PolyPid Ltd (PYPD) 2021 Q1 法說會逐字稿

Greetings, and welcome to the PolyPid First Quarter 2021 Conference Call.

(Operator Instructions)

As a reminder, this call is recorded. And 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, and thank you all for participating in PolyPid's First 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 announced -- released financial results for the 3 months ended March 31, 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 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 for trials, timing of trials and release of trial results thereof, the capacity of the company's manufacturing facility, the potential benefits of PLEX and OncoPLEX and the sufficiency of the company's 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 filings with the Securities and Exchange Commission. 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. Therefore, you should not place undue reliance on these statements. I encourage you to review the filings with the SEC, 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 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 12, 2021.

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 our team at PolyPid, I would like to welcome everyone to our First Quarter 2021 Earnings Call. I will begin today with some brief introductory comments and then Dikla will provide detailed update on our business and will review our financial results after which we will open the call for questions.

I'm very pleased with the recent progress we have achieved in advancing our development programs and in continuing our evolution 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 infection or SSI. Dikla will provide further details on this program, shortly. But I am excited to report today that our ongoing SHIELD I trial is proceeding as planned. And we are having great success accelerating enrollment into this study. Moreover, our second Phase III trial in abdominal surgery SHIELD II is also advancing as expected with new site opening at a robust phase. As a reminder, these 2 Phase III trial will serve as a basic for PolyPid first New Drug Application submission, and we believe will contribute to support a broad level for the prevention of SSI.

Importantly, our broad D-PLEX100 development program is supported by a vast patent portfolio. In fact, we now have 101 patents granted and allowed worldwide for our platform and products. I am also pleased to report today that our manufacturing facility is now fully scaled up. This facility will be able to support the first 30 months of product demand worldwide. As you can see, PolyPid has recently achieved important progress in all aspects of its 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 as well as further advance our OncoPLEX development platform with cash on hand. I will now turn the call over to Dikla to provide you with some further details on our business. 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. The recruitment rate in the SHIELD I trial doubled in the last 3 weeks, and we now have nearly 200 patients enrolled into the study. We believe the recruitment rate will continue to increase as several centers have been recently opened, and new one will open throughout the current month. Importantly, approximately 70% of the patients currently enrolled in SHIELD 1 have a colorectal cancer diagnosis, a rate similar to the 74% seen in our successfully completed Phase II trial, meaning that we are talking about high priority surgical procedures that are less influenced by the COVID-19 pandemic worldwide.

Moreover, the data safety monitoring committee in charge with the review of the cumulative safety data and study conduct for SHIELD I study now recommended for the second time to continue the study without modification. Meaning that no safety issue related to the D-PLEX100 have been observed in SHIELD I do date. Based on these collective data points, we continue to anticipate the availability of topline data from SHIELD I by the end of this year. As a reminder, our plan is to enroll 616 to 900 patients within 60 centers in the U.S., EU and Israel.

Following the enrollment of 500 patients, the study design provides for a blinded sample size reestimation, based on the overall infection rate observed in the study. Moving on SHIELD II, which has broader eligibility criteria than SHIELD I, including minimally invasive surgical procedure, also continued to progress as planned. Though our initial focus here remains on opening centers.

The second trial will enroll approximately 900 to 1,400 patients across 60 hospitals different from the one participating in the SHIELD I study. From a commercial perspective, to reiterate what we have said previously, in order to maximize our commercial success in the U.S., we have begun to establish our own footprint in the U.S. to initiate commercial preparation activities, while also exploring potential partnering opportunities with leading pharmaceutical companies. We recently completed a large U.S. market research project to ensure optimal positioning and coverage of D-PLEX100 that included a total of approximately 90 in-depth 1 hour interviews with pharmacy director and other hospital administrators and a mix of general cardiac and orthopedic surgeons. The result of this work only strengthened our confidence in the U.S. commercial prospects for D-PLEX100, especially in abdominal surgery.

Most interestingly, while both hospital administrators and surgeons reported a significant need for a product like D-PLEX100, the hospital administrators were especially enthusiastic. Typically, hospital administrators push back on new technologies, more so than surgeons. This does not appear to be the true for D-PLEX100. We believe the view of hospital administrators is indicative of the significant cost burden of treating surgical site infection with associated prolonged length of stay and the fact that hospital readmission of Medicare patient for SSIs are not reimbursed by CMS.

