8/14/2024

speaker
Operator

Greetings and welcome to the Polypeet second quarter 2024 conference call. At this time participants are in 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.

speaker
Brian Ritchie

Thank you all for participating in Polypeet's second quarter 2024 earnings conference call. Joining me on the call today will be Dikla Chachkas-Axelbred, Chief Executive Officer of Polypeet, Johnny Misalawen, Polypeet's Chief Financial Officer, and Ori Warshawski, Chief Operating Officer, United States of Polypeet. Earlier today Polypeet released its financial results for the three and six months ended June 30th, 2024. A copy of the press release is available in the investors section on the company's website, .polypeet.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 timing for recruitment, number of centers, top-line results from the shield two trial, and of the unblinded interim analysis, the planned new drug application submission for DPLEX 100, and the company's expected cash runway, and the potential to secure additional funds if all the warrants issued through its recent pipe are exercised. 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 CC 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 annual report on 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. Poly-P 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 14, 2024. With the completion of those prepared remarks, it is my pleasure to turn the call over to Dikla Tsachkis-Axelberg, CEO of Poly-P. Dikla?

speaker
Johnny Misalawen

Thank you, Brian. On behalf of our team at Poly-P, I would like to welcome everyone to our second quarter's 2024 earnings conference call. We are thrilled with the important clinical and operational progress achieved recently, most critically as it relates to continued study and enrollment in our ongoing Shield II pivotal trial for DIPLEX 100 for the prevention of abdominal correctal surgical sanitization. Further, the recent successful financing extends our cash runway throughout expected interim analysis results in the fourth quarter of this year and the completion of the full planned patient enrollment in early 2025. In addition, assuming the full exercise of the warrants for this financing, our cash runway will be further extended into the Let's begin with the status of Shield II. I am pleased to report today that the study has now enrolled approximately 320 subjects and approximately 50 centers are currently open in multiple countries around the world, including the U.S., Germany, Italy, Ireland, Portugal, Hungary, and Israel. As a reminder, we intend to conduct an unblinded interim analysis once approximately 400 patients of the planned total of approximately 600 subjects complete the 30-day follow-up, which is expected to occur in the fourth quarter of 2024. Top-line results are anticipated in the first quarter of next year. Therefore, Shield II is now three quarters enrolled for the interim analysis and more than halfway to full planned enrollment. Importantly, enrollment is progressing at a consistent and robust pace. Of significance, the key patient enrollment trends we identified on our last call have continued. The median age, male-female split, and percentage of enrolled patients suffering from cancer in Shield II are all similar to the patient in the Shield I large incision pre-specified subgroup. This is important because these similar demographics are being observed in the more focused patient population in which we have already generated highly positive data in Shield I. We continue to strongly believe that Shield II is a -risk-based retrial. Unlike Shield I, the currently enrolling Shield II is not being conducted under the tight COVID-related restrictions that were in place during the pandemic. Later in the call, Ori will further discuss the surgical site infection risk currently being observed in the clinic as viewed by a key opinion leader in the field. Of course, we are also leveraging key learning from Shield I related to the sites involved in this study. As discussed on prior earnings call, while we are targeting approximately 60 centers for Shield II around the same number as Shield I, we identify the best performing sites and countries from Shield I in terms of recruitment, patient monitoring, and good clinical practice and have focused on these sites and countries in Shield II. We believe this to be essential in the execution of Shield II. Moreover, the Data Safety Monitoring Committee in charge of the review of accumulating safety data and study conduct for Shield II has recommended three times to continue the study without modifications, meaning that no safety issues related to Deeplex 100 have been observed in Shield II to date. Moving on, to reiterate what we have said previously, we have a clear regulatory pathway for the potential NDA submission for Deeplex 100 in the U.S. Last year, the FDA acknowledged not only that Shield I results may provide supportive evidence of the safety and efficacy of Deeplex 100 in patients with large surgical incisions, but also confirmed that if successful, Shield II is sufficient to support a potential NDA submission. Shifting gears, we were pleased to recently fortify our balance sheet by successfully closing a financing of $8.1 million of gross profit. The PIPE syndicate was comprised of few and existing investors, including participation from multiple top-tier U.S. life-size focused investors. The PIPE extends the company's cash runway into the first quarter of 2025, beyond expected interim analysis results and the completion of enrollment of approximately 600 patients in Shield II. PolyBid has the potential to secure an additional $6.1 million if the unlighted interim analysis of the Shield II phase III trial of Deeplex 100 results in either the stopping of the trial due to positive efficacy or continuation to planned patient recruitment of up to 630 subjects. If all warrants issued in this recent financing are exercised, the company will be funded beyond top-line results and into the second quarter of 2025. In addition, the company announced that it has restructured its existing secured loan agreement with Grails with over $2 million of deferred repayments, which will be paid from April 2025 onwards. I'd like to take the opportunity to thank all the investors who participated in the financing for their confidence and support. Finally, I am pleased to announce today that Ms. Dalit Khazan, our EVP R&D clinical and regulatory affairs, has been promoted to the role of Deputy CEO EVP R&D clinical and regulatory affairs. Dalit has been instrumental in the planning and execution of our clinical strategy, R&D, and the company's strategy with the FDA and European regulatory authorities. And we look forward to her continued contribution to the advancement of Polypid as we approach potential commercialization of Deeplex 100. Now, I'd like to turn the call over to Ori to review the recent KOL event Polypid hosted with Professor Charles Edmiston. Ori?

