PolyPid Ltd.

Thank you all for participating in PolyPede's Third Quarter 2022 Earnings Conference Call. Joining me on the call today will be Dikla Chachkas-Oxelbrad, Chief Executive Officer of PolyPede, and Ori Warshawski, Chief Operating Officer for U.S. Operations. Earlier today, the company released financial results for the three and nine months ended September 30th, 2022. A copy of the press release is available in the Investors section on the company's website, www.polyped.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 a forward-looking statement when it discusses our ongoing clinical trials and the timing thereof, our expectation to extend the company's cash runway, into the third quarter of 2023. Our attention to publish important results from the SHIELD-1 study in a medical journal as soon as it is practical, that the top-line results indicate that patients undergoing complex surgeries with large incisions or patients with risk factors could potentially benefit from DPLEX-100. Our attention to use the impressive data from Shield 1 in discussions with potential partners regarding future pipeline products, including in oncology. Our belief that significant reduction in superficial and deep SSIs and large surgical abdominal colorectal wounds and in high-risk patients, as well as the safety data, are very encouraging. Our intention to discuss with the FDA the lower than anticipated overall infection rate in the study, driven by COVID-19 safety restrictions that were in place while our trial was being conducted. Our intention to discuss the regulatory pathway for D-Plex 100 for the prevention of SSIs and abdominal surgery with US and EU regulatory authorities in the first quarter of 2023 and the potential of D-Plex 100 to prevent SSIs and abdominal surgery. The potential innovation behind our lead product and preparations with Advanced Pharma and discussions with other potential partners and the potential outcome of our anticipated meeting with the FDA and EU regulatory authorities. 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 which could cause actual results or events to materially differ. Accordingly, you should not place undue reliance on such statements. I encourage you to review the company's filings with the Securities and Exchange Commission, including, without limitation, the company's Form 20F, which identifies specific risk factors that may cause actual results or events to differ materially from those described in forward-looking statements. PolyP 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, November 9, 2022. A copy of the slides The management team will review on this call can be found on the investor section, Polypeed's website at investors.polypeed.com. With the completion of those prepared remarks, it's my pleasure to turn the call over to Dikla Traskas-Oxabrod, CEO of Polypeed. Dikla?

