fitzgerald. Please go ahead.

Hi, thanks for taking my question. And, Amir, congratulations on all the success over the last 11 years –

Thank you.

Dikla, all the best, looking forward to you taking over [firmly] [ph]. So maybe just two from me sort of following along the earlier line of questioning. Can you just provide some detail in terms of what level of data you expect to provide when you do publicly release the interim analysis? And then secondly, assuming it’s positive, how do you think the FDA is going to look at the patients you’ve already enrolled in the trial, just given you have met the 900? How do you think the FDA is going to look at those additional patients? Thank you.

Well, I’ll ask you what do you mean by additional patients if – but in effect and on your first part, so we expect to get from the DMC committee – the DSMB Committee that’s a Safety Monitor Committee that is doing the analysis. A more precise overall number of patients needed for the trial. There are four stocks that could be made up to as I said, and also the 1,400 patients, including overwhelming. There is, of course, is always the risk for futility, but we think that the chances here are very low. This will allow us to give investors better timelines for both NDA submission and later on approval and last patient in. And will give a sense that we are meeting the efficacy primary endpoint in terms of being able to state that we are meeting that at least 50% reduction of protection. This is what we expect this year. And you were asking about the additional patients or are you referring about the additional patient post the 750 patients?

You kind of answered it, to be honest with you. You sort of said –

Okay.

It looks like – well I guess my question really was you know if we did hit that sort of futility analysis where you were able to submit, but it sounds like you know that’s a small percentage chance right? Is the base case really just that we’re going to kind of get a more accurate sample size, is my understanding correct?

You’re right. And as we said, we – in today’s release, we’re very close to this analysis, and we expect it very soon, and we are now at about 900 patients. So this – you can get from that sense of what will be the overall size of the trial if we’re going to start immediately.

Okay. And you answered my questions. So thank you very much.

Thank you.

Thank you. Next question comes from the line of Roy Buchanan from JMP Securities. Please go ahead.

Hi, thanks for taking the questions. I had – first quick one on the loan facility for the next $2.5 million tranche, a positive interim. I just want to make sure that definition also includes upsizing the trial?

Sorry, can you repeat the question, please?

The positive outcome to enable the $2.5 million tranche from the loan facility that includes upsizing the trial?

Yes. To some degree, yes.

Yes.

It does.

Okay, great. And then I guess, you know maybe for Ori, but that you know the main question we get for D-PLEX100 is, what’s going to really motivate the surgeon to use it. You know you presented data, the hospital’s motivation is clear and the penalties that they can get from infections. And you have the market research and you have the quote about an ethical obligation to use the product if it shows a benefit. But you know you’re also giving the surgeon something else to think about. So I guess can you maybe go into a little bit detail about how you’re going to convince the surgeon themselves to use this product? Thank you.

Yeah, sure. So you know in our conversations with the surgeons, it’s really a straightforward conversation. I would say it’s one of the more – the easier conversation that we, because doctors, first of all, every surgeon – knows their SSI rate. They know the department rate. They know their benchmark compared to what other hospitals and other departments do. And honestly, nothing that exists today shows this significant reduction in SSI. So when we show and we’re going to another kind of research right now, when we show a 50% reduction, the doctors get it. So now there’s a question of costs and there’s questions of the pharma economics. It’s a full package, honestly between all of it. We will use data. We are collecting really an enormous amount of data from the Phase 3. If you can imagine, a 900-plus sized trial. This is one of the bigger colorectal trials that have been done in the recent decades. So there’s really quite a lot of data here, and doctors are interested. And even beyond what we’re testing right now, we hear a conversation and we have questions and – we were at conferences like Dikla was mentioning earlier, and the conversation are pretty straightforward of what a 50% reduction can do to patient outcomes, to doctor’s management of time, to doctor’s management of wound care. So it’s really will be a complete sense of data around that. And. of course, we’re collecting the pharma economics, which is a big driver of that. I can tell you that from – you know from a conversation that we – I had last week with a Board Member of one of the bigger IDNs in New Jersey, and he mentioned to us that the CEO and the entire top management of the IDN, are measured part of their annual goals and their bonus is measured on reduction of hospital-acquired infections. So, yes, there’s a big driver from the patient, but there’s also a big driver we’ll see and we expect to take advantage of top down from the management, from the overall administration of the hospital.

Thank you. I would like to hand back over to the speakers for final remarks.

Thank you for joining our first quarter earnings conference call. I would like to reiterate how excited we are about the progress we have achieved to-date, especially in our D-PLEX100 clinical program as well as the opportunities that lay ahead of us. We remain grateful to our team members and all of our external partners for their commitment, to our mission and their support in continuing to advance towards achieving our goal of bringing D-PLEX100 to healthcare providers and patients as quickly as possible. We look forward to speaking with you on our next call.

That does conclude our conference today. Thank you for participating. You may all disconnect.