PolyPid Ltd.

Q1 2023 Earnings Conference Call


spk05: greetings and welcome to the polypeed first quarter 2023 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 your host for today's conference brian ritchie from life site advisors mr ritchie you may begin
spk08: Thank you all for participating in PolyPede's first quarter 2023 earnings conference call. Joining me on the call today will be Dikla Chachkis-Axelbrad, Chief Executive Officer of PolyPede, Johnny Misalowan, PolyPede's Chief Financial Officer, and Ori Warshawski, Chief Operating Officer. Earlier today, PolyPede released financial results for the three months ended March 31st, 2023. A copy of the press release is available in the investor section on the company's website, www.polypeed.com. I'd like to remind you that on this call, management will make forward-looking statements within the meeting of the federal securities laws. For example, management is making forward-looking statements when it discusses the expected resumption of recruitment for the Shield 2 Phase 3 trial and the timing of top-line results therefrom. potential MAA and NDA submissions, the expected timing of the completion of the commercial manufacturing process and packaging validation for D-Flex 100, potential partnering and collaboration opportunities, and the company's expectations regarding its cash balance and additional compelling financing opportunities. 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 place no 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 Form 20F, which identifies specific factors that may cause actual results or events to differ materially from those described in the 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, May 10th, 2023. With the completion of these prepared remarks, it is my pleasure to turn the call over to Dikla Tachkis-Axelbrot, CEO of Polypeat. Dikla?
spk01: Thank you, Brian. On behalf of our team at Polypeat, I would like to welcome everyone to our first quarter 2023 earning call. To begin, we are thrilled with the recent progress we have achieved throughout our business, including the significant strengthening of our balance sheet, which I will review a bit later in my remarks. From a clinical perspective, we have submitted the revised protocol for SHIELD2 to the FDA and await their feedback. Assuming no major comments from the agency, we expect very soon to be in a position to begin recruiting your patient into SHIELD2, which today has enrolled approximately 40 target patients. As a reminder, we now have a clear regulatory pathway for the potential NDA submission for DIPLEX-100 in the U.S. Earlier this year, the FDA acknowledged that the SHIELD1 result may provide supportive evidence of safety and efficacy of DIPLEX-100 in patients with surgical incisions greater than 20 centimeters. The agency also recommended that the company conduct an additional study on this focused patient population to support a potential NDA submission and confirmed that CHEO-2 could serve as such a study. To reiterate what we said on our last call, we intend to recruit a total of approximately 600 patients or an additional 550 subjects beyond the 40 patients already recruited into SHIELD2. Total recruitment time into the study is expected to be approximately 12 months from the time we resume SHIELD2 enrollment. Topline results are expected mid-next year. We also plan to conduct and unblinded interim analysis once a total of approximately 400 patients complete their 30-day follow-up. As we prepare to resume recruiting for Shield 2, one of the key learnings from Shield 1 is on the sites involved in the study. While we are targeting approximately 50 centers for Shield 2, around the same number as Shield 1, we now have firm knowledge of the best performing sites from Shield 1 in terms of recruitment, patient monitoring, and good clinical practice. We believe this to be essential in the execution of Shield 2. We also have announced our clinical operations team, another key step towards supporting a successful study. While we have made modest modifications to the Shield 2 protocol based on the Shield 1 results, The design of the SHIELD-2 trial is very similar to the SHIELD-1 study in terms of primary and secondary endpoints. Patients in the intervention arm will receive DPLEX-100 on top of standards of care, and subjects in the control arm will receive standards of care alone. The primary endpoint of the trial will be a combination of exercise, re-intervention, and mortality rate of 30 days post-index surgery as defined in the CDC SSI guidelines. Patient safety will be monitored for an additional 30 days, and the study will take place in the US, Europe, and Israel. As we have said previously, I would like to emphasize that we view SHIELD2 as a de-risked phase three trial, giving the more focused patient population in which we have already generated highly positive data in Shield 1, and the fact that it will not be conducted within the tight COVID-related restrictions that were in place during the pandemic and throughout the duration of Shield 1. In addition, as I noted a moment ago, we are leveraging the key learnings from Shield 1 study. In Europe, we recently received feedback in a national scientific advice meeting from the Swedish Medical Products Agency, or Swedish MPA, that was in line with the feedback received from the FDA following