Thank you, Bob. On behalf of our team at Polypeed, I would like to welcome everyone to our third quarter 2022 earning call. I'm pleased to have the opportunity to provide you with a corporate update today during such an eventful period for policy. I will begin with a discussion of the top line results from the SHIELD-1 phase 3 study of DPLEX-100 for the prevention of surgical site infections or SSIs in abdominal surgeries, which we announced in early September. Beginning with slide three, as a reminder, SHIELD1, the largest study of infection prevention in colorectal surgery in over a decade, is a prospective global randomized double-blind phase three trial designed to assess the efficacy and safety of TPAX100 administrated along with standards of care compared to standards of care alone in a prevention of post-abdominal surgery incisional infection. The primary endpoint of the trial is the combination of incisional SSI, mortality, and surgical re-intervention due to SSI or wound complication and determined by a blinded and independent adjudication committee within 30 days post-surgery. A total of 977 patients were randomized into the study consisting of 488 subjects in the DIPLEX-100 treatment arm and 489 patients in the control arm. The study was well designed and well executed, as it was balanced on all baseline characteristics and demographic parameters. Importantly, the trials took place during the COVID-19 global pandemic, with the first patient recruited in July 2020 and the last in May 2022. We believe the precautionary measures put in place in hospitals during this time reduced overall infection rates. These precautionary measures included a reduced number of surgeries being conducted, disallowing visitors and increased personnel and hospital hygiene practices. We believe that these critical external factors significantly impacted the trial statistical plan. On slide four, we take a closer look at the study population. Per FDA request, a pre-specified subgroup analysis was done based on incision length. The circle on the left indicates that 43% of total study subjects underwent complex surgeries with large incisions. The middle circle shows that nearly 70% of the total patients in the trial had at least one personal risk factor, including a BMI of over 30, smoking or COPD, diabetes, and hypertension. Of significance, each of these risk factors has the potential to increase the risk for SSI and other post-surgical complications. The circle on the right demonstrates that more than three-quarters of the total study subjects were cancer patients. Let's move on to the top line results on slide five. As we previously reported, in the intent to treat population, the local administration of DPLEX-100 and standard of care in 485 patients resulted in a decrease in the primary endpoint of 23% compared to standard of care alone in 489 subjects, representing a p-value equal to 0.15. However, in a pre-specified subgroup analysis, requested by the FDA of a total of 423 subjects with incision lengths greater than 20 centimeters, the local administration of DPLEX-100 resulted in a statistically significant reduction of 54% in the primary endpoint compared to standards of care alone, representing a p-value of 0.0032. As I highlighted, On the previous slide, this statistically significant reduction was achieved in a large subgroup representing over 43% of the patients in the intent to treat population. Since the initial top line readout was announced, we have continued to gather and analyze additional data from SHIELD1. These data have been increasingly encouraging. While we cannot get to granular at this time, As we intend to publish this important result in a medical journal, as soon as practical, I would like to highlight that in a post-hoc analysis, DPLEX-100 also demonstrated a clinically important reduction of 34% in the primary endpoint in high-risk surgical patients, those with at least one personal risk factor representing a p-value of 0.04 seconds. Now, let's take a deeper dive into the large incision subgroup on slide 6. Most importantly, we see a large effect size in all efficacy parameters. I've highlighted the decrease in the first few secondary endpoints where the infection rate at 30 days post-abdominal surgery was 10% in the standard of care only arm. versus 4% in the DPLEX-100 treatment arm. I'd also point out the lower mortality rate in the DPLEX-100 treatment arm, as well as significantly fewer patients treated with IV antibiotics as treatment for adjudicated SSI. So, to conclude, on the efficacy aspects of the trial, we believe that the top-line results indicate that patients undergoing complex surgeries with large incisions or patients with one or more risk factors could potentially benefit from DIPLEX-100. As you can see on slide seven, DIPLEX-100 showed good safety profile in SHIELD-1. Of significance, there was no impact on mortality in the DIPLEX-100 arm compared to the standard of care. In addition, there was 40% reduction in surgical re-intervention in the DPLEX-100 treatment arm versus standard of care alone arm. Also, severe treatment adverse events occurred in 12% of the patients receiving DPLEX-100 versus 16% in the standard of care arm. And serious treatment adverse events occurred in 14% of the patients receiving DPLEX-100 versus 20% in the standard of care alone arm. Moving to slide eight. I think it is important to highlight how the overall results of SHIELD1 truly validate the ability of our proprietary Plex technology to locally deliver treatment over a prolonged predetermined period with minimal systemic effects. PK data collected in the trials showed very low concentration of doxycycline in the plasma for a prolonged period of 30 days, as designed. We intend to use this impressive data in discussions with potential partners regarding future pipeline products, including in oncology. In summary, on slide 9, while the overall top line result for DIPLEX-100 did not meet study's statistical assumptions, the significant reduction in superficial and deep SSI in large surgical abdominals, colorectal wounds, and in high-risk patients as well as the safety data, we believe are very encouraging. As such, we are in the process of preparing a package of data from Shield 1 and prior positive phase 2 studies for submission to the FDA and intend to discuss with the agency the lower than anticipated overall infection rate in the study driven by COVID-19 safety restrictions that were in place while our trial was being conducted. As previously stated, we expect to meet with the FDA regarding the regulatory pathway for DIPLEX-100 for the prevention of SSI in abdominal surgery in the first quarter of next year. We plan to meet with EU regulatory authorities shortly thereafter. Based on the totality of the data generated today, we remain confident in the potential of DIPLEX-100 to prevent SSI in abdominal surgery. As we approach this anticipated meeting with the FDA, it is critical to contemplate a few potential outcomes. For example, the FDA may potentially agree that data could be sufficient for seeking approval in a narrower patient population based on the current collective data set. The FDA could require us to conduct another clinical trial or generate additional data. If we were to conduct another pre-approval trial, we currently believe that this trial would be a smaller, more targeted study. Also, from a regulatory perspective, we were pleased to recently receive confirmation from the European Medicine Agency, or EMA, that DPEX-100 is eligible for submission of marketing authorization applications in the EU under the agency's centralized procedures. The centralized procedures allows the submission of a single marketing application to the EMAA that, if approved, enables the product to be marketed in all EU member states, as well as in Iceland, Liechtenstein, and Norway. The centralized process eligibility is granted to DPLS 100 under the therapeutic innovation criteria, which underscores that DPLS 100 provides a new innovative alternative to patients in preventing abdominal exercise. On a related note, I think it is important to also highlight that we proceed with our regulatory preparations with our European partner, Advanced Pharma. In addition, we remain engaged in partnering discussions in multiple additional geographies for DPLEX-100. Of course, it is unlikely that we will enter into any additional partnerships prior to the receipt of regulatory feedback. I would now like to provide a brief update on OncoPlex, our lead intratumoral product candidate in oncology, applied as a paste to the tumor resection area during surgery. OncoPlex remains a priority for policy, and we are currently finalizing C&C processes as we continue our efforts to begin clinical development for these promising product candidates. Moving on, as you know, we recently announced the cost reduction plan, including a 20% decrease in headcount across all departments. As we prepare for our planned regulatory interactions regarding DX100 early next year, we expect that these decisive actions will extend our cash runway into the third quarter of 2023 and further enhance the company's long-term growth strategy. That is a good transition to now move into a review of our current financials. As of September 30, 2022, the company had cash, cash equivalents, and short-term deposits of $18.1 million, which includes the $2.6 million upfront payment from advanced pharma received in the third quarter. Also, as it relates to our balance sheet, during the third quarter of 2022, we sold approximately 600,000 worth of ordinary shares from our existing at-the-market facilities. To reiterate, we expect that our current cash runways will extend into the third quarter of next year. Now let's turn to our income statements. Research and development expenses for the three-month end of September 30, 2022, were $6.2 million compared to $7.3 million in the same three-month period of 2021. The decrease in R&D expenses resulted primarily from the completion of the SHIELD I Phase III clinical trial. Marketing and business development expenses for the third quarter of 2022 were $840,000 compared to $445,000 for the same period of 2021. General and administrative expenses for the third quarter of 2022 were $1.7 million compared to $2.1 million recorded in the prior year period. For the third quarter of 2022, the company had a net loss of $9.3 million as compared to $9.9 million in the prior year period. We will now open the call to your question. Operator?

Thank you. As a reminder, to ask a question, you will need to press star 1 and 1 on your telephone keypad. Star 1 and 1 to ask a question, and please wait for your name to be announced. We will now take our first question.