PolyPid Ltd. (PYPD) Earnings Call Transcript & Summary

Good morning, everyone. Welcome to Day 2 of Barclays Global Healthcare Conference. My name is Balaji Prasad. I lead the specialty pharmaceuticals coverage for Barclays. And to kick start our spec pharma track for the day, we have with us a very interesting company, PolyPid, Phase III biopharma company with an interesting lipid polymer matrix for localized delivery. So from the management side, we have with us Dikla Czaczkes, EVP and CFO and also CEO designate. So congratulations, Dikla.

Thank you.

And we have Ori Warshavsky, Chief Operating Officer. And in the audience, we also have Jacob Harel, the Chairman of PolyPid, so welcome, everyone. So Dikla, why don't we start with a few opening comments from your side. And we also hit a nice milestone recently. So a few opening comments from your side, we can have a follow-up then.

Sure. Thank you, and good morning, everyone. So we are very exciting to be here, and this is a very exciting point in PolyPid development. We have developed a unique platform technology that allows for prolonged local delivery, which is a real enabling technology in the aspect that it could encapsulate any molecules, whether it's small molecules or large molecules. And now after over a decade of validating the platform, more recently 5 years ago, establishing our pipeline, we are at the last few steps of a large Phase III trial, 900-patient trial, showing prevention of infection in surgical setting. This large trial is aiming to show significant reduction of infection. We're aiming of 50% or more. And recently, 2 weeks ago, we have recruited the 750th patient, which we have an unblinded interim analysis on that basis coming next quarter. But this is a real potential inflection point and an exciting moment to actually understand where we stand with this product and this track.

Great. As I said, it's a major inflection point for you, a decade of work translating to what we'll see in the next quarter. So explain to us what are the next steps once you -- now that you have reached 750 patients. I guess you'll wait for 30 days and been doing unblinded interim analysis. So compared with it also, maybe it's a good time to refresh us with your Phase II efficacy rates that you saw? And what are you expecting to see, and next steps from there?

Sure. So our Phase II was 200 patients, similar trial in terms of the primary endpoint. The primary endpoint is to show reduction of infection and mortality within 30 days. The reference to the 30 days comes from CDC definition of surgical site infection. In these cases, that is infection that occurs within 30 days from the primary surgery. And this is the primary endpoint that we have now in the Phase III. This was also the primary endpoint in the Phase II. We've seen 59% reduction of infection, statistically significant. We've also seen a statistically significant reduction in regards to mortality. Within the overall 60-day follow-up on those 200 patients, we saw a reduction of infection from 5% in the control arm to 0. None of the patients that were treated with D-PLEX have died, which is very fortunate, and we are hoping to see similar effect in the Phase III -- in the 900-patient Phase III. I would also say that this trial is with patients undergoing colorectal resection, and this is the model that we've chosen. The reason that we are going after colorectal resection as the model to approve D-PLEX100, this is the worst-case surgical site infection. We're looking at double-digit infection rate here in the U.S., in Europe, everywhere and quite intuitively because the risk is not just from the outer, from the skin, from the surgery suite, it is also from the colon, from the most dirty organ. And most of the patients that are in our trial now and were also in the Phase II are cancer patients. Most of the patients that undergo colorectal resection are cancer patients, about 70%. This was also the demographic in the Phase II. 74% of the patients were cancer patients. And what we're seeing in the ongoing Phase III, 70% are -- about 70% of the patient are cancer patients. And out of the rest, majority are prone IBD.

Great. And once interim analysis or if the data is successful, it enables you for a filing, and you also have a breakthrough designation with D-PLEX. So what could that mean in terms of pipelines for you potentially launching the product? And maybe also give us a bit of expectations around what kind of label you -- we could expect?

So in terms of the time line and also the aspect of if we are at the interim close to ending the trial, we are looking on 1 Phase III that is sufficient for approval. Thanks to the Breakthrough Therapy designation that this product received from the FDA, we are able to have a relatively shorter path to approval. We could do that in a rolling submission and it's a shorter time for review. This Phase III is also going to be submitted to the European authorities. We've aligned the requirement there. So we would be expecting an approval both in Europe and the U.S. Our expectation is that this trial, with previous data that we have, including clinical and preclinical, should be sufficient for a broad abdominal indication, could be with some additional data that we have in the SHIELD II. And later on, we are hoping and expect to expand it to a broader labeling of prevention of surgical site in general. That's what where we are targeting. In terms of the time line, we expect to submit the NDA next year and meet the FDA for an end of Phase III meeting by the end of this year or early next year and submit it next year with expectation to see sales during 2024.

Great. Maybe it's also a good segue to get Ori in and speak of the commercial efforts you're leading and also help us understand the market size of those. I mean, so you have colorectal surgery, then you have soft tissue surgery, abdominal surgery. So help us understand the market size of these.