speaker
Charles Edmiston

Thank you, Dikla. This last June, we hosted a key opinion leader webcast and conference featuring Professor Charles Edmiston, Emeritus Professor of Surgery, Division of Vascular Surgery, Medical College of Wisconsin. We discussed several key topics surrounding the prevention of surgical site infections. A replay of this virtual event can be found on the events and presentation page under the investor heading of the company's website. Key takeaways from this call included, one, the increase in surgical site infections back to pre-COVID rates due to a rebound in the number of elective surgeries conducted and the surgical environment normalizing to that found prior to 2020. Two, widespread underreporting of surgical site infections with up to 30 to 35 percent of colorectal infections missed due to suboptimal surveillance strategy. Three, procedural and patient-related risk factors significantly heightened the possibility of developing a surgical site infection and this increased possibility is compounded when patients have multiple risk factors. Four, the long-term cost to commercial players of the single colorectal surgical site infection event over a period of 24 months remains substantial, ranging from $44,000 in superficial infections to $64,000 in deep infections and the cost for Medicare ranging from $20,000 to $45,000 per spectrum. And the fifth and final takeaway, the risk of surgical site infection is reduced when using surgical care bundles in patients undergoing colorectal surgery. Dr. Edmiston commented that the 30-day high concentration release of antibiotics achieved with D-Plex 100 has the potential to add additional clinical and economic benefits to infection prevention bundles. With that, it is my pleasure to turn the call over to Johnny to review the financials. Johnny?

speaker
Johnny

Thank you, Ored. As of June 30, 2024, the company had cash equivalents and short-term deposits of $9.3 million. This does not include the gross proceeds of approximately $8.1 million generated from the pipe financing closed in August. We expect that our performer cash balance will be sufficient to fund operations into the first quarter of 2025, not including a potential additional $6.1 million if all warrants from recent financing are exercised. Now let's turn to our income statement. Research and development expenses for the three months ended June 30, 2024, were $4.8 million compared to $4 million in the same three-month period of 2023. The increase in R&D expenses in the most recently completed quarter was driven by the ramp-up of the ongoing Shield 2 phase 3 trial. Marketing and business development expenses for the three months ended June 30, 2024, were $265,000 compared to $357,000 during the prior year period. General and administrative expenses for the three months ended June 30, 2024, were $1.1 million compared to $1.5 million recorded in the same three-month period of 2023. This decrease reflects our ongoing cost containment efforts. For the three months ended June 30, 2024, the company had a net loss of $6.3 million as compared to $5.8 million in the second quarter of 2023. With that, we will

speaker
Ored

now open the call to your questions. Operator?