the Type D meeting. Specifically, similar to the FDA, the Swedish MPA acknowledged that the SHIELD1 result may provide supportive evidence in patients with large surgical incisions. and recommended that the company confirm the results with an additional phase three study to support an MAA submission. The Swedish MPA also noted that clinical safety data obtained to date is sufficient for an MAA submission. Importantly, we continue to work closely with our European partner, Advanced Pharma, with respect to the European development pathway and are fully aligned on the regulatory strategy for this region, including the preparation surrounding our recent meeting with the Swedish MPA. I should add that we expect to complete the commercial manufacturing process and packaging validation for DIPLEX 100 in the next few months. We continue to expect to have the CMC and preclinical data needed to support an NDA well in advance of the top line results. In regard to our financial strength, we completed a series of financial transactions late in the first quarter to further solidify our financial position. First, we closed on an underwritten public offering that included the full exercise of the underwriter's option to purchase additional ordinary shares and a concurrent private placement of a pre- funded warrants with certain existing shareholders for total gross proceeds of approximately $11.4 million. In addition, we restructured our existing secured loan agreement with Krails Capital, resulting in over $3 million of deferred repayment, which will be paid from August 2024 onwards in line with the expected timing of our top-line results from year two. The proceeds from the financing transactions, combined with the loan repayment default, extend our cash runway into late Q1 of next year. Looking ahead, we anticipate having a number of additional compelling financing opportunities to further enhance our balance sheet later in 2023 in order to fund Shear 2 to its successful completion. With that said, we are grateful for the continued support shown by our largest institutional shareholders, as well as our new investor who participated in the March public offering. Moving on, we also continue to advance our business development initiatives. As a reminder, we are focused on two key areas. First, we are targeting additional strong partners for D-Plex 100 in different geographies like the US and Asia. Second, we are pursuing Plex platform-related collaboration that are becoming more focused in nature in specific therapeutic areas such as oncology. As we said on our last call, our planned objective is to formalize two partnerships in 2023. although the exact pace of partnership discussion is inherently difficult to predict. With that, it is my pleasure to turn the call over to Johnny to review our current financials. Johnny?
spk10: Thank you, Niklas. As of March 31, 2023, the company had cash, cash equivalents, and short-term deposits of 19.6 million dollars including the $6.2 million net received from the underwritten public offering in April 2023. To reiterate what the club previously stated, we expect that our cash balance will be sufficient to fund operations into late first quarter of 2024. Now let's turn to our income statement. Research and development expenses for the three months ended March 31, 2023 were $3.8 million compared to $8.7 million in the same three-month period of 2022. The decrease in R&D expenses resulted primarily from the completion of Shield 1 Phase 3 clinical trial and respecting the cost reduction plan that was executed in Q4 2022. Marketing and business development expenses for the first quarter of 2023 were $385,000, a decrease from the $775,000 during the prior year three-month period. General and administrative expenses for the first quarter of 2023 were $1.6 million compared to $2.5 million recorded in the same three-month period of 2022. For the first quarter of 2023, the company had a net loss of $6.1 million as compared to $11.9 million in the first quarter of 2022. With that, I will turn the call back over to Diklaaf. Diklaaf?
spk01: Thank you, Johnny. Before opening the call to your questions, I would like to discuss some recent updates to our board and senior leadership team. First, we are excited to welcome Yossi Ben Amram as an independent director on our board. Yossi is a highly accomplished senior leader in the biopharmaceutical industry, having spent over 30 years in commercial operations. He previously served as an SVP and president of Merck & Co, Europe, Russia, Africa, and Middle East region, a $4 billion business with 10,000 employees in multiple divisions in more than 100 countries. In this role, Yossi Ledberg from the fifth position to market leader in pharmaceutical sales in this region. As we approach the potential commercialization of DPLEX 100, we are thrilled to add Yossi and his significant commercial expertise to our board. Also, as it relates to the board, Chaim Horitz, a member of our board since 2016, will no longer serve as a director. On behalf of everyone at Polypeet, I would like to thank Rhyme for his significant contribution to our company over the years. We are grateful for his dedication to Polypeet. Finally, I'm pleased to announce that Johnny Misalami, our SVP Finance, has been promoted to Chief Financial Officer. We will now open the call to your questions.
