PolyPid Ltd (PYPD) 2021 Q2 法說會逐字稿

Greetings, and welcome to the PolyPid Second Quarter 2021 Conference Call. (Operator Instructions) As a reminder, this call is recorded.

I would 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's Second Quarter 2021 Earnings Conference Call. Joining me on the call today will be Amir Weisberg, Chief Executive Officer; and Dikla Czaczkes Akselbrad, Executive Vice President and Chief Financial Officer of PolyPid. Earlier today, PolyPid released financial results for the 3 and 6 months ended June 30, 2021. A copy of the press release is available on 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 expected improvement of trials, timing of trials and release of the results thereof, the capacity of the company's manufacturing facility, the company's pipeline, the potential benefits of PLEX and OncoPLEX, the company's potential partners and sufficiency of cash to fund future operations.

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 material risks and uncertainties that could cause 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 Securities and Exchange Commission, including, without limitation, the company's Forms 20-F and 6-K, which identifies specific factors that may cause actual results or events to differ materially from those described in these 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, August 11, 2021.

And with the 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 the PolyPid team, I would like to welcome everyone to our second quarter 2021 earnings call. I will begin today with some brief introductory comments, and then Dikla will provide a [detailed] PolyPid business update and a review of our financial results. After that, we will open the call for your questions.

We have recently achieved significant progress in advancing our many development programs and in continuing our progress towards becoming a commercial company. As you know, we are currently in a large Phase III program with our lead asset D-PLEX100 for the prevention of surgical site infections or SSIs. SSI accounts for around 20% of all Hospital-acquired Infections in the U.S., resulting in extended hospital stay in and readmissions and adding up to $10 billion in annual medical costs. Dikla will provide further details on this program shortly, but I am excited to report today that our ongoing SHIELD I trial in abdominal surgery continues to proceed as planned, and we are successing in accelerating enrollment into this study.

Importantly, following a Type B meeting request to the FDA in the second quarter, we received written response from the agency regarding our development plan for D-PLEX100. The FDA indicated that provide our results are adequate. Our proposal for a single Phase III pivotal study, SHIELD I, would present enough evidence of a clinical efficacy and safety to support approval of D-PLEX100 for the prevention of SSI in colorectal surgeries. We are very happy that our proposed development plan for the potential on approval of D-PLEX100 has been accepted. This will reduce the anticipated cost for the program and provide us with additional financial flexibility overall.

SHIELD II, our second Phase III trial in abdominal surgery offer broader eligibility criteria, including the minimally invasive surgical procedures. This trial is also advancing as expected with new sites continuing to open on an ongoing basis. I'm also pleased to report that our promising OncoPLEX development platform in oncology continues to progress quickly. To this end, I am excited to announce today that our initial target indication for OncoPLEX will be brain tumors, where local delivery can be a game changer. Dikla will provide further details on the status and planned next step for OncoPLEX shortly.

As you can see, PolyPid has recently achieved important progress throughout our business. We also continue to be supported by a strong balance sheet, which we expect to be sufficient to complete the SHIELD I study, to conduct SHIELD II and prepare for the submission of NDA to the FDA as well as further advance our OncoPLEX development platform.

I will now turn the call over to Dikla to provide you with some further updates on our businesses. Dikla, please take it from here.

Thank you, Amir, and thank you all again for joining us on the call. I would like to begin with a brief discussion on the status of our pipeline. The pace of enrollment in the SHIELD I trial has been strong to date and is expected to continue to accelerate. We now have over 300 patients enrolled into the study. And based on the current environment, we believe that the recruitment rate will continue to gain momentum in the months to come.

Approximately 70% of the patients currently enrolled in SHIELD I had a colorectal cancer diagnosis, a rate similar to the 74% seen in our successfully completed Phase II trial. Importantly, the high priority nature of the surgical procedures makes them less influenced by the ongoing COVID-19 pandemic worldwide. Other reasons for colorectal surgery include mainly Crohn disease and inflammatory bowel disease as was also seen in our completed Phase II abdominal trial.