speaker
Operator

Thank you. To ask a question, please press style 1 and 1 on your telephone and wait for your name to be announced. To withdraw your question, please press style 1 and 1 again. Once again, please press style 1 and 1 on your telephone and wait for your name to be announced. To withdraw your question, please press style 1 and 1 again. Thank you. We are now going to proceed with our first question. The questions come from the line of Roy Butanen from JMP. Please ask your question.

speaker
Roy Butanen

Hey, thanks for taking the questions. I guess the first one, just the interim analysis coming up in the next quarter, what are the options of what you can announce? What should we expect? I guess if the trial continues to the final results, are you going to disclose the infection rate?

speaker
Johnny Misalawen

Hi, good morning, Roy. First, I'll start with the letter. We will not be aware of the infection rate. We will only get the end point of the study. The options of the interim, the DSMB, who is also monitoring the safety data, will come back to us with several, one of three options. Either they can say that, which we do not expect, but they can say that we need to stop because the study is futile, will not reach the end point. They can say, which is obviously what we are hoping, that we need to stop the study at the 400 due to efficacy, that we reach the point, or they can send us to the end of the study, the lower end of the study, which is expected to be below 630. They also have a fourth option of upscaling the study. Then they will tell us just the overall patient number that is required. At no point before unbinding the data, we will actually know the infection rate.

speaker
Roy Butanen

Okay, great. That's helpful. Thanks. I guess still on that point, the warrants, are they eligible for exercise if they recommend that the trial size goes above the 630? Can you remind us any potential advance milestones on the interim?

speaker
Johnny Misalawen

So the warrants are exercisable at any time within the coming two years. There is a triggering event that shortens the time for exercise if we are either stopping the study early due to efficacy, or if we are sent to the minimum sample size, which is the end of the study, which is up to 630. We're sent to a lower number, there will be

speaker
Ored

exercise within 10 days from the point. Okay, great. Any advance? So

speaker
Johnny Misalawen

we're asking about advance, yes. So advance has several development milestones in the agreement. And the first one being positive supply results.

speaker
Roy Butanen

Okay, great. And then the last one for me, I guess, I know you guys are 110% focused on SHIELD2 and the interim, but just anything you can say about progress with partnering D-PLEX in additional geographies or with the broader platform?

speaker
Johnny Misalawen

Thanks. So as part of being 100% and more than 100% focused on D-PLEX, we are also progressing on commercialization discussions. We said this early in the year that we expect to see commercialization deals coming this year, and we are focusing on that, different geographies in that we've already have an agreement. We've also indicated that in previous quarter, I can say that we are in discussions on that and something that has been sometimes, and we still expect to sign before the data. You are also asking on platform deal, this is another aspect of our business development activities that is progressing. Again, I would expect to see a deal before the end of the year, as we said

speaker
Ored

in our objectives. Okay, thank you.

speaker
Operator

Thank you. Once again, to ask a question, please 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. We are now going to proceed with our next question. The questions come from the line of RAM. Silva Raju from HCWayne-Wright, please ask your question.

speaker
Silva Raju

Thank you very much for taking my questions. Can you hear me?

speaker
Johnny Misalawen

Yeah, we hear you well. Good morning, Graham.

speaker
Silva Raju

Good morning. I wanted to first of all ask if you could provide a little bit more granularity around the timing of the completion of the interim analysis. Once you are in a position to conduct the interim analysis, can you share with us approximately how long you expect that process to take? If you have a sense of this juncture, depending on when you start that process, when in the first quarter of 2025 you might have the results? Would it be earlier the quarter or later in the quarter?

