PolyPid Ltd. (PYPD) Earnings Call Transcript & Summary

Thank you all for joining us today with the PolyPid management team to discuss the interim analysis recommendation of the independent Data Safety Monitoring Board, or DSMB, regarding PolyPid's Phase III SHIELD I trial of D-PLEX100. Joining me on the call today will be Amir Weisberg, Chief Executive Officer; and Dikla Czaczkes Akselbrad, Executive Vice President and Chief Financial Officer. In addition, Ori Warshavsky, the Chief Operating Officer of PolyPid's U.S. operations, will be available during the Q&A session. Earlier today, the company issued a press release with the details of the DSMB's interim analysis recommendation that will be reviewed in greater detail during today's call. A copy of that press release is available in the Investor's section of the company's website, www.polypid.com. I'd like to remind you that on this call, the 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 conclusion of the SHIELD 1 Phase III trial and patient enrollment that full top line results are anticipated by the end of the third quarter of this year, and if the results are positive, would be followed by an NDA submission to the FDA and the European MAA filing planned for the first half of 2023. Pursuit of a pre-NDA meeting with the FDA to discuss a rolling NDA submission, continued advancement of the company's prelaunch commercial preparations while also expediting partnership discussions in and outside of the U.S.; the company's focus on potential partner companies with an established hospital presence and ideally, and establish operating room focused sales team, the market potential for D-PLEX100, the company's belief regarding the opportunities for potential use of D-PLEX100 and how, if approved, D-PLEX100 could significantly transformed the surgical landscape. Forward-looking statements are subject to numerous risks and uncertainties, many of which are beyond our control, including risks described from time to time in our SEC filings. Our results may materially differ from those projections. These statements involve material risks and uncertainties that could cause actual results or events to differ materially. Accordingly, you should not place undue reliance on these statements. I encourage you to review the company's filings with the SEC including, without limitation, the company's Form 20-F, which identify specific factors that may cause actual results or events to differ 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 23, 2022. With the completion of those prepared remarks, it's my pleasure to turn the call over to Amir Weisberg, CEO of the company. Amir?

Thank you, Bob. On behalf of the team at PolyPid, I would like to welcome everyone to our call to review and discuss today's announcement regarding DSMB recommendation to conclude the SHIELD 1 Phase III trial exploring the efficacy of D-PLEX100 in preventing surgical site infection in abdominal tissue surgery. More specifically, the DSMB recommendation to conclude the trial once the target minimum enrollment has been reached, which is expected in the coming days. This event presents a key milestone for our D-PLEX100 development, [ Orka ] and our company as a whole. Before I turn the call over to Dikla to review the DSMB recommendation and discuss next steps, I would like to briefly extend my thanks to all the patients and the physician who participated in this study as well as to acknowledge all the hard work and commitment put forth by the entire PolyPid team in advancing D-PLEX100. Without delay, I would like to pass the call over to Dikla for further details on today's news and the path forward. After which, we will open the call for your questions. Dikla?