Moreover, the data safety monitoring committee in charge with the review of accumulating safety data and study conducts for the SHIELD I study has twice recommended to continue the study without modification, meaning that no major safety issues related to D-PLEX100 has been observed in SHIELD I to date.

As a reminder, our plan is to enroll 616 to 900 patients within 60 centers in the U.S., EU and Israel. Once 500 patients have completed the first month follow-up and have been evaluated for the primary endpoint, the study design provides for a blinded sample size re-estimation based on the overall infection rate observed in the study. Assuming only the low end of around 650 patients plan to be enrolled, if necessary, we continue to anticipate the availability of top line data from the SHIELD I at the end of this year.

Moving on, as Amir indicated, while only positive results from SHIELD I are needed for FDA approval, we continue to move forward with SHIELD II, which has broader eligibility criteria than SHIELD I including minimally invasive surgical procedures. SHIELD II also continues to progress as planned. And although our focus here remains on opening centers, we are pleased with the current rate of enrollment in the study as well. Total enrolled patients in SHIELD I and SHIELD II collectively is now approaching 400 patients. Moreover, we have recruited in just the last year during the pandemic, approximately the same number of patients that were enrolled into all 5 prior clinical trials conducted by the company since incorporation.

Now I'd like to further elaborate on the status of OncoPLEX. Our intra-tumoral chemotherapy product candidate for solid tumors, including tumors that are chemotherapeutic resistant. As a reminder, OncoPLEX provides local prolonged and control exposure to docetaxel, one of the most widely used chemotherapy agents, in the intraoperative tumor resection setting. The control and prolonged release of docetaxel at the residual tumor site, may have a critical impact on the prevention of local tumor reoccurrence and the potential spreading of cancer cells and ultimately improve the overall survival rate of cancer patients.

You will recall that we generated compelling data in animals that we are excited about in different solid tumor indications. In addition, we expect OncoPLEX to significantly reduce the non-toxic systemic exposure to chemotherapy. One of the important attributes of successful local delivery in cancer therapy. And our various animal models today have indeed shown a very promising safety profile versus systemic chemotherapy.

As Amir noted earlier, we are disclosing today that brain tumors have been selected as the initial indication for the OncoPLEX intra-tumoral therapy program. There is currently almost no meaningful treatment option for brain tumors, primarily due to the limited ability of existing approaches to penetrate the blood brain barrier. Due to the localized nature of OncoPLEX, we believe it is highly beneficial as compared to systemic treatment in this specific indication.

In addition, its ability to produce the controlled delivery of aggressive drug generating a high local concentration over week may further enhance OncoPLEX significant potential. Importantly, we expect the availability of additional OncoPLEX preclinical data in brain tumors shortly. We believe this result will further support our work towards the completion of our preclinical package for the filing of our pre-IND request with the FDA in the coming months to potentially initiate a Phase I clinical trial next year.

We also continue to spend our network top experts and KOLs around our OncoPLEX development program to support our efforts in this promising area. We firmly believe that OncoPLEX has the potential to become part of the standard of care in the tumor resection surgical setting within multiple solid cancer types.

Going back to D-PLEX100, from a commercial perspective, we have developed a launch plan that details all of the activities that will occur from now until launch, for the various functions at PolyPid, including sales, marketing, market access and medical. In addition, a resource plan has been developed to assess the hiring needs and timing for each of the different functions as well as the infrastructure that will be needed in preparation for launch.

We are currently in discussions with a number of launch excellent service providers to support the commercial launch. In parallel, we also remain in discussions with multiple large and midsized strategic partners, all with significant presence and experience selling in hospital and operating rooms for potential collaboration in Europe and Asia.

