This conference call transcript was computer generated and almost certianly contains errors. This transcript is provided for information purposes only.EarningsCall, LLC makes no representation about the accuracy of the aforementioned transcript, and you are cautioned not to place undue reliance on the information provided by the transcript.
spk01: Greetings and welcome to the Polypedes second quarter 2023 conference call. At this time all 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 LifeSci Advisors. Mr. Ritchie you may begin.
spk03: Thank you all for participating in today's PolyPede's second 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 of PolyPede. Earlier today, PolyPede released financial results for the three and six months ended June 30th, 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 meaning of the federal securities laws. For example, management is making forward-looking statements when it discusses recruitment of additional patients into Shield 2, total recruitment time into the study, and the timing of the top-line results They're from its attention to conduct an unblind interim analysis. Once a total of approximately 400 patients complete their 30 day follow up the potential submission for deplex 100 in the US expectation to have 20 centers open in the US, Europe and Israel by the end of the current quarter. Factors essential in the execution of Shield 2, Plex technology positioning the company well to potentially pursue a number of compelling strategic opportunities, its business plans, prospects, and objectives, including its planned objective to formalize two partnerships in 2023, and the potential of vPlex 100 in addressing the persistent challenge of surgical site infections and the company's expectations regarding its cash balance. Forward-looking statements are subject to numerous risks and uncertainties, many of which are beyond our control, including the risks described from time to time in our SEC filings. Our results may differ materially from those projections. These statements involve material risks and uncertainties that could cause actual results or events to materially differ. Accordingly, you should not place any 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 20-F, 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, August 9th, 2023. With the completion of those prepared remarks, it is my pleasure to turn the call over to Dikla Chachkis-Axelbrad, CEO of PolyPede. Dikla?
spk02: Thank you, Brian. On behalf of our team at PolyPede, I would like to welcome everyone to our second quarter 2023 earning call. To begin, we are thrilled with the recent progress we have achieved in the advancement of our promising lead product candidate, DIPLEX-100. This May, we announced that the FDA agreed to our SHIELD II Phase III trial design, evaluating DIPLEX-100 for the prevention of abdominal colorectal surgical site infection. The revised trial includes only patients undergoing open colorectal abdominal surgery with large incisions. Importantly, you will recall that we previously generated very positive data in Shield 1 from this more focused patient population. Specifically, this patient population showed a highly statistically significant reduction of 54% in surgical site infection in Shield 1. We intend to enroll an estimated 550 additional patients beyond the 40 patients already recruited into SHIELD2. Total recruitment time into the study is anticipated to be approximately 12 months, and top-line results are expected in mid-2024. We also intend to conduct an unblinded interim analysis once a total of approximately 400 patients complete their 30-days follow-up. In late June, the first patient was recruited in the revised SHIELD2 trial. Multiple countries have now approved the trial protocol, and several recruiting centers were recently opened. We expect to have 20 centers open in the U.S., Europe, and Israel by the end of the current quarter. As a reminder, we have a clear regulatory pathway for the potential NDA submission for DPLEX-100 in the U.S. Earlier this year, the FDA acknowledged not only that SHIELD1 results may provide supportive evidence of the safety and efficacy of DIPLEX-100 in patients with large surgical incision, but also confirmed that, if successful, SHIELD2 is sufficient to support a potential NDA submission. As we have said previously, we strongly believe that SHIELD2 is a de-risk phase 3 trial. Given 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, we are also leveraging key learning from Shield 1 related to the site involved in the study. While we are targeting approximately 50 centers for SHIELD2 around the same number as SHIELD1, we now have firm knowledge of the best performing sites from SHIELD1 in terms of recruitment, patient monitoring, and good clinical practice. We believe this to be essential in the execution of SHIELD2. We have also enhanced our clinical operations team, another key step towards supporting a successful study. Moving on, we also continue to progress our business development initiatives. As previously mentioned, we are focused on two key areas. First, we are targeting additional strong partners for DPLEX 100 in different geographies like the US and Asia. Second, we are pursuing Plex platform-related collaborations that would be focused on specific therapeutic area, such as oncology. Our proprietary Plex technology positions us well to potentially pursue a number of compelling strategic opportunities. Over the last quarter, we have significantly ramped up our business development activities across both biotech and big pharma. We are at varying levels of discussions with more than 20 companies, whether to partner on D-Plex 100 or to evaluate co-development partnership opportunities related to the Plex technology. In addition, we recently retained a business development-focused consulting firm to further strengthen the company capabilities and support the company's goal in this key area. As we have said previously, our planned objective is to formalize two partnerships in 2023, although the exact pace of partnership discussions is inherently difficult to predict. While we broaden our business development activities, we also continue to augment the published research in support of DIPLEX-100. Most recently, a paper highlighting the potent antibacterial activity of DIPLEX-100 and its potential as an effective prophylactic drug against the most prevalent bacteria causing surgical site infection, including resistant strains, was published in the European Journal of Pharmaceutical Sciences. This paper highlighted the tremendous potential of DIPLEX-100 in addressing the persistent challenge of surgical site infections, especially in an era of increased multidrug resistant bacteria. The data showed the significant antibacterial activity of DIPLEX-100 in preclinical and Phase II clinical studies against a wide range of bacteria tested, including resistant ones. Finally, while Joni will review our current financials momentarily, I'd like to highlight our cost containment efforts throughout the business in 2023, including in clinical operations, GNA, and manufacturing, most significantly in a challenging inflationary environment, we have generated over $1 million in cost savings year to date. Moreover, our net cash used in operating activities decreased by 59% in the first six months of the year as compared to the first six months of 2022. With that, it is my pleasure to turn the call over to Johnny. Johnny?