So we went really line by line, trying to identify where D-PLEX can make the most -- the biggest impact. So there's surgeries with this high infection rates like colorectal resection, like some of the hernia surgeries, cholecystectomy and so on. There's also -- there are also surgeries where maybe the infection rate is not as high, but if there is an infection, the consequences are really detrimental. So for example, open-heart surgery. If there is an infection, there's a 40% chance of mortality. In orthopedic surgery, if the infection sets into the bone, the final stage could be amputation. So taking all these surgeries, there's about 14 million surgeries here in the U.S. And those don't include the ones we talk about a really broad soft tissue label. There's another about 1 million of C-sections -- 1 million surgeries C-section a year and some of the cosmetic surgery. So there's really a pretty big market here as a potential. Obviously, this will come gradually. We'll start with the soft tissue abdominal and build with data and with the trials and with the doctor's experience. We'll target all this market.

Got it. And, Dikla, I know that you would not want to think about it, but any trial result basically that has chances of success and failure. So if your interim analysis doesn't meet the required endpoints, what is the plan B for the company?

So you're right. We are very confident with our ongoing trial and with our product, but still as a responsible company, we do look at potential plan B, and we do evaluate what is the prospect of the company if things are not going as expected. And people need to remember that we are a real true platform technology, and we have a pipeline. So yes, D-PLEX is now reaching the last few steps of the Phase III, which is very exciting. But we do have a pipeline and our next-in-line product is in oncology, our oncology program, pairing our PLEX platform with chemotherapy. The product has 3 weeks of prolonged local administration of chemotherapy designed for solid tumor. Very promising preclinical data. We have recently met the FDA for pre-IND meeting last year and are progressing towards a Phase I/II in solid tumor. We think that this product, again, with no systemic exposure to the chemotherapy, creates high concentration in the tumor environment, in the tumor residual environment of chemotherapy with a potential for different solid tumors, including GBM.

Understood. And so do you have any incremental updates on glioblastoma? And if you have any incremental comments or feedback from the FDA with regard to trial design on the next steps?

So we do. The FDA indicated that they are comfortable with progressing with oncology as first-line treatment and with newly diagnosed patients, which, for us, is very encouraging. And we are now in the stage of designing this trial. Once we produce the product for the clinic, we will start putting together the IND package and later on going into first-in-man, which will be Phase I/II in our case.

To tell you, I spoke to a number of the opinion leaders in the glioblastoma space, one of them said, "If this works, this is a complete game changer on how we treat GBM." Waiting to show it, but...

I would even add to that the -- there is no real chemotherapy that is working on GBM. Because the limiting factor with GBM up until today was the blood-brain barrier. Very potent drugs are not reaching the unmet need, are not reaching the tumor. And us bypassing it by actually administrating PLEX oncology program at the tumor site, at the tumor residual effect with constant prolonged 3 weeks of exposure to the tumor cells could really make a difference.

Absolutely. And if I understand right, the difference between treating glioblastoma currently is you have surgery and then not for a couple of weeks, then you have systemic chemotherapy, whereas the advantage was OncoPLEX is a localized application during surgery?

During surgery and immediately exposing the cells to the chemotherapy. There's no gap between the surgery and the treatment.

The other treatments, radiation, but none of them really is extending life expectancy by a few months. That's everything has to be done today.

And you also recently expanded your oncology advisory board in getting this. Are there any other oncology indications that you would want to pick up next as follow through? I know it's still early stages, still may not enter into clinical trials for OncoPLEX.

So OncoPLEX, today, as it is today, designed as part of the surgery solution is very well designed to solid tumors. So solid tumor, in general, could be our indication -- is our indication for oncology. We think that later on, we would be wanting to progress and pairing our PLEX platform not just with chemotherapy. We've done in the past research program around antibodies as well as biospecific with a few of the largest biotech companies out here. And we think that pairing the PLEX platform with those novel antibodies could really make a difference for patients. And this, of course, will be with collaboration not something that we will do on our own. But for us, this is the next step for the oncology. And it's in parallel. It's not 1 competing the other. There is room for all of these solutions.

The following step in parallel is going on in -- to being able to inject the materials instead of going into a foot surgery, resecting the tumor by injecting PLEX -- OncoPLEX directly into the tumor and shrinking it without the needle, delaying the time the patient goes into surgery.

Got it. And I think something that we look forward to, but as we also think about it, still a developmental stage company, and capital is always a big constraint, right? So there is also need to deploy well. And towards that, I think one of the things you're also looking at is partnerships. And we've been discussing this now for the past 1 year or so. What should we look for in terms of partnerships? And do you anticipate closing any this year? And its impact on how your capital is kind of structured and the cost?

So we are working here in 2 parallel paths, and we've indicated very strongly that we are in discussions on commercializing D-PLEX, and we do expect to be able to execute at least 1 deal this year. This is our target and, we think that this is feasible within this year. We're also looking at other nondilutive options to fund the company. Although we have cash well into this year, until the end of this year while running the Phase III and IV, we still want to make sure that the company is well funded when we reach this inflection point and can progress aggressively towards commercialization. And those 2 paths are going very well and could -- both of them, I think, will bring result this year.