speaker
Johnny Misalawen

Let me try to clarify some of the points. You raised very, very good points. The interim is based on 400 patients. I expect that we will announce that we've reached 400 patients. Once we reach 400 patients, it is about two months until we get DSMB recommendation. Once we get the full 400, approximately 400 patients for the interim, for that point, it's two months. It's 30 days for follow-up and another 30 days for clean-up or clean-up of the data and then getting the top-line data to the DSMB and a recommendation. So that would give you better clarity on timeline. This is why we said that we expect that the interim data will be at the fourth quarter of this year. With regards to the top-line, since we are continuing to recruit the patient, towards the end of the year, we should also be in the full 600 patients. Then top-line is taking a little bit longer in terms of cleaning data and getting the unlined data because you close the data, you cannot go back to the data after that. It's unlined, there's no going back to the data. So it's a bit longer than that. It's more of a quarter and this is why we said the first quarter of next year.

speaker
Silva Raju

Okay, no, that's very helpful. Thank you. The second question I had was with respect to the underlying market dynamics for the Shield II target indication and if you can maybe comment on what you are seeing specifically with respect to a return to the pre-COVID environment and the extent to which you expect that to persist going forward. In other words, should we at this point assume that for all intents and purposes, if nothing changes from a market environment perspective, that essentially you will be reporting your top-line data into a situation that effectively for all intents and purposes in every way resembles the -COVID-19 market situation and what are the implications of that for the market demand for a product like this?

speaker
Johnny Misalawen

So this is part of the reason that we wanted to hold a KORL event with Professor Richard Edmston to really not give our opinion but rather someone with a surgical site infection specialist working with hospital, working with teams within the hospital to try to reduce the infection rate and try to educate teams on how to lower the surgical site infection rate and give his perspective on what was the baseline prior to COVID, what happened during COVID and what he's seeing these days when we are out of COVID. To be more specific on your question, we do assume that when we publish the data, we will be similar to what is being observed now, that we will be at more close to baseline infection rate prior to COVID. Obviously, with regards to the study itself, we are blinded, so we are not exposed to the data and we cannot, the only thing that we can say is, and we said this in today's formal presentation, that the key patient enrollment trends that we identified on our last call are continuing. We see a comparability between Shield 1 and Shield 2 in the demographic, in the patient population, obviously comparing the large incision to the large incision and for us, this is very encouraging and we view this

speaker
Ored

as de-risking of the study. Okay, great. Then the last question from me is,

speaker
Silva Raju

assuming a hypothetical situation, which I think obviously we all are expecting, that the interim analysis is positive, can you give us a sense of how you expect your GNA spending to evolve from that point? In other words, are you going to engage in any additional market preparation activities prior to the release of the final top line data, but after the release of positive interim analysis results, or are you going to effectively keep GNA expenses at a more modulated run rate until after the top line analysis? In other words, what I'm really asking is, when do you expect GNA spending to ramp up as you contemplate the possibility of introducing the product into the market?

speaker
Johnny Misalawen

This is a very good point. I would start by saying that from our perspective and also the investor that participated in the last round, a positive interim will be either stopping at the interim or going to the minimum size of the 600 patients. Both, on our view, is a good income at the interim, and this is why this is how the triggering event is defined for the warrant. With regards to the GNA, we do not foresee a substantial increase in the expenditure there. Obviously, there will be some modification as we grow and as we continue to sign additional collaboration deal around Ziplex, but again, looking at the agreement that we have with advance, most of the responsibility on the marketing, on the medical affair, on reaching out to the hospital is on the partners. There will be some increase, but we do not foresee something that will immediately

speaker
Ored

change significantly our P&L. Thank you very much.

speaker
Operator

Thank you. We have no further questions at this time. I want to hand back to Declan Chachki's Axel Bright for closing remarks.

speaker
Johnny Misalawen

Thank you for joining Polypeed's second quarter 2024 earnings conference. We remain highly confident in our long-term prospects, especially the potential of our promising late-stage product candidate, Ziplex 100. As always, we are grateful to our team members, shareholders, and all external partners for their commitment to our mission and support in continuing to advance toward a goal of bringing Ziplex 100 to healthcare providers and patients as quickly as possible. We look forward to speaking with you again on our next conference call.

speaker
Operator

This concludes today's conference call. Thank you all for participating. You may now disconnect your lines. Thank you.

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