In the U.S., we are in contact with several large and midsized pharmaceutical and medical service companies that we believe will be ideal commercial partners for D-PLEX100. These companies are leaders in commercializing pharmaceutical products and medical devices have strong established commercial infrastructure, demonstrate a detailed understanding of clinical and pharma economic benefits in the hospital channel and maintain strong relationships with the hospitals, clinical, medical and administrative stuff. We are progressing with these companies and are quite pleased with the high level of interest in D-PLEX100.

Before I move on to our recent financial results, I'd like to take a moment to discuss the recent registration statement we filed with the SEC as it is an important strategic element related to the development of our pipeline. This shelf filing provides us with critical leverage around our commercial partnership discussions, many of which are recurring with companies of much larger size than PolyPid. Moreover, this shelf filings allows for further flexibility regarding the structure of a potential partnership agreement. While we have no immediate plans to utilize the shelf filing, we believe it to be a prudent financial tool to have in place.

Finally, I'd like to welcome Dr. Anthony J. Senagore to PolyPid. Dr. Senagore will serve as Senior Medical Director and will be responsible for developing our medical infrastructure in the United States, and will contribute to the company's NDA submission and commercial launch of D-PLEX100. Dr. Senagore is a colorectal surgeon with a long track record of academic surgery practice and has significant experience at healthcare start-up company. His record as a practicing surgeon and biopharmaceutical innovator, as well as his unique understanding of the budgeting process within hospital systems, will prove invaluable for our pursuit to reducing the clinical and financial burden of SSI.

With that, I will now review our recent financial results. Let's begin with PolyPid's balance sheet information. As of June 30, 2021, the company had cash, cash equivalents, short-term deposits and long-term deposits of $52.9 million, as compared to $66.6 million as of December 31, 2020. Cash used in operations for the 3 months ended June 30, 2021, totaled $8 million.

We expect that our current cash runway will extend into the second half of 2022 and remain confident that this strong balance sheet will allow us to complete our first Phase III trial, SHIELD I in abdominal soft tissue infection to prepare for the submission of an NDA for D-PLEX100 and further advance our OncoPLEX program towards Phase I trial.

Now let's turn to our income statement. Research and development expenses for the 3 months ended June 30, 2021, were $7.4 million compared to $4.3 million in the same 3-month period of 2020. As spending increased due to the ongoing SHIELD I and SHIELD II Phase III clinical trials in abdominal surgery.

Marketing and business development expenses for the second quarter of 2021 were $700,000 compared to $300,000 for the same period of 2020. These expenses increased primarily due to an increase in marketing and business development personnel in our offices in New Jersey and an increase in the market-facing activities as we continue to build our commercial infrastructure.

General and administrative expense for the second quarter of 2021 were $2.4 million compared to $2.6 million in the prior year period. The decrease in general and administrative expenses was due to lower noncash share-based compensation expenses. For the second quarter of 2021, the company had a net loss attributable to ordinary share of $10.5 million as compared to $19.1 million in the prior year period.

We will now open the call to your questions. Operator?

(Operator Instructions) Your first question today comes from the line of Brandon Folkes from Cantor Fitzgerald.

Congratulations on all the progress. Maybe just firstly, on the potential for label expansion. In your discussions with the FDA, have they given any color in terms of whether this is going to have to be a sort of indication-by-indication label expansion or there is potential maybe for SHIELD II to drive broad label expansion?

And then secondly, maybe just as we go forward, do you intend to focus on SHIELD II and OncoSec. Any color on prioritization there? Or should we expect that they will both continue as expected?

Thank you, Brandon, and it's good to have you on this call. With regards to label expansion, it is clear to us from our discussions with the FDA that it's not going to be indication by indication. That's quite definite already from our discussions with regarding general abdominal from the colorectal trial, it's clear that this is something that could be done. And in some of our correspondent and also QIDP, we got a broader abdominal -- general abdominal indication versus colorectal.