spk05: Thank you, Dikla. As of June 30, 2023, the company had cash and short-term deposits of $15.1 million. We continue to expect that our cash balance will be sufficient to fund operations into late first quarter 2024. Now let's turn to our income statement. Research and development expenses for the three months ended June 30, 2023 were $4 million compared to $8.4 million in the same three-month period of 2022. The decrease in R&D expenses resulted primarily from the completion of the Shield 1 Phase 3 clinical trial and reflects the impact of the cost reduction plan that was executed in the fourth quarter of 2022. Marketing and business development expenses for the second quarter of 2023 were $357,000, a decrease from the $923,000 during the prior year three-month period. General administrative expenses for the second quarter of 2023 were $1.5 million compared to the $2.2 million recorded in the same three-month period of 2022. For the second quarter of 2023, the company had a net loss of $5.8 million as compared to $11.8 million in the second quarter of 2022. Finally, as Dikla noted, we are executing well on our cost containment initiatives. As such, our net cash used in operating activities for the first six months of 2023 decreased by $12 million as compared to the same period in 2022, from $20.3 million to $8.3 million. With that, we will now open the call to your questions. Operator?
spk01: Thank you. As a reminder to ask a question, you will need to press star 1 and 1 on your telephone. and wait for your name to be announced. To withdraw your question, please press star 1 and 1 again. Please stand by while we compile the Q&A roster. We will take our first question. And the question comes from the line of Balazs Prasad from Barkers. Please go ahead. Your line is open.
spk04: Good morning. This is Xiao An for Bellagio. Thanks for taking our question. So can you speak of the partnership and the licensing opportunities that you are pursuing, whether across the technology or the product candidates? Thanks. I'll take it. Good morning.
spk06: In terms of partnerships, there are a few things that are in discussion. One, on the deep lake side, there are a number of conversations in different stages, looking both at US, Latin America, and Asia. I think what is interesting is in some of the conversations, they are more advanced, some less, some are waiting to see more data, and some are really I would say more a want to find something now ahead of data. I think when we look at structures, any deal that is signed before the top line results, we will look at a deal that is similar to the advanced type of deal that we signed, which is a milestone-based, really back-loaded, some sort of an initial payment just to align incentives and ensure that both sides are really committed for the product. And then most of the milestone payments will be based on regulatory and sales milestones. So very similar to the advanced team. On the platform side, there's quite a lot that's happening from anywhere from a conversation with a with pharma companies, looking at the innovative products, delivery, you know, wherever local delivery is needed. And I can highlight that, I think I mentioned this in the past, there's an increased interest in the RNA delivery, right? That's the buzzword of the day, and we do have Data, both bench data and animal data in RNA delivery in a nucleic acid in general, not just RNA. We have patents around that delivery, so this is something that we're looking to push on. There's, you know, with any new, let's say technology, there's always this window where So it's open, companies are open to learn more and see more, and I think this is where we are with RNA. So as a company, we'll try to push as much as we can on the RNA delivery. In addition, there are conversations around Oncoplex, local delivery of Oncoplex, whether as an intratumoral injection or a post-resection adjuvant delivery into the tumor bed.
spk02: I think, good morning, Shah. Without going into the specific, and obviously we cannot commit on timeline, I think what's important for investors to see and what we were trying in today's prepared remarks to emphasize It's probably, not probably, for the first time in the life of quality, we are experiencing such a robust interest. So many companies that are in parallel discussions, and this is, I think, is something that is new, and we still believe that will lead to agreement this year.
spk04: Got it. Very helpful. Thank you.
spk01: Thank you. We will take our next question. Please stand by. The next question comes from the line of Roy Buchanan from JMP. Please go ahead. Your line is open.
spk00: Hey, great. Thanks for taking the questions. I guess the first one, can we expect enrollment progress updates for Shield 2 each quarter? And what about the blinded infection rate? Or can you at least inform us if the rate is meeting your expectations as we're going through the trial? And can you remind us what you expect for the baseline infection rate based on the design of the trial?
