PolyPid Q2 2023 Earnings Call Transcript

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August 9, 2023

Key Takeaways

  • Polypede received FDA agreement on the SHIELD-2 Phase III trial design for DPLEX-100, plans to enroll ~550 new patients plus 40 already recruited, open 20 sites by quarter-end, conduct an unblinded interim analysis at 400 patients, and expects top-line data in mid-2024.
  • SHIELD-1 results in patients undergoing large open colorectal surgery showed a 54% reduction in surgical site infections versus baseline (~9.7%), and the company expects at least a 50% reduction in SHIELD-2.
  • Management is in talks with over 20 potential partners to secure two partnership deals in 2023—one for DPLEX-100 licensing in new geographies (U.S., Asia) and others for PLEX platform collaborations, including RNA delivery and oncology applications.
  • Through cost-containment initiatives, Polypede has generated over $1 million in savings YTD, reduced net cash used in operations by 59%, and finished Q2 with $15.1 million in cash—funding into late Q1 2024.
  • As a Qualified Infectious Disease Product (QIDP), DPLEX-100 is eligible for CMS NTAP reimbursement of up to 75% of drug cost, which aligns hospital economics with infection-prevention outcomes.
AI Generated. May Contain Errors.
Earnings Conference Call
PolyPid Q2 2023
00:00 / 00:00

There are 6 speakers on the call.

Operator

Greetings, and welcome to the Polypede 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.

Operator

Ritchie, you may begin.

Speaker 1

Thank you all for participating in today's Polypede's Q2 2023 earnings conference call. Joining me on the call today will be Dikla Chachkus Axelrod, Chief Executive Officer of Polypede Johnny Misalawan, Polypede's Chief Financial Officer and Ori Warshavsky, Chief Operating Officer of Polypede. Earlier today, Polypede released financial results for the 3 6 months ended June 30, 2023. A copy of the press release is available in the Investors section on the company's website, www.polypede.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.

Speaker 1

For example, management is making forward looking statements when it discusses recruitment of additional patients into SHIELD II, total recruitment time into the study and the timing of the top line results therefrom. Its intention to conduct an unblind interim analysis once a total of approximately 400 patients complete their 30 day follow-up, the potential NDA submission for DPLEX-one hundred in the U. S, its expectation to have 20 centers open in the U. S, Europe and Israel by the end of the current quarter, factors essential in the execution of Shield 2, Flex 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 2 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.

Speaker 1

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. Polypeak 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.

Speaker 1

This conference call contains time sensitive information and speaks only as of the live broadcast today, August 9, 2023. With the completion of those prepared remarks, it is my pleasure to turn the call over to Dikla Tschakas Axelrad, CEO of PolyPide. Dikla?

Speaker 2

Thank you, Brian. On behalf of our team at PolyPide, I would like to welcome everyone to our Q2 2023 earnings call. To begin, we are thrilled with the recent progress we have achieved in the advancement of our promising lead product candidate, DPLEX-one hundred. This May, we announced that the FDA agreed to our SHIELD-two Phase 3 trial design, evaluating Diplex100 for the prevention of abdominal colorectal surgical site infection. The revised trial includes only patients undergoing open colorectal abdominal surgery with large incisions.

Speaker 2

Importantly, you will recall that we previously generated very positive data in SHIELD-one from this small focused patient population. Specifically, this patient population showed a highly statistically significant reduction of 54% in surgical size infection in SHIELD-1. We intend to enroll an estimated 550 additional patients beyond the 40 patients already recruited into SHIELD-two. Total recruitment time into the study is anticipated to be approximately 12 months, and top line results are expected in mid-twenty 24. We also intend to conduct an unblinded interim analysis once a total of approximately 400 patients complete their 30 days follow-up.

Speaker 2

In late June, the first patient was recruited in the revised CHIEL-two 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-one hundred in the U.

Speaker 2

S. Earlier this year, the FDA acknowledged not only the CHILT-one results may provide supportive evidence of the safety and efficacy of Diplex-one hundred in patients with large surgical incision, but also confirmed that if successful, SHIELD II is sufficient to support a potential NDA submission. As we have said previously, we strongly believe that SHIELD II is a derisk Phase III 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.

Speaker 2

While we are targeting approximately 50 centers for SHIELD-two around the same number as SHIELD-one, we now have firm knowledge of the best performing sites from SHIELD-one in terms of recruitment, patient monitoring and good clinical practice. We believe this to be essential in the execution of SHIELD-two. 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 2 key areas.

Speaker 2

First, we are targeting additional strong partners for DIPLEX-one hundred in different geographies like the U. S. And Asia. 2nd, 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.

Speaker 2

Over the last quarter, we have significantly wrapped 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 DPLEX-one hundred 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 2 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 Diplex100. Most recently, a paper highlighting the patent antibacterial activity of Diplex-one hundred 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.

Speaker 2

This paper highlighted the tremendous potential of DPLEX-one hundred 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 DPX-one hundred in preclinical and Phase II clinical studies against the wide range of bacteria tested, including resistant ones. Finally, while Johnny will review our current financials momentarily, I'd like to highlight our cost containment efforts throughout the business in 2023, including in clinical operations, G and A and manufacturing. Most significantly, in a challenging inflationary environment, we have generated over $1,000,000 in cost savings year to date. Moreover, our net cash used in operating activities decreased by 59% in the 1st 6 months of the year as compared to the 1st 6 months of 2022.

Speaker 2

With that, it is my pleasure to turn the call over to Johnny. Johnny?