So it's clear that it's not going to be indication by indication. Of course, at the end of the day with the FDA data speaks, I can tell you that with the European authorities, when we've aligned the requirement and discussed with them the Phase III, they recognize that colorectal resection is the worst case of nominal and this could serve the general abdominal as a trial that can serve an abdominal indication. And later on, when we will be reinitiating our SHIELD II trial and starting to get data on bond-related surgery, we believe we could use that to expand to bone-related indication. Whether we'll need some additional safety data, it is not clear, but this is something that will be discussed in full when we have the Phase III data. But clearly, it's not going to be an indication by indication.

Your second question was regarding our priority and how we are looking at Q2 versus the oncology. So first of all, our highest priority and our main focus and enthusiasm is going through SHIELD I. Now that we got the Breakthrough Therapy designation and from this discussion and understanding that one trial is sufficient to get an NDA. We put all the efforts on that and all the resources.

And then second in line are exactly SHIELD II and cancer program. So the cancer program is still it's preclinical stage. So the resources that are required for the coming 2 years are relatively modest. So it's high priority. We see a lot of value. We are going to be publishing soon an additional preclinical data in brain cancer and we are very excited about this program.

SHIELD II as it is not limiting factor for the approval is going at a more modest pace to allow us to balance the resources. But still, it is a priority. We are opening centers. And our assumption is that once we finalize, we will have resources that could be diverse to SHIELD II, and this is exactly the plan, but we are not holding on the trial at this stage.

Your next question comes from the line of Gary Nachman from BMO Capital.

First, for SHIELD I and the pace of enrollment, over 300 patients enrolled. What's the pace to get to 500? So when do you think you'll have the results from the sample size reestimation? I think you previously said 3Q. And it seems like it could be tough to have the top line data by the end of the year, even if you're going to be at the low end at around 650, like you said, Dikla.

And maybe just comment also how many of the 60 sites have been activated, I think it was 2/3 on the last call. And then also, it sounds like to commercialize D-PLEX100, you're leaning more towards partners at this point? Is there still a chance you would commercialize on your own. So just talk a little bit more about how far along you are with partnership discussions and maybe how soon you could announce that and if that would provide some nondilutive capital for you?

Right, right. So with regards to the pace of enrollment, so as we said, we've passed the 300 for SHIELD I, and we are almost at 400 with both SHIELD I and II. And the last few months have been quite strong and are getting even stronger. We did not disclose how many of the 60 are open besides from the 2/3 and we haven't updated yet, but we are happy with the level of opening centers and also the level of recruitment within those centers. And the 500 is still remains where we were thinking that it will happen, which is the end of third quarter, end of September, early October. This is the time line for the 500. With this time line of end of September, early October, for the 500, we still believe we should be in line if we stop at the lower end for the end of the year.

Saying that, of course, there is still some causative starting to show again and we will need to see how this will react -- effect of the centers. Up until now, we haven't seen any effect. But again, the numbers are changing quite rapidly over the world. So we will evaluate that as we go, but we are still very confident with regards to the 500 at the end of September, early Q4. And with that, getting to the 600 by the end of the year.

You were also asking with regards to commercialization. So maybe I'll go one step backward, we are still -- and we -- to start with, we were leaning towards licensing out of U.S. And the discussions that we have are out of U.S., Europe, Far East, and this is something that we have no intention on commercializing on our own in those territories. So we are quite pleased with those discussions. Of course, those processes take a while, and we cannot evaluate what will be the exact timing for it.

With regards to the U.S., we clearly said that we want to have our boots on the ground, and this is why we made the investment on putting a plan for commercialization, what is required in terms of resources, time line, hiring. This is what we've done in the previous quarter. And we have a very detailed plan that was -- planned for a with a service provider, and we are also evaluating some potential co-promotional. So we do not see ourselves having -- losing control on the products that we've invested so much for almost 10 years now.

Okay. Great. And then just one more on the OncoPLEX. So it makes a lot of sense that you're going after brain tumors first. Just -- maybe you could describe how it would be administered with tumor resection. Would it be the same as for SSI? So would you need a different formulation or be a similar formulation as what you have with D-PLEX100. And also, will you consider other indications to evaluate over the next year or we're really just going to focus on brain tumors for the time being?

