PolyPid Ltd. (NASDAQ:PYPD) Q1 2023 Earnings Call Transcript

PolyPid Ltd. (NASDAQ:PYPD) Q1 2023 Earnings Call Transcript May 10, 2023

PolyPid Ltd. misses on earnings expectations. Reported EPS is $-0.28 EPS, expectations were $-0.26.

Operator: Greetings, and welcome to the PolyPid 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 LifeSci Advisors. Mr. Ritchie you may begin.

Brian Ritchie: Thank you all for participating in PolyPid’s first quarter 2023 earnings conference call. Joining me on the call today will be Dikla Czaczkes Akselbrad Chief Executive Officer of PolyPid; Jonny Missulawin, PolyPid’s Chief Financial Officer; and Ori Warshavsky, Chief Operating Officer. Earlier today, PolyPid released financial results for the three months ended March 31 2023. A copy of the press release is available in the Investors section on the company’s website www.polypid.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 resumption of recruitment for the SHIELD II Phase III 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-PLEX100, 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 20-F, which identifies specific factors that may cause actual results or events to differ materially from those described in the forward-looking statements. PolyPid 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 10, 2023. With the completion of these prepared remarks, it is my pleasure to turn the call over to Dikla Czaczkes Akselbrad, CEO of PolyPid. Dikla?

Dikla Czaczkes Akselbrad: Thank you, Brian. On behalf of our team at PolyPid, I would like to welcome everyone to our first quarter 2023 earnings 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 SHIELD II 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 new patients into SHIELD II, which to date has enrolled approximately 40 target patients. As a reminder, we now have a clear regulatory pathway for the potential NDA submission for D-PLEX100 in the US.

Earlier this year, the FDA acknowledged that the SHIELD I result may provide supportive evidence of safety and efficacy of D-PLEX100 in patients with surgical incisions greater than 20 centimeters. The agency also recommended that the company conduct an additional study on this focus patient population to support a potential NDA submission and confirmed the SHIELD II could serve such as planned. 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 SHIELD II. Total recruitment time into the study is expected to be approximately 12 months from the time we resumed SHIELD II and more. Top line results are expected mid next year.

We also plan to conduct an unblinded interim analysis once a total of approximately 400 patients complete their 30-day follow-up, as we prepare to resume recruiting for SHIELD II, one of the key learnings from SHIELD I is on the sites involved in the study. While we are targeting approximately 50 centers for SHIELD II, around the same number SHIELD I, we now have firm knowledge of the best performing site from SHIELD I in terms of recruitment, patient monitoring and good clinical practice. We believe this to be essential in the execution of SHIELD II. We also have enhanced our clinical operation stream, another key step towards supporting the successful study. While we have made modest modifications to the SHIELD II protocol based on the SHIELD I results, the design of the SHIELD II trial is very similar to the SHIELD I study in terms of primary and secondary endpoints.

Patients in the intervention arm will receive D-PLEX100 on top of standard of care and subject in the control arm will receive standard of care alone. The primary endpoint of the trial will be a combination of SSI. reintervention and mortality rate at 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 U.S. Europe and Israel. As we have said previously, I would like to emphasize that we view SHIELD II as a de-risked entry trial giving the more focused patient population in which we have already generated highly positive data in SHIELD I. 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 I.

In addition, as I noted a moment ago, we are leveraging the key learnings from SHIELD I 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 we received from the FDA following the Type D Meeting. Specifically, similar to the FDA, the Swedish MPA acknowledged that the SHIELD I result may provide supportive evidence in patients with large surgical incision and recommended that the company confirm the results with an additional Phase 3 study to support an MAA submission. The Swedish MPA also noted that clinical safety data obtained to-date is sufficient for an MAA solution. Importantly, we continue to work closely with our European partner Advance 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 meetings with the Swedish MPA.

I should add that we expect to complete the commercial manufacturing process and packaging validation for D-PLEX100 in the next few months. We continue to expect to have the CMC and preclinical data needed to support an NDA submission well in advance of the top line results. In regard to our financial strength, we completed a series of financial transaction, 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 underwriters’ 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 Kreos Capital, resulting in over $3 million of deferred repayments which will be paid from August 2024 onwards, in line with the expected timing of our top line results from SHIELD II.

The proceeds from the financing transactions, combined with the loan repayment deferred 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 SHIELD II to a successful completion. With that said, we are grateful for the continued support shown by our largest institutional, shareholders as well as our new investors 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-PLEX100 in different geographies like the U.S. 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 discussions is inherently difficult to predict. With that, it is my pleasure to turn the call over to Jonny, to review our current financials. Jonny?

Jonny Missulawin: Thank Dikla. As of March 31 2023, the company had cash, cash equivalents and short-term deposits of $19.6 million, including the $6.2 million net received from the underwritten public offering in April 2023. To reiterate what Dikla previously stated, we expect that our cash balance will be sufficient to expand 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 I Phase 3 clinical trial, and reflecting 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 Dikla. Dikla?

Dikla Czaczkes Akselbrad: Thank you, Jonny. 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 BenAmram 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’s 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 led Merck from the fifth position to market leader in pharmaceutical sales in this region. As we approach the potential commercialization of D-PLEX100, we are thrilled to add Yossi and his significant commercial expertise to our Board.

Also as it relates to the Board, Chaim Hurvitz, a member of our Board since 2016 will no longer serve as a Director. On behalf of everyone at PolyPid, I would like to thank Chaim for his significant contribution to our company over the years. We are grateful for his dedication to PolyPid. Finally, I’m pleased to announce that Jonny Missulawin, our SVP Finance has been promoted to Chief Financial Officer. We will now open the call to your questions. Operator?

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Q&A Session

Operator: Thank you. [Operator Instructions] We would take our first question. And the question comes from the line of Brandon Folkes from Cantor Fitzgerald. Please go ahead. Your line is open.

Operator: Thank you. We will take our next question. Please standby. Your next question comes from the line of Bala Prasad from Barclays. Please go ahead. Your line is open.

Operator: Thank you. We will take our next question. Please standby. Your next question comes from the line of Roy Buchanan from JPMorgan [ph]. Please go ahead. Your line is open.

Operator: There seems to be no further questions. So I would like to hand back for closing remarks.

Dikla Czaczkes Akselbrad : Thank you for joining PolyPid’s first quarter 2023 earnings call conference. We remain highly confident in our long-term prospects especially the potential of our promising late-stage product candidate D-PLEX100. 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 D-PLEX100 to health care providers and patients as quickly as possible. We look forward to speaking with you again on our next call and throughout the year.

Operator: This concludes today’s conference call. Thank you for participating. You may now disconnect.