Thank you, Amir, and thank you all for joining us for this exciting announcement. Before I begin, I would like to emphasize that the data generated from the SHIELD I interim analysis remain blinded to PolyPid and all others outside of the DSMB. With that said, we are pleased to announce today that following the unblinded review by the independent DSMB of efficacy data from the first 750 enrolled patients, the DSMB has recommended that the SHIELD I Phase III study of D-PLEX100 should conclude subsequent to the enrollment of 950 patients, which is the minimum number of targeted patients in the study protocol which provides for 950 to 1,400 patients. I'm pleased to report that the enrollment of the 950 patients is expected to occur within days. Patients in the study have been enrolled across approximately 60 centers in the United States, Europe and Israel. The SHIELD I study of D-PLEX100 in the prevention of pesticides and abdominal tissue surgery is designed to demonstrate at least a 50% reduction in incisional exercise in the D-PLEX100 treatment arm compared to the control arm, with 90% power to detect the difference between the 2 arms and a maximum alpha level of 0.04. Last but not least, I would like to emphasize that chilled one is the largest colorectal surgery trial conducted in more than a decade, which we believe only enhances the importance of these data. Full top line results are anticipated by the end of the third quarter of this year, and if results are positive would be followed by an NDA submission to the FDA and the European Union MAA filing both planned for the first half of 2023. Following the receipt top line results, as a near-term regulatory next step, we intend to pursue a pre-NDA meeting with the FDA to discuss a rolling NDA submission, consistent with the breakthrough therapy designation previously granted. Similar tenures with our planned regulatory activities, we will continue to advance our prelaunch commercial preparation, while also expediting partnership discussions in and outside of the U.S. As a reminder, we are focused on potential partner companies with an established hospital presence and ideally an established operating room focused sales team. I think it is worthwhile to now reiterate some of the market potential data from D-PLEX100 that was presented by Ori Warshavsky, quality COO of U.S. operation, during our last quarterly call entities related to today's news. We believe the total addressable market for D-PLEX100 in the U.S. is just over 12 million surgeries per year based on IQVIA data, the leading industry source on procedures and prescriptions data. There are approximately 4.4 million abdominal soft tissue surgeries annually, both open and minimally invasive procedures, principally comprised of hernia repair, appendectomy and colorectal surgery. We also believe that there is an opportunity for the use of D-PLEX100 in an additional 2.1 million abdominal procedure in gynecology and urology, including hysterectomies and related procedures. Other D-PLEX100 potentially relevant surgeries which either have high SSI rates or are high-risk surgery include sternotomy, joint replacement and vascular surgeries. SSis are among the most prevalent complications following surgeries, occurring in 6% to 26% of patients undergoing abdominal surgeries particularly after open colorectal resection. Currently, the lack of effective infection prevention methods expose patients to higher risk. When they occur, SSI lead to hospital readmission, increased resource utilization and cost the U.S. hospital system of nearly $10 billion annually, according to recently published research from the American College of Surgeons and service infection society. Taken as a whole, this market data reflects a large and broad unmet need and commercial opportunity for D-PLEX100 in the U.S. without even considering the more substantial global market. If approved, D-PLEX100 could significantly transform the surgical landscape where [ post-authorities ] surgical site infections remain a costly problem. Finally, I would like to echo Amir's sentiment and extend my sincere appreciation to everyone inside and outside of PolyPid involved in SHIELD I. We look forward to completing this study and advancing preparation for our planned NDA submission and prelaunch activities. With that, we are happy to take any questions from participants on the call today. Operator?

[Operator Instructions] Your first question comes from the line of Elliot Wilbur from Raymond James.

Congratulations to the entire team. I know it's been a very long journey to get to this point. And obviously, we await the full topline release, but implications, of course, very favorable trends. So congratulations. First question for yourself, Dikla, just in thinking about your outreach to FDA and requesting a pre-NDA meeting. I'm trying to think about sort of what you have to hear, what you need to see before you start taking advantage, I guess, of the rolling submission process under your breakthrough therapy designation versus considering just maybe filing the entire NDA package at a singular point in time. And I'm wondering if as well with respect to the EU, if there's a possibility of also submitting components of the data package before actually submitting the final package. Just trying to sort of gauge what may happen between now and year-end versus the first half of 2023, both with respect to the NDA and the MMA.

Sure. So first, thank you, and good morning. With regards to the FDA and the pre-IND meeting and rolling submission, the limiting factor for us in terms of the submission of the last package that will be submitted as part of the NDA submission is the CMC package is everything that has to do with the manufacturing and the limiting factor. There are 6-month stability that we need to present based on our upscale manufacturing facility. This process has taken place -- started to take place end of last year or last year, and we've already finished the upscaling. We are now in the last few steps of the validation process and soon enough, we will put vials for stability, for 6-month stability that will be submitted by the end of -- by mid next year. So this is really -- or I would say, the first half. This will be the last model that will be submitted as part of the NDA. The point of the pre-NDA meeting is really to get to an agreement on the rolling submission. We are not starting at that point, preparing the NDA, part of the NDA captures are already ready, whether it has to do with some -- with the preclinical work that was done here, aspect that -- some of other aspects that are relating to the CMC and the manufacturing processes. The critical package, of course, will be submitted later after the top line results. But this is an ongoing process. And the idea is really to get to an agreement on the rolling submission process and then submit the packages are already ready with the last package being submitted during the first half of next year. So this is with regards to the FDA. With regards to the MAA, again, it's a bit different. What we are hoping to see with the European authorities is a more of a centralized procedure. Again, this is something that is -- we'll know later this year if we can submit in a centralized process. And then we are submitting it once to a centralized review or we need to submit to the different countries. And we'll update as we go and as we know.