Great. Thanks for raising that. So we mentioned that briefly in today's prepared remarks, we've started working with different KOLs and part of those are neurosurgeons to evaluate and see how exactly OncoPLEX is going to be administered and discussed. It seems quite fairly easy to the administrate. At this stage, the actual administration is going to be fairly simple. Once the tumor is resect, because we are talking about brain tumor, there is a residual tumor that is left. And at this area, there is a quite significant gap that D-PLEX will be administrated at that area, releasing the chemotherapy for several weeks.

What we -- your second question was regarding the formulation. So OncoPLEX is a novel formulation. Of course, we do have some similarity, but it's a novel formulation with novel chemotherapy, we spent several months to years to come up with this formulation. It's now quite advanced with preclinical stage, and this is why we are confident and comfortable sharing data and time lines on its development program, but it's a different novel formulation, which, of course, is patterned separately from all our 101 patents that are already there.

Okay. And will you look at anything else besides brain tumors or that's just the focus for now?

So we've already done some work with other solid tumors. We are focusing initially on solid tumors and seen very nice preclinical data. We think that -- for us, at this stage, it makes more sense to be more focused to get some progress to get to the FDA. Later on, when we get some additional data, we will see in terms of prioritization and focus what makes sense in terms of expanding because we do believe that OncoPLEX could be using more than one indication. But for now, we are focusing to move ahead to the clinics.

Your next question comes from the line of Balaji Prasad from Barclays.

Great to see the progress. A couple of questions. Maybe just going back to Gary's question on brain tumor. Were there any other reasons for you to select this indication apart from the fact that this is a very challenging tumor to treat systemically. I'm asking because I just want to think about how we thought about other tumors, which are much more common like breast prostate and why did you roll them out. So that's one. And secondly, on the progress in SHIELD I, from some update that I have seen, it looks like you've activated 46 sites currently out of the 60. Please correct me if I'm wrong.

I'll start with the first question, but just I couldn't hear you well, how many centers you mentioned?

I thought you had activated 46 out of 60 site -- 60 centers. So is this right and when the other 14 is going to be activated?

Okay. So I'll start with with OncoPLEX, and this is a great question because I think it also demonstrates the power of our approach. So of course, we went to bring cancer because it's an unmet need, maybe the highest unmet need in cancer today, but it fits so nicely to our approach.

One of the challenges with brain tumor is the brain blood barrier, it's the BBB. It's driven from majority of the drugs out there, systemic drugs to reach the brain. Drugs as if they could have reached the brain, maybe they would have been effective, but they are not able to reach and what's nice about PolyPid's approach, about the PLEX approach that it's getting where it's needs to be. There is no need to use the systemic administration. We are just there. So we have the ability to release the chemotherapy where it's needed, that's one aspect.

The other aspect is the fact that we have the ability to have a prolonged release. There have been attempt to use chemotherapy locally. Different attempts in the past, there are some drugs conversion, not so successful drugs that are having none of them had the local -- the prolonged local control release that we are suggesting. And this could be a real game changer, as Amir mentioned. So that -- those are the two main reasons to pursue brain tumor in addition to the fact that it's a huge unmet need.

Your second question was regarding the number of centers that are open. So we didn't disclose the exact number, but it's a higher number than the 46. I don't want to go into the exact number because this is not something that we updated. We did update on the actual patient, which is, of course, the most important number in these days.

Your next question comes from the line of Elliot Wilbur from Raymond James.

This is actually Michael Parolari on for Elliot. So first one, I guess, piggybacking off of the prior partnership discussion. Just wondering, how nature of discussions have kind of changed now that the FDA indicated that a single Phase III trial might be sufficient to file an NDA. And then also wondering if you guys have any potential plans for expanding your manufacturing capabilities to address the higher expected demand after the first 30 months of launch?