And so we'll probably expect to see some partnership announcements coming through? Or it's something that we are still...

This is the kind of things that you cannot time, but we are confident with the data that we have and with the prospect of the product. And the discussions are very positive.

Okay. Great.

Strategically, at least for U.S. market, you would want it after the top line to get a greater value profit from the deal. So kind of...

Got it. Yes. And Ori, as you think about the commercialization efforts, at what point will you start looking to build the team? And will it be soon after interim analysis or...

Yes. So we are starting the initial steps now more on the medical side, kind of building our medical capabilities, pretty soon starting the MSLs that can reach out to KOLs that can start getting those right, keep people in the hospital to start discussions about how to get the formulary. That's -- these are activities that we will start really in the next few months, once we have results. The next step of the whole discussion on access and later on, the sales team. But really, the MSL is going and starting discussion. Formulary will be in the next few months.

What is the feedback been -- initial sort of feedback been from many hospitals and administrators that you have spoken to? And clearly, this has great potential to reduce hospital operating costs and also indirectly increase revenue. So what has been the feedback and like controller?

Yes. It's -- the feedback has been very, very good. The product -- so when you talk to surgeons, the discussion is very clear. They see 60% reduction. We don't need to say anything else because every surgeon knows their SSI rate and the department SSI rate. When you talk to the administrators and they are measured on -- SSI is one of the indicators that CMS tracks for improvement of quality, and it's rated and it's public. SSI is one of the -- is how -- one of the measures the hospital quality is measured, the reputation impact. So when I talk to hospital CEOs, almost the first thing that would tell me we're U.S. best news top rank for leapfrog, A rated and so on. So really, quality and the impact of amputation is the driver. The cost, what we show and what we expect to show from the trial is how we reduce the number of hospital days, readmission rates, the physician time. All of this can translate into dollars. So as opposed to bringing a new expensive antibiotic that is incremental for many reasons to the hospital, we bring a very effective product that can actually take costs from the system. And that message resonates pretty well.

So what's your confidence level that D-PLEX could be the new standard of care, assuming it's launched on market?

I don't think -- we're not very embarrassed to say that that's where we're targeting. We -- really, every surgeon we talk to is interested. Infectious disease specialists, those guidelines, that's kind of where we want to go. I think with data, I think we will get there because there's a level of SSI that with everything that exist today, with IV antibiotics, with the sutures, with all the different guidelines, there's a level of SSI the doctors cannot go below. And there's a clear impact on patients. There's clearly impact on cost. We will -- that's why we want to go into the clinical guidelines, into the really impact -- in the -- how hospital operates.

Look forward to that. And the main change you get likely towards manufacturing, you did expand capacity recently. Where does that take you in terms of ability to supply? And that's also a good segue to probably think about -- disclose your global aspirations, global launch plans around this product.

So this is one of the things that we are mostly proud of, the fact that we strategically make the decision 5 years ago to build our own manufacturing facility, which is now producing for our clinic, of course, 14,000 square feet of state-of-the-art manufacturing facility. One of the uniqueness of our platform lies on the manufacturing aspects. The fact that it's a self-assembly process, and we are now with upscaled facility. We almost increased it by 50%, and the capacity was doubled. We are in the process of validating it again. And we expect that during this year, we will have it fully validated, and we will be putting vials for stability that will be submitted later next year to the FDA. The thought about in terms of looking a bit farther ahead, this facility is sufficient for the first 3 years of sales, and we already have plans and evaluation on what should be the next step. Because, as you know, those processes take a long time, but we still have time to execute on that.

Got it. And on the part about global operations, I think you'll be looking to have partners in...

Yes, next year. The problem with SSI is really greater. Once you step outside the U.S. and Europe there's -- the more sophisticated the health care system is, the more infections there are. So this product is really fits well with, say, markets like -- big markets like Brazil and Mexico and some of the big Asian markets. And I mean, we're still a start-up, so we can't do all of this on our own. And we already have some interest from potential partners for some of these markets.

Perfect. So with that, we'll probably look forward to next month and the data from there. And I'll leave it over to you for any closing remarks, and thank you again.

So thank you. First of all, thank you for inviting us and having us. It's really nice to be in an in-person conference. It is an exciting time for PolyPid. We, as the management of the company, together with our Board and everyone that is in PolyPid, are looking forward to next quarter, where we will be seeing some real unblinded data on our Phase III. We are targeting a relatively large Phase III. 900-patient program is something that not every start-up can -- it's an ambitious task, and we are excited to see what lies ahead of us.

Fantastic.

It's a lot of progress.

Ori and Dikla, thank you so much for your time, and I wish you a very productive conference.

Thank you.

Thank you.