Speaker 3

Thank you, Dick Clark. As of June 30, 2023, the company had cash and short term deposits of $15,100,000 We continue to expect that our cash balance will be sufficient to fund operations into late Q1 2024. Now let's turn to our income statement. Research and development expenses for the 3 months ended June 30, 2023 were $4,000,000 compared to $8,400,000 in the same 3 month period of 2022. The decrease in R and D expenses resulted primarily from the completion of the SHIELD-one Phase 3 clinical trial and reflects the impact of the cost reduction plan that was executed in the Q4 of 2022.

Speaker 3

Marketing and business development expenses for the Q2 of 2023 were $357,000 a decrease from the $923,000 during the prior year 3 month period. General and administrative expenses for the Q2 of 2023 were $1,500,000 compared to the $2,200,000 recorded in the same 3 month period of 2022. For the Q2 of 2023, the company had a net loss of $5,800,000 as compared to $11,800,000 in the Q2 of 2022. Finally, as Decla noted, we are executing well on our cost containment initiatives. As such, our net cash used in operating activities for the 1st 6 months of 2023 decreased by $12,000,000 as compared to the same period in 2022 from $20,300,000 to $8,300,000 With that, we will now open the call to your questions.

Speaker 3

Operator?

Operator

Thank you. And the question comes from the line of Bhalaj Prasad from Barclays. Please go ahead. Your line is open.

Speaker 3

Good morning. This is Xiao on for Balaji. Thanks for taking our question. So can you speak of some of the partnership and the licensing opportunities that you're pursuing whether across the technology or the product candidates? Thanks.

Speaker 4

Okay. Good morning. In terms of partnerships, there are a few things we are that are in discussion. 1, on the Diplex side, there are a number of conversations in different stages looking both at U. S, Latin America and Asia.

Speaker 4

I think what is interesting is some of the in some of the conversations, they are more advanced, some less, some are looking waiting to see more data and some are really, I would say, more and 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 result, 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 pharma companies looking at the innovative product, delivery, wherever local delivery is needed.

Speaker 4

And I can highlight that I think I mentioned this in the past, there's 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 nucleic acid in general, not just RNA. We have patents around that delivery. So this is something that we're looking to push on.

Speaker 4

There's with any new let's say, technology, there's always this window where 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 the intratumoral injection or post resection adjuvant delivery into the tumor bed?

Speaker 2

I think good morning, Shah. Without going into Zulu into the specific and obviously, we cannot commit on time line is that I think what's important for investors to see and what we were trying in today's prepared remarks to emphasize that probably not probably for the first time in the life of Qualysys, we have experienced such a robust interest. So many companies that are in parallel discussion And this is, I think, is something that is new and we still believe that will lead to agreements this year.

Speaker 3

Got it. Very helpful. Thank you.

Operator

Thank you. We will take our next question. Please stand by. Your next question comes from the line of Roy Buchanan from JMP. Please go ahead.

Operator

Your line is open.

Speaker 5

Hey, great. Thanks for taking the question. 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?

Speaker 5

And can you remind us what you expect for the baseline infection rate based on the design of the trial?

Speaker 2

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 Q1.

Speaker 2

So this is the next milestone, and we can judge this in the next quarterly call and see if we have 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 unwinding of the trial. What I can tell you is that we use the baseline assumption that we've experienced since SHIELD-one for this focused 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 our in all our corporate presentation, but the infection rate that we are presenting around patients with open large open abdominal incision that was experienced in SHIELD-1 is 9.7%.

Speaker 2

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 II and as we've seen in this focused patient population in the Phase III, it should be at least 50% reduction.

Speaker 5

Okay, great. And then can you I know you guys did quite a bit of market research ahead of SHIELD-1. 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?

Speaker 5

Thanks.

Speaker 2

So I'll take the first part and Ori here on my side will 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-one, we had 977 patients and 423 out of those were with large incision. If you look at patients with 1 or more risk personal risk factor, this was even 70% of the trial.

Speaker 2

So this is supportive also with our SHIELD-two SHIELD-one data.

Speaker 4

Yes. I would add 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 in app, that's 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 surgery.

Speaker 4

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 2 things. So first, since this is an inpatient product, our conversation is really with the hospital and not with the payers. Payers hospitals get paid a lump sum per the DRG.

Speaker 4

And then in a way if they're efficient, if the surgery went as planned and the patient leaves 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 NTAP, new technology add on payment. And we went through the process and we fit all the criteria for NTAPs.

Speaker 4

And the NTAP gives a separate reimbursement from CMS to the hospital up to 75% of the cost of the drug. So although we are we don't have direct conversations with the payers, the hospital can get reimbursed for the product.

Speaker 5

Okay, great. That's very helpful. And then one last maybe, yes, thank you, Oren. On the interim, it sounds like you're probably on track for a 1Q interim announcement. Is that a good assumption?

Speaker 5

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.

Speaker 2

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 1st patient.

Speaker 2

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 what I would expect to see as we progress, investors are seeing quite an increase in patient recruitment. On the aspect of the interim, the interim is once we recruit 400 patients. We expect to recruit the 4,000 patients during the Q1 of next year. And about 1.5 months after that, we should have the feedback from the DSMB committee.

Speaker 2

So either end of Q1 or early Q2, we should have the increase. Again, just for everyone to remember, our SHIELD-one data was around 400 patients, 423 patients in this focused patient population. And we have there a robust statistical significance that could have made 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 software sequencing.

Operator

CTC. There seems to be no further questions. I would like to hand back to Dikla Tsakas at Zalbrad for closing remarks.

Speaker 2

Thank you for joining PolyPit's Q2 2023 earnings conference call. 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, shareholder 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 the PLEX-one hundred 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.

Operator

Thank you. That does conclude our conference for today. Thank you for participating. You may now disconnect.

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