Ultimately, this market research will support our efforts to demonstrate favorable health economics for hospital to drive the commercial potential of our drug candidate. In parallel, we also remain in active discussion with potential partners for the U.S., EU and Asia market. Before I move on to the rest of our pipeline, I'd like to take a moment to discuss manufacturing. Another key area where we have recently made important progress. As Amir noted earlier, our manufacturing facility is now fully scaled and can produce the first 30 months of anticipated commercial demand for D-PLEX 100. We recently ramped up our capacity by 2.5x to achieve this critical milestone. This is a key milestone in our vision to become a fully integrated biopharmaceutical company. Looking further ahead, we are currently evaluating potential plans for additional manufacturing capabilities to address product demand beyond the first 30 months.

Now I'd like to elaborate on the status of OncoPLEX.

Our intratumoral chemotherapy product candidate for solid tumors, including tumors that are chemotherapeutic resistant OncoPLEX provide prolonged and controlled exposure to docetaxel. One of the most widely used chemotherapy agents in the intraoperative tumor reception setting. The control and prolonged release at the tumor resected site have critical impact to prevent the local tumor recurrence and the potential spreading of cancer cell. And ultimately improve the overall survival of cancer patients. In addition, OncoPLEX is expected to significantly reduce the known toxic systemic exposure, one of the important attributes of successful local delivery in cancer therapy. You will recall that late in 2020, we announced positive preclinical data from this program. In a syngeneic mouse model for solid tumor of colon carcinoma, using cancer cell highly resistant to docetaxel, among the most treatment-resistant tumor cell types, a single local application of OncoPLEX generated significantly better results compared to the group treated with 6 cycle of systemic docetaxel treatment in multiple key measures, including overall tumor recurrence, overall survival and overall tumor-free survival.

Moreover, we recently generated additional compelling safety data in animal that we are excited about, including positive safety data in a promising solid tumor indication. We are also in parallel building a network of top experts and KOLs around our OncoPLEX development program.

So to accompany us during the development stages. We continue to conduct other preclinical safety and efficacy studies of OncoPLEX in various types of solid tumors and are advancing towards the completion of a preclinical package for the filing of pre-IND request with the FDA later this year in order to potentially initiate first-in-man clinical trial next year.

We continue to believe that OncoPLEX has potential to become part of the standard of care in the tumor reception surgical setting within multiple solid type cancer type, including glioblastoma, prostate cancer and head and neck cancer.

With that, I will now review our recent financial results. Let's begin with PolyPid's balance sheet information. As of March 31 in 2021, the company had cash, cash equivalents, short-term deposits and long-term deposit of $61.4 million as compared to $66.6 million as of December 31, 2020. Cash used in operations for the 3 months ended March 31, 2021, totaled $5.6 million.

We continue to expect that our current cash runway will extend into 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 conduct the second abdominal surgery study SHIELD II and to prepare for the submission of an NDA for D-PLEX 100.

Now let's turn to our income statement. Research and development expenses for the 3 months ended March 31, 2021, were $6 million compared to $3.4 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 surgeries.

Marketing and business development expenses for the first quarter of 2021 was $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 market-facing activities, as we begin building our commercial infrastructure. General and administrative expenses for the first quarter of 2021 were $2.1 million compared to $700,000 in the prior year period as cost increased due to being a publicly traded company with higher D&O insurance costs and an increase in noncash share-based compensation. For the first quarter of 2021, the company had a net loss attributable to ordinary share of $8.7 million as compared to $5.9 million in the prior year period. We will now open the call for your questions. Operator?

(Operator Instructions)

Your first question today comes from the line of

Balaji Prasad from Barclays.

Couple on SHIELD I. Could you remind us of how many sites have been activated. It's reassurance, the patient enrollment data, especially in the last 3 weeks. Can we expect that this is likely to continue based on our earlier discussions that sites have been activated on patient enrollment is going to be faster. So is this the trend that's going to be for Q2, and that means we would be going through a sample size reestimation in mid-2021, as you planned earlier? That's one.

Two, do you have any updated thoughts around raising capital and at what point. You did give a cash balance and said that it's sufficient till end of 2022. But any thoughts around that would be appreciated.

Thank you, Balaj. So I'll start with your first question on SHIELD I. The plan was to open 60 centers. We now have about 40 that are activated and running and opening is going pretty fast. It was nice some of them were open in the last few weeks. Additional is expected to be open, and this is why we've seen such an increase in the recruitment, and we expect it to continue. As we said, we nearly recruited 200 patients, which is in line with what we plan. And the timeline remain as we expected, meaning that we'll have the sample size in between 500 patient this year, but rather Q3, early Q3, probably.