spk02: So, hi. Good morning, Rory. Thank you for joining us. You could expect, and we will be updating on recruitment progress probably every quarter and definitely I would expect that we will issue a press release in the next milestone in our eyes, which is 100 patients. And I hope we will be able to report this either around before or around the first quarter. So this is the next milestone, and we can judge this in the next quarter. We call and see if we've reached this point. In terms of overall infection rate, this is something that we will not be able to share because obviously we do not want to in any way jeopardize the unblinding of the trial. What I can tell you that we used the baseline assumption that we've experienced in SHIELD1 for this focus patient population. And this is generally, not generally, this is lower than what we've seen in literature. So for example, the infection rate that is in all our corporate presentation, but the infection rate that we are presenting around patients with large open abdominal incision that was experienced in SHIELD1 is 9.7%. So this is what we are looking at as the baseline. And from that, we expect to see substantial reduction. Our assumption is that as we've seen in the phase two, and as we've seen in this focus patient population in the phase three, it should be at least 50% reduction.
spk00: Okay, great. And then can you, I know you guys did quite a bit of market research ahead of SHIELD1. I assume that's continuing. Can you just remind us what that suggests? about usage in settings maybe like smaller incisions outside of the incisions above 20 centimeters and potentially beyond colorectal surgery? And how would reimbursement work in the event that you get a limited label to, let's say, large incisions? Thanks.
spk02: Well, I'll take the first part, and Ori, you're on my side. We'll take the second part. So, our market research showed very clearly that 40% of the open colorectal and other open abdominal surgery meet the criteria of high-risk surgery either due to patient risk factor or to surgery-related risk factor. So this is quite substantial. Just as a reminder, in our Shield 1, we had 977 patients, and 423 out of those were With large incision, if you look at patients with one or more personal risk factor, this was even 70% of the trial. So this is supportive also with our SHIELD-1 data.
spk06: Yeah, so I would add to that, and before I get to the reimbursement, when we asked, I'm going back a few calls ago, but when we asked surgeons, when we showed them the TPP of the product and asked, Doctor, where would you use this? Which patient would you start using DIPLEX? And really across the board, they point into these high-risk patients. And then the next question is, okay, so tell us how many of your patients are high-risk patients. And we split it into colorectal surgery, general surgery, gynecology, and so on. And really, the numbers varied anywhere from 35% to 45% of surgeries. And when you think about it, it really meets what we know of the general population in terms of a high BMI instead of a diabetic. In terms of smokers, it kind of fits with these numbers. So as a starting point for the product across all abdominal surgeries, I think this is a good assumption. In terms of reimbursement, so maybe two things here. First, since this is an inpatient product, our current conversation is really with the hospital and not with the payers. Payers, hospitals get paid a lump sum per the DRG. And then in a way, if they're efficient, if the surgery went as planned and the patient lives on time, then the hospital makes money. If there is an infection and now the hospital, the patient stays in the hospital for another 10 days, the hospital loses money. So our conversation is really showing the hospital that additional preventative measures to reduce infection has a patient outcome piece here, but there's also an economic piece here. Now that said, because we have a QIDP, Qualified Infectious Disease Product designation, we are eligible for the ANTAP. new technology add-on payment. And we went through the process, and we fit all the criteria for NTAP. And the NTAP gives a separate reimbursement from CMS to the hospital up to 75% of the cost of the drug. So although we don't have direct conversations with the payer, the hospital can get reimbursed for the product.
spk00: Okay, great. That's very helpful. And then one last maybe, yeah, thank you, Oren. On the interim, it sounds like you're probably on track for a 1Q interim announcement. Is that a good assumption? I think on the last call, you were waiting for FDA feedback around maybe the nature of the interim and what the implications were, such as upsizing the trial. Do you have anything you can share about any FDA feedback around the interim? Thanks.
spk02: Sure. Yes. So you're totally correct. We were waiting for a feedback from an approval actually from the FDA on the overall protocol. And we received this approval by the end of May. A month after that, by the end of June, we recruited the first patient. And from that point, we are getting approval in multiple countries and opening centers with the, Target to have 20 centers by the end of the current quarter. So I would expect to see as we progress Investors seeing quite an increase in impeachment patient recruitment on the aspect of the entry The entry means once we recruit 400 patient we expect to recruit the 400 patient during the first quarter of next year and About a month and a half after that, we should have the feedback from the DSMB committee. So either end of first quarter or early Q2, we should have the entry. Again, just for everyone to remember, our SHIELD1 data was around 400 patients, 423 patients in this focus patient population, and we had their a robust statistical significance that could have meet criteria of an interim analysis. This was part of the reason to set the number around 400 patients. And also, the interim is quite, I would say, in line of what you would expect in terms of the statistical analysis of an interim and could obviously suggest an early stop for .
spk01: Okay, thank you. Thank you. There seems to be no further questions. I would like to hand back to Digla Chakes-Axelbrad for closing remarks.
spk02: Thank you for joining PolyPIT's second quarter 2023 earning conference call. We remain highly confident in our long-term prospects, especially the potential of our promising late-stage product candidate, DIPLEX100. As always, We are grateful to our team members, shareholder, and all of our external partners for their commitment to our mission and their support in continuing to advance toward achieving our goal of bringing DPLEX 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 second half of the year.
spk01: Thank you. That does conclude our conference for today. Thank you for participating. You may now disconnect.
Disclaimer