Thank you. So I'll start with your second question. We do have plans on expanding the manufacturer. It's more than planned. We are evaluating different options as well as starting to plan for that. And this is quite progressed. We are not going to take any financial committees at this stage. But we are looking on options that could be utilized quickly once we have the green light for the data.

So this is something that a lot of hours has been put into evaluating the requirements, evaluating the property that is needed doing some planning and as well as understanding what kind of machinery will be needed for the full-scale manufacturing. So the data is there, and we have the ability now relatively in a short time to implement this plan.

With regards to your second question, which was on what effect had breakthrough therapy and the fact that we are not -- we need only 1 Phase III, I think it -- it's open additional discussions. That's one thing that we didn't have prior to that. But it also gave confidence to everyone that this is something that needs to -- the discussions need to be kind of relatively fast track if we want to get them to the endpoint trial to data, if it's going to be us, if we're going to sign after the data, then it's a different terms and a different type of agreement.

Okay. And then one more quick one just on the indicated cash runway out to the second half of 2022. This seems a little bit more favorable than your prior commentary. Just wondering if that is solely because of the single Phase III trial indication from the FDA or if there are other moving parts that are affecting the cash runway?

That's exactly that. It's because of the 1 Phase III. It gives us some more flexibility.

Your final question at this time comes from the line of Jim Molloy from Alliance Global Partners.

I was wondering if you could speak a little bit to -- I mean, you alluded to it on the call, potential of the Delta variant. I know it's been an issue in Israel in particular and certainly hit in the U.S., currently. Can you speak a little bit to the Delta variant and how that may be impacting the SHIELD I. Just -- some of the questions as well, it seems like it might be push in the first quarter '22 for the data at just over 380 to 5 or 6 for the first Phase III to SHIELD I. If you can speak to that, I don't think pushing back a quarter of that big deal, but what your thoughts on when you think you might have a better insight if that might happen.

Sure, sure. So for now, we don't see an impact. It doesn't mean that we've been with this pandemic for long enough to understand that it's changing quickly and you cannot really predict what will be the situation in the days to come. But for now, we don't see an impact on recruitment rate, probably one of the favorable things in that regard is that most of our patients are cancer patients. And this is deemed to be high priority surgery, and those surgeries are not delayed at least not at this stage of the pandemic.

With regards to the time line, we said also in our recent shelf registration that if we are at the lower end, we still think that this will be happening this year. If we decide we want to go for a larger sample population -- patient population that will expand -- extend the study, but not -- we don't see any -- as you said, we don't expect anything dramatic. We will be able to give more exact time lines when we reach the 500 and evaluate the exact number of patients required.

A quick follow-up. Could you put any color around the commentary with -- from the FDA provided the study results are adequate. Any parameters you can put around that for us looking out -- looking -- we also looking in on what will be adequate versus what might not be?

So that's what we have presented in the protocol. That's what it means adequate. It means that what we presented in terms of our statistical plan, we meet the statistical plan that was presented. There's no need for higher bar than what was presented to the FDA and approved.

All right. Final question then. Any thoughts on timing on when you might be able to review, I know partnerships are hard to put timing on. You think it's post the SHIELD I data for announcing potential partners ex U.S. or even in the U.S.?

It's hard to say at this stage. We wouldn't want to commit at this stage. What will be the time -- whether those will be signed after the data or trial to the data. But as we said already, we are pleased with the discussion and the level of interest that D-PLEX100 is getting.

I would now like to hand back to Amir for any closing comments.

Thank you for joining our second quarter 2021 earning conference call. I would like to repeat how excited we are about the progress we have achieved today, specifically in our D-PLEX100 clinical program as well as the significant opportunities that lie ahead of us.

We remain grateful to our team members and all our external partners for their extreme commitment to our mission and their support in continuing to advance efficiently lower achieve our goal of bringing D-PLEX100 and OncoPLEX healthcare providers and patients as fast as possible. Thank you.

Thank you. Ladies and gentlemen, that does conclude your call for today. Thank you all for participating, and you may now disconnect.