spk03: Operator?
spk05: Thank you. If you wish to ask a question, you will need to press star one and one on your telephone and wait for your name to be announced. To withdraw your question, please press star one and one again.
spk06: Please stand by while we compile the Q&A roster. We will take our first question.
spk05: And the question comes from the line of Brandon Volk from Cantor Fitzgerald. Please go ahead. Your line is open.
spk11: Hi, thanks for taking my questions and congratulations on the progress during the quarter.
spk12: Maybe just starting firstly, in the Type D meeting, was there any discussion in terms of what a label may or may not include should be successful in the trial under the new protocol? May I start there?
spk01: Hi, good morning. Thank you for that, Brian. Brendan, there weren't specific discussion on label and what the label should be. It was focused more on the clinical pathway and what's needed for an NDA. But we did have in the past some communication regarding labeling both in Europe and with the FDA. that leads us to believe that we will be starting with some indication around abdominal. And from that, we can expand later on as we gather more information and more safety data.
spk12: Great. Thanks. And then maybe just switching gears to Europe. Can you talk about if there were any differences that the Swedish MPA asked for compared to the FDA? I know you did say... Pretty similar there. And then just staying on Europe, maybe just a three-part question. I guess I'll ask Paul this one. How do we think about the Swedish authority and their feedback with regards to the rest of Europe? Do you think you still have to discuss with any other regulatory agencies in Europe? And then similarly, you know, there's been talk about sort of antibiotic incentives, again, coming out of Europe. Anything in there for a product such as D-Plex, just given... sort of the actual ingredient to be using there.
spk01: Thank you. So, with regards to Europe, as I'm sure everyone remembers, we have a partner there, Advanced Pharma, and a hospital specialty pharma-based pan-European company. So, obviously, all of our strategy there is aligned with our partner. We believe that the Swedish authorities could be representative of what we should expect from the European authorities in general. We do not think we need additional advice. Obviously, you know, and this goes to any regulatory agency, they can think differently when results come or when you speak with a different division or a different country. But we sense that the feedback was very clear. So, we do not think we will need additional consultation there. And with regards to differences, I really can't point out to major differences because I think that the overall feedback was similar. First, they acknowledged the data and said it can be supportive. This is similar to the FDA. they requested that we will perform another trial again, same as the FDA. I think that they were more clearer with regards to the safety data that we already generated. But other than that, I really don't see anything to point out from that, which for us is a level of, confidence and clarity of the data that we have. If both agencies come with similar feedback, it's reinforced what needs to be done next.
spk02: All right. Thank you very much, Tom. Very positive. That's it for me, and congrats, Joni, on the promotion. Well deserved.
spk06: Thank you so much. Thank you. We will take our next question.
spk05: Please stand by. Your next question comes from the line of Balao Prasad from Barclays. Please go ahead. Your line is open.
spk09: Hi, good morning. This is Xiao An for Balaji. Thanks for taking our question. Just a quick one on your business development plan. You mentioned that you will focus on opportunities on the platform itself. So just wondering, have you ever considered alternative uses of your platform in other areas such as animal health? Thank you.
spk07: Hi, Ja, good morning. This is Ori. So the quick answer is yes. So animal health is one of it. It's one of the things we're looking into. But there's even, there's much more that can be done with the platform and we're starting to hear this more and more. there's some level of conversations around delivery of RNA. You know, the RNA is the hottest topic now in the industry, and so there's some discussions around that. There's some discussions around aesthetics, as we can use the platform for prolonged release of fillers, fat-melting acids, and so on. So these are all kind of venues that we're looking into so you know let's keep it let's keep it at that it's still all very very early in conversations but there's definitely more than just antibiotics got it very helpful thank you thank you we will take our next question please stand by
spk06: Your next question comes from the line of Roy Buchanan from JP Morgan.