Okay. And then just one follow-up for myself. At what point now in terms of your future engagement with the agency, would you expect to have some discussions or conversation around expanded use for D-PLEX in abdominal procedures may be associated with sort of outside of SHIELD I, as gynecology, neurology segments and more broadly discussions around consideration of just a general broad label in soft tissue surgeries.

So we already had some preliminary discussions and we have some preliminary evidence that we are on the right track in that regard. We expect to have a more formal discussion after the top line separate from an end of Phase III meeting. This is again something that is in process, but we believe it will be more effective to do it with the top line results.

Your next question comes from the line of [ Michele Fransistina ] from Barclays.

Just wondering what today's decision means in time lines and also just really how you interpret today's recommendations.

So in terms of the time lines, as we stated, we expect to have the top line results by the end of the third quarter of this year. We also expect to be able to announce last patient in -- within days, just short -- a quick reminder. In our quarterly call, that was about 10 days ago, we've reported that we've already recruited approximately 900 patients, so we expect to announce that very soon. And lastly, of course, if the top line results are positive as we are hoping, we expect to submit the last package of the NDA by mid next -- by first half of next year. So this is in respect of the time line. And from our perspective, this is very encouraging. I mean being at the minimum number of patients that are part of the protocol is very encouraging. We'll -- of course, all need to wait for the top line to have more specific data on actual efficacy, but this is very encouraging in our end, and we are happy to get to this point. Also, when looking on the Phase II data and the level of efficacy that we had there, we find it supportive of this primary endpoint and these numbers, so we are encouraged with that as well.

Your next question comes from the line of Gary Nachman from BMO Capital Markets.

My congrats as well on the positive outcome from the interim result. Understanding that you're still blinded, do you have any idea at all what the p value might be? Or just that it's less than 0.04? I'm assuming it was meaningfully below the threshold if you're able to stop the study at the minimum enrollment. Do you have any sense of that?

So we chose in this press release to disclose the criteria of the design of the trial that is seeing at least 50% reduction of infection, of surgical SSI in the deep [indiscernible] in -- with a 90% power and a maximum alpha level of 0.04. So we don't know, of course, we are blinded, as you mentioned. So we do not know what are the statistical numbers, but we are very hopeful that the -- they meet this criteria. This is what the CSMB also have in mind when evaluating the data.

Okay. No, that makes sense. And any adverse events at all worth noting at the interim look? Or is everything in line with what you've seen previously? And then based on this outcome with SHIELD I, are you still planning to complete SHIELD II for commercial purposes? Or is it too early to say that?

Sure. So with regards to the safety, the Data Safety Monitor Board also reviewed unblinded safety data in this meeting, and they're doing it all around the trial every few months. And according to the DSMB, they confirm that there are no safety concerns in the study. And with that, or regarding the adverse event or outcome and agree that we can conclude the study and it's safe to continue. So this was another input that came from this same meeting, and it's very encouraging. With regards to SHIELD II, SHIELD II was designed to initially support approval, but when we were -- when the FDA agreed that there is no need for 2 Phase III, but one potential pivotal trial is sufficient together with our Phase II data, we prioritized SHIELD III and prioritized SHIELD I and expedite recruitment where it puts us in the pace that we are now that we are very close to last patient team. The idea of SHIELD II is to have a more broader eligibility criteria. We allowed there to have also minimal invasive patients. And our thought that as part of the discussions with the FDA, in the pre-NDA meeting as well as with the broad labeling indication discussion, we will modify this trial to comply with this bridging strategy. We already have over 200 patients in this trial. So it's -- although it's less of a priority, there are a very nice number of patients already enrolled. And the idea in our thinking, and this is -- this will support later on broadening the indication farther from a abdominal.

