PolyPid Ltd. (PYPD) Q1 2024 Earnings Report, Transcript and Summary

Greetings, and welcome to the PolyPid First Quarter 2024 Conference Call. [Operator Instructions] As a reminder, this call is recorded. And I would now like to introduce your host for today's conference, Brian Ritchie from LifeSci Advisors. Mr. Ritchie, you may begin.

Thank you all for participating in PolyPid's First Quarter 2024 Earnings Conference Call. Joining me on the call today will be Dikla Czaczkes Akselbrad, Chief Executive Officer of PolyPid; Jonny Missulawin, PolyPid's Chief Financial Officer; and Ori Warshavsky, Chief Operating Officer, U.S., of PolyPid. Earlier today, PolyPid released financial results for the 3 and 12 months ended March 31, 2024. 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. For example, management is making forward-looking statements when it discusses the expected timing for recruitment, number of centers, top line results from the SHIELD II trial and of the unblinded interim analysis, the planned new drug application submission for D-PLEX100, the strength of the company's intellectual property, the company's expected cash runway and the potential to receive additional funds if warrants are exercised. 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 actual results or events to materially differ. Accordingly, you should not place undue rely 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 20-F, 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, 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 and speaks only as of the live broadcast today, May 8, 2024. With the completion of these prepared remarks, it is my pleasure to turn the call over to Dikla Czaczkes Akselbrad, CEO of PolyPid. Dikla?

Thank you, Brian. On behalf of our team at PolyPid, I would like to welcome everyone to our first quarter 2024 earnings conference call. We are excited about the substantial momentum throughout our business. Most importantly, as it relates to enrollment in our ongoing SHIELD II pivotal trial for D-PLEX100 for the prevention of abdominal colorectal surgical site infection. Importantly, this clinical progress is being achieved with a recently fortified balance sheet. Let's begin with the status of SHIELD II. I'm pleased to report today that the study has now enrolled more than 200 subjects and approximately 50 centers are currently open in multiple countries around the world, including the U.S., Germany, Italy, Ireland, Portugal, Hungary and Israel. As a reminder, we intend to conduct an unblinded interim analysis once approximately 400 patients of the planned total of 600 subjects complete the 30-day follow-up, which is expected to occur in mid-2024. Top line results are anticipated in the second half of this year. Therefore, SHIELD II is now more than half enrolled for the interim analysis and more than 1/3 fully enrolled. Importantly, at the current status would indicate, enrollment is now progressing at a constantly robust space with respect to the expected recruitment rate. As we said on our last call, once the site is fully up and running, which takes several weeks following its being formally opened, we anticipate approximately 1.5 patients being recruited into this trial per center per month, and we expect to have a total of approximately 60 centers opened and recruiting patients. So at the peak of the enrollment period, we anticipate recruiting 90 patients per month. Similar to the enrollment rate, we had in SHIELD I. With that said, having crossed the important 200 subject threshold, we thought we'd provide some color on several encouraging involvement trends we are seeing. Of note, the median age, male/female split and percentage of enrolled cancer patients in SHIELD II are similar to the patient population in the SHIELD I large incision pre-specified subgroup. This is significant because we are thus far observing similar demographics in this more focused patient population, in which we have already generated highly positive data in SHIELD I. This is yet another reason we continue to strongly believe that SHIELD II is a derisked Phase III trial. Along with the fact that SHIELD II is not being conducted within the tight COVID-related restrictions that were in place during the pandemic and throughout the duration of SHIELD I. Of course, we are also leveraging key learnings from SHIELD I related to the sites involved in the study. To this end, while we are targeting approximately 60 centers for SHIELD II around the same number as SHIELD I, we have firm knowledge of the best-performing sites from SHIELD I in terms of recruitment, patient monitoring and good clinical practice. We believe this to be essential in the execution of SHIELD II. We have also enhanced our clinical operations team, another key step towards supporting the successful study. Moreover, the data safety monitoring committee in charge of the review of accumulated safety data and study conduct for SHIELD II study has twice recommended to continue the study without modification, meaning that no safety issues related to D-PLEX100 has been observed in SHIELD II to date. Moving on, to reiterate what we have said previously, we have a clear regulatory pathway for the potential NDA submission for D-PLEX100 in the U.S. Last year, the FDA acknowledged not only the SHIELD I results may provide supportive evidence of the safety and efficacy of D-PLEX100 in patients with large surgical incision, but also confirmed that if successful, SHIELD II is sufficient to support a potential NDA submission. I'd like to take a moment to acknowledge an often overlooked key aspects of the compelling D-PLEX100 product profile. And that is its substantial intellectual property foundation. Specifically, we are fast approaching 175 granted and pending applications patented for the PLEX platform and its uses for the treatment of different indication. Among those method of use patents our significant number of patents with long-term protection for D-PLEX100 for the prevention of surgical site infection. For example, our D-PLEX100 SSI patent is expected to remain in effect until 2035 in more than 40 countries worldwide. This incredibly strong IP position only enhances the value of this promising late-stage product candidate for us. Shifting gears. We continue to advance SHIELD II from a strengthened financial position following our January 2024 private placement financing or PIPE for $16 million of gross proceeds. Importantly, our cash runway now extends into the fourth quarter of this year and beyond the anticipated timing of SHIELD II's planned unblinded interim analysis. Moreover, the company has the potential to secure an additional $19 million if the result of the unlined interim analysis are positive and all of the warrants issued in the financing are exercised, which would fund PolyPid to the start of a planned rolling NDA submission for D-PLEX100. As a reminder, the PIPE syndicate was comprised of new and existing investors, including participation from U.S. life science-focused investors, DAFNA Capital Management and Rosalind Advisors. Before I turn the call over to Jonny for his review of the financials, I'd like to let you all know that we have recently posted a newly revamped corporate presentation on our IR website. We would encourage all of you to take a look at your convenience. With that, it is my pleasure to now turn the call over to Johnny. Johnny?