So we're talking about 60 at the end of Q2, early Q3, we'll have the 500. And after that, we will be able to report topline results by the end of the year. So we are online with the same. We are not -- at this stage, we are not reporting that it will be shortened. With regards to financing, though, you say that we ended the quarter with over $61 million in cash and cash equivalent. We have a very strong position, cash position, the cash in the position finance both SHIELD I and SHIELD II as well as progress with our oncology program.

So we don't see an immediate need to raise money, and we think that a substantial raise will only be made after the topline results.

Great. Just one follow up maybe. You called out interviews with hospitals and hospital administrators recently. So in terms of finding how different were your takeaways from the earlier research that you have conducted around a year ago. Any incremental findings that was different from what you had done earlier?

It was very similar, which is, again, reassuring, I think, what we have -- was different in a way that the product is more mature, the clinical trial more is mature. We are now describing -- when describing to surgeons, we are describing a product with an actual positioning in terms of potential NDA because we know what is the Phase III, how many patients. So this is based on something that is more mature in terms of the development program, but the aspect of hospital administrators and seeing the economic value of the product is similar to what we've seen in the past...

Maybe a bit more. A little bit more.

Maybe a bit more. Yes, we've seen aspect of pricing was very similar. Also price sensitivity was similar. So this is -- for us, this is now a trend.

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

So as you accelerate the rate of enrollment for SHIELD I, does that hold back the enrollment for SHIELD II in any way? So just remind us, how much overlap is there between the sites in those 2 studies? And then also, what's the average number of patients being enrolled per site at this point in SHIELD I? And what number do you think you need to get to in order to get the data by the third quarter?

Sure. Thank you, those are very good questions. With regards to SHIELD II, those are different centers, as we said, actually, the only -- there is only 1 parallel center and this is by a strategic decision. We want to have different centers in order to avoid competing between the 2 trials. So those are totally different centers. In different 60, then there are 60 that are insured one. Once SHIELD I reaches a point where it's -- centers of -- the maximum capacity of recruitment per center, we can transfer them, but there won't be any overlap during the trial. And you were also asking about how the patients are distributed between the centers.

So it's still early to say because we are -- in 200 patients out of the expected 600 patients. And some centers are -- have been opened since the beginning of the trial and some are open for 1 month. But we see a very nice distribution, and we expect it to be divided in more or less similar ways, if not between centers, but between countries. So depending on the number of centers, we don't see patients coming from one country or from one center over the other.

So yes, there is some differentiation between. But then it's quite similar in terms of having several patients in each center. Our average assumption, as we said in the past, is that centers will recruit, in average, along the trial, one patient per month, per center. And this is what we are seeing. We're seeing it supports this. So we expect this to continue. And this way, the statistics will be more or less the same between centers.

You were also asking about the overall number of patients. So if you recall, the trial is designed on an adaptive design and allow us to recruit between 616 to 900 patients, and we can make the decision on -- between this range after having recruiting 500 patients, the sum of reestimation. Our assumptions are based on the 600 patients. But again, at that stage, if we decide to add few patients, a few dozen patients, it shouldn't be more than 1, 2 months at the time. Because at the end of the opening and the recruitment, we have all the centers up and running.

So we are, at this stage, recruiting more than one patient per center, per month. This is an average along the life of the trial that is not equivalent during all the time.

Okay. That's very helpful. And then just a follow-up on OncoPLEX. So just what are the gating factors to starting a Phase I study? Is it just resources? It sounds like you're confident you'll have the IND meeting before the end of the year. What -- and you're collecting a lot of data here, preclinical. data.

So just maybe talk a little bit more about what you think that package is going to look like and just your confidence that you'll be able to have that meeting before the end of the year. And then starting the Phase I, at what point next year will you be able to do that?

Sure. So first of all, we are very excited with this program. We see how the experience that we've gained with D-PLEX 100, with the development with the PLEX platform, how we are able, at this stage, to shorten the development, things that have taken us several years for D-PLEX 100, for example, CMC processes and preclinical package are going in -- are taking place in a matter of months. So this is a very exciting program within the company, our ability to use all the knowledge that we have gained with D-PLEX 100, whatever it's regarding regulatory, regarding manufacturing, preclinical is taking place in this program. We are confident that we can get to the pre-IND this year. Of course, we are -- we don't know what will be raised in that. Our assumption is that we should be in a position to start first, in next year. Based on our understanding of what will be required for an IND. But we'll need to hear from the FDA and see if they agree with our plan. We will also be in a position to share more information with investors and its program in terms of safety and efficacy in preclinical studies.