spk05: Please go ahead. Your line is open.
spk00: Not quite. JMP Securities. Maybe, yeah. Anyway, thanks for taking the question. Trying to gauge timing for the unblinded interim. Can we assume linear enrollment from when you start the trial to the 550 patients? And then is there an option to upsize the trial? Can you talk about how big the trial could get if there is? And then can you talk a little bit about the powering and your assumptions for infection rates?
spk01: Sure. So, first of all, good morning. Thank you for asking. You are in any venue that you choose to be. We, I'll start with the first question with regards to the number of patients and the entry. So, so the entry is that at 400 patients, this is an additional 550 patients. And as we said, we expect to be able to finalize the recruitment for the entry during the 1st quarter. So, less than a year ago, and overall 12 months for recruitment for the additional 550 that gets us to the 600. we do have an option to upside. I think we. As we are still awaiting FDA feedback, it makes more sense to discuss this once we get the feedback. But this very much goes in line with your next question on the underlying assumption, because this is obviously all driven from the underlying assumption. And I think the underlying assumption are very important for investors, for analysts trying to determine where policy is and what are the value drivers. For us, this is one of the major value drivers, the fact that this phase three is de-risked from the sense of the underlying assumption. All the underlying assumptions were taken from Shield 1 from the phase 3 from the group with the larger incision. This is all public information because we've published all this top line. So infection rate, which was 9.7%, is what we are taking as the underlying assumption for the infection in the standard of care arm. Mortality, again, is taken from the standard of care arm, and re-intervention. All of this is taken, although Those were data and this was a situation that reflected quite significant restrictions that were used during COVID. So it's fair to assume that today when we do not have those restrictions, both personal and hospital-based, as well as the overall reduction in patients going to the hospital and undergoing colonoscopy, there should be a higher infection rate, but still, this is our assumption. I hope this answers your question.
spk00: Yeah, no, that's very helpful. Just to make sure I'm clear, so you're expecting the interim in 1Q 2024, is that what I heard? Yes, yes. Okay, got it. Okay. And so will you be in a position, do you think, to have the NDA submitted in the second half of next year? And I expect you're going to announce when you restart enrollment of SHIELD 2.
spk01: Yes, we will announce when we start enrollment. And since this is a very fine refinement, we stick to all the dates that we said in terms of 12 months and all of that. But we could be refining this. I think it's very reasonable that we will start submitting the NDA package in the second half of next year.
spk00: Okay, great. And then just one more on the sites that are being changed. Can you just give us a sense of how many sites are being changed from Shield 1? Is it half, 10%, 90%? Thanks.
spk01: something that is hard for me to say in terms of percentage because not all the centers are yet opened. We are opening the center right now. So once we have all the centers, I can tell you in percentage-wise what's changed. I can tell you that we are going after all of the countries and most of the centers that we worked with want to participate. We were performing the trial, the SHIELD-1, in around 50 centers. This is the plan for this trial as well. Overall, we had also in SHIELD-1, we have opened around 60 centers, and 50 were actually recruiting, and this is the plan now. Many of the centers that were active in SHIELD-1 will also be in Shield 2. Until we have all of them fully open, it's hard to say what level has changed.
spk00: Okay, but it sounds like a minority of the sites are going to be not included in Shield 2. Is that fair to assume? Hard to say.
spk01: I think that it's easier for us to say that most of the centers that were in Shield 1 are going to be in Shield 2. Got it, okay. But we can, I hear this is interesting, so we will keep our investor updated on that.
spk00: Okay, thanks for taking the questions.
spk05: Thank you. There seems to be no further questions, so I would like to hand back for closing remarks.
spk01: Thank you for joining Polypeet's first quarter 2023 earning call conference. We remain highly confident in our long-term prospects especially the potential of our promising late-stage product candidate, DIPLEX 100. As always, we are grateful to our team members, existing and new shareholders, 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 DIPLEX 100 to healthcare providers and patients as quickly as possible. We look forward to speaking with you again on our next call and throughout the year.
spk06: This concludes today's conference call. Thank you for participating. You may now disconnect.

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