Thank you, Dikla. As of March 31, 2024, the company had cash and short-term deposits of $14.5 million as compared to $5.3 million at the end of 2023. This includes the net proceeds of approximately $15 million generated from the PIPE financing closed in January 2024. We expect that our cash balance will be sufficient to fund operations into the fourth quarter 2024. Now let's turn to our income statement. Research and development expenses for the 3 months ended March 31, 2024, were $5.1 million, compared to $3.8 million in the same 3-month period of 2023. The increase in R&D expenses in the most recently completed quarter was driven by the ramp-up of the ongoing SHIELD II Phase III trial. Marketing and business development expenses for the 3 months ended March 31, 2024 were $236,000, compared to $385,000 during the prior year period. General and administrative expenses for the 3 months ended March 31, 2024, were $1 million, compared to $1.6 million recorded in the same 3-month period of 2023. This decrease reflects our ongoing cost containment efforts. For the 3 months ended March 31, 2024, the company had a net loss of $6.4 million as compared to $6.1 million in the first quarter of 2023. With that, we will now open the call to your questions.

[Operator Instructions] We will take our first question and your first question comes from the line of Roy Buchanan from Citizens JMP.

A couple just quick ones on SHIELD II. I guess, Dikla, can you just review in a little bit more detail, I guess, the time line for the NDA submission and the expected review, I would say, 505(b)(2), you have breakthrough designation? Just what can we expect as far as the time line? Then what are the plans for Europe assuming SHIELD II is successful?

Roy, Thank you for the question. So SHIELD II is expected to finalize the 400 patients for the interim analysis this -- mid this year with the readout for that and around the fall. And assuming we are stopping there -- or maybe I should say, assuming we are -- we will need to continue to the 600 patients, which is the minimum for the study design, it is another quarter for recruitment. So towards the end of the year, we expect to get that done as well. And the understanding that we have is that during 2025, at the first half of -- at the end of the first half of 2025, we should be submitting NDA, which means that towards the end of 2025, we will get the result. This assumes that we are continuing recruitment, and this is our assumption. If we decide to stop the recruitment then -- well, let's leave it this way. So this assume continuing recruitment up to the 600 patients, and this takes us into the end of 2025 for the NDA. With regards to Europe, we are looking at it as a parallel strategy. It takes a bit longer to get the approval in Europe. Although we are entitled to the centralized procedure, so we can submit once and get an approval for all of Europe, which is very beneficial. We will be making more, let's say, tactical decision, as we get to the readout to see if whether we want to get -- before we submit to Europe to have the end of Phase III meeting with the FDA, but these are really tactical. So our assumption is that Europe will shortly follow after U.S. in terms of NDA.

Okay. Great. And then just 1 on the site. I guess can you provide a bit more detail on the geographic breakdown of the current 50 sites? I know the countries are listed in the press release, but those predominantly in the U.S. or elsewhere, Western Europe, et cetera, and then for the additional 10 sites, where are those expected to be added?

Sure. So we actually related a little bit to that in the press release listing there -- the list that the countries that are -- examples of countries that are participated, we listed U.S., Germany, Italy, Ireland, Portugal, Hungary and Israel. We have some additional countries, Eastern European countries that are also being added. Overall, I would say that it is between -- in the European countries around between 3 to 5 centers per countries. In the U.S., we have a bit more, and that's about that. It's quite spread, similar. Many countries that were in SHIELD I are also in SHIELD II. We didn't have that much Western Europe in SHIELD I. We have a little bit more of Western Europe now, which we see as a good thing because we see the data is more clean and repeats itself.

Okay. Great. That's helpful. And then maybe 1 last 1 if I can. Just I guess assuming SHIELD II is successful, how soon do you think you can pivot -- or not pivot, but advance the pipeline. You have OncoPLEX kind of, I guess, in the waiting, what are the plans? How fast can you get that going?

So this is something that we are actually putting a lot of effort now into. So obviously, our top priority right now is D-PLEX100. But as we previously said, we are looking into the pipeline. The second in line priorities is the oncology program, the OncoPLEX, which remains a priority for us. If you remember, we had a successful pre-IND meeting with the U.S. FDA supporting the Phase I/II clinical trials. So this is our first priority, but we are also looking on potential broadening of that, a more strategic, pipeline prioritization, looking also in some additional direction in order to be prepared with this for the time of the top line. We want to make sure that once we are -- pass this very important milestone of Phase III in SHIELD I -- sorry, in SHIELD II in D-PLEX100, we are ready for expansion of the pipeline. So I think after the top line, we will also have some news to share there. This is something we are looking at very in depth these days.

There seems to be no further questions. I would like to hand back for closing remarks.

Thank you for joining PolyPid's First Quarter 2024 Earnings Conference Call. We remain highly confident in our long-term prospects, especially the potential of our promising late-stage product candidate D-PLEX100. As always, we are grateful to our team members, shareholders and all external partners for their commitment to our mission and support in continuing to advance toward our goal of bringing D-PLEX100 to health care providers and patients as quickly as possible. We look forward to speaking with you again on our next conference call.

Thank you. This concludes today's conference call. Thank you all for participating. You may now disconnect.