So I think we will be able to update on this program along the year, as we get closer to the listing -- the package, we'll also have some additional efficacy studies in animals. But for now, we are confident that this is doable.

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

My first question, just on -- basically want to ask a follow-up question on the OncoPLEX program. It sounds like there's been a lot of progress in a very short period of time. When might we expect additional data points, publications, et cetera. Anything we might see before the end of the year on that program entering the public domain. And I guess as you think about initial first-in-man trials, are you thinking about a specific tumor type at this point? Or would you expect to initiate trials in the range of tumors that you outlined earlier?

First of all, thank you for your kind words. We have made progress, and we do expect to be able to share more around this program during this year. In terms of both safety as well as indications and plans as well as efficacy. With regards to the specific indication, this is part of the process what we're looking at. Of course, we do have some thoughts here, and we are -- there are things that we think that are more likely, but we want to make sure with animal studies, things are looking as expected before we make a final decision and submit that to the FDA.

And we'll make the decision, again, based on the data. We'll review the data and make a decision whether it makes more sense to start with one indication and approve the product first and take it first to -- first-in-man in this one indication and have more of a bundle type of submission. But I don't want to give -- to say anything before we actually see the data. But again, I'm saying this, again, we expect to be able to share this data before the end of this year, before we meet the FDA and for the pre-IND with regards to additional efficacy data and safety.

Okay. And I had a question with respect to the market research study or project that you mentioned earlier, it's encouraging, obviously, to hear the favorable feedback from hospital administrators, obviously, they kind of get it in terms of the incremental cost. But curious if -- is there anything you could share in terms of their impressions of some of the price points that you have talked about for the product earlier, assume that, that data to some extent was shared with them and if there's anything that you could convey to us in terms of their receptivity around some of the price points that the company had been previously considering? And then with respect to the commercial side or feedback from surgeons, anything that you learned, thus far, from that study that maybe is somewhat different in terms of what you were previously thinking about with respect to commercial positioning of the product?

So a couple of points here. With regards to pricing, we got reassured that our thinking of pricing is valid. This is how they view that in terms of sensitivity, we -- I think we could even say that our assumptions that were presented based on 50% reduction of inspection were verified. And if the overall efficacy in the Phase III is higher than that, we could even consider higher price than we initially thought. But again, this is too early. We'll need to see what comes up from the Phase III that make final decisions. I think another thing that we clearly see, both from this study by discussions with opening centers that there is an unmet need in colorectal resection in abdominal, in general, the specific in colorectal resection a lot of times patients have infection. And this is not just holding back the surgeons in terms of additional hospitalization days, readmission it's also hurting the patient on the aspect of most of those surgeries, oncology surgeries, most of the patients coming to the hospital for colorectal resection are doing that due to cancer tumors, and this is holding them back on their oncology protocol. They should go to the, either radiation or chemotherapy. A few weeks after surgery, if they have an infection, this delays the process. And this jeopardize their oncology treatment, their cancer treatment.

So there is a lot of benefit here in terms of patient health as well as health economics. And this is quite clear from the market research that we performed.

Okay. And then just last question, Dikla, if there's obviously, there's been some incremental spend tied to commercialization efforts in the U.S., but anything specifically you can share in terms of key hires or what exactly the investment has been targeted towards?

So we are very cautious here in terms of budgeting and expenses with looking at what is the main route that is needed to meet the timeline for commercialization, this market research that we've done, we are looking to build a plan to commercial, there are discussions that we are having in parallel. So we do have the people there that are working, and this is something that we are cautiously progressing on, especially with aspects of things that are critical in the path for commercialization, whether it goes to packaging, naming and things that needs to be done today in order not to hold it. Amir, would you like to add to that?

No. Actually, this is very important point. I just want to add something else about the research market. I think that what is more clear to us in this research market, if I compare it to the previous one, it was very clear the need. And we heard it from the doctors and from the administrators. And this was a very good support for our approach, and it give us to understand that the administrator that sometimes top activities like that, they are supported, and they are very happy to see these kind of products in the market.

(Operator Instructions)

We have no further questions. If you wish to continue.

Yes. Thank you for joining our First Quarter 2021 Earnings Conference Call. I would like to repeat how excited we are about the progress we have achieved up to date as well as the complaints of the pandemic that lie ahead of us.

We remain grateful to our team members and all of our external partners for their very strong commitment to our mission and their cooperation to ensure that we continue to advance towards achieving our goal of bringing D-PLEX 100 to health care providers and patients as quickly as possible. Thank you very much.

Thank you. That does conclude your conference for today. Thank you all for participating, and you may now disconnect.