Okay. But given that you're only going to need the minimum enrollment for SHIELD I, you wouldn't think of maybe accelerating SHIELD II ahead of that meeting? Are you still going to wait for the pre-NDA meeting to see if it's worth it?

Yes, yes, because we will need to modify this trial slightly. I think we will not need so many patients. We can have it on a smaller scale. This will be a post-approval trial, we can reduce the number of patients there.

And then also just given this outcome, just talk about the partnership discussions and how much that could accelerate? Or will we need to wait until we have the full top line data in the third quarter? I'm assuming some of those discussions have been ongoing.

Yes. So we believe that this announcement today should accelerate the discussion. The risk -- the overall risk for fertility is not there now at this stage. So this is encouraging and also gives us some better understanding on time line and potential efficacy going forward after top line. So we believe this will accelerate the discussion.

Your next question comes from the line of Brandon Folkes from Cantor Fitzgerald.

Congratulations to you and the team. I just want to follow up on, I guess, 2 of the earlier questions. So if the FDA is receptive to a broader label with the data from SHIELD I when you meet them for the pre-NDA meeting? Could there be any impact on the time line you've given today? Just is there any impact? I know you just addressed SHIELD II, but just anything else we should consider there if the FDA actually does come back and is receptive to a broader label? And then secondly, maybe just -- you talked about you're going to go full steam ahead with prelaunch preparation as well as partnership discussions. So I guess, maybe the -- are you committed to launching the product yourself until a partner arise? Just trying to get some sense of how we should think about that sort of buildup in the P&L.

Sure. So in terms of the time line, we do not expect to have any change in the time line, again, assuming the data is positive, the NDA and the submission of the NDA and MAA submission is expected in the time line that we've disclosed. This shouldn't be affected in terms of later on broadening the label to general soft tissue indication. And with regards to commercialization, just as a reminder, our strategy out of the U.S. is to look for partners and license the product. In the U.S., we are looking to have more of a collaborating approach where we have some of the parameters ourselves, some of the aspects of marketing, whether it's the medical offer, just a reminder to everyone, we are manufacturing the product on our own, so in any type of arrangement and collaboration, we will be the one manufacturing the product, and there is a lot of know-how there. So this is our strategy. And as part of the strategy in the U.S., we've already started some of the prelaunch activities, and we will continue with this in parallel to any discussions that will progress in the future.

Very helpful. One more follow-up, if I may. Do you have a view on launching a drug in the setting sort of late in the year versus maybe waiting until early in the following year? And that's all for me.

Could you repeat the question? It was -- the line was...

Do you have a view on launching the drug later in the year versus maybe waiting until the new year? So I guess, if we get to sort of mid-November, would you wait until the following year to launch the drug? Or do you think you could -- it's worth launching kind of later in the year?

So we'll need to update that after we have a better understanding on more specific time line in terms of the NDA submission and PDUFA date. So I think it's a bit premature to say -- to go into a specific month of launching. But it's very reasonable to assume based on our breakthrough therapy designation that we will be granted expedited review by the FDA. So you could make the time line on that. This should be -- the expedite review should be around 6, 8 months overall. So this is our assumption, but it's a bit, I think, premature to go into the specific date.

Your next question comes from the line of Roy Buchanan from JMP Securities.

First, on the clarification, the 90% power max alpha, 0.04, mentioned in the press release, does that refer to the interim? Or is that actually referring to the final readout at 950 patients? And then have you been informed of the infection rate at the interim?

So I'll relate to those 2 fronts. The information in the press release is relating to the actual design of the trial of the full 950 patients. We were not informed. We outlined it, so we do not know what was the actual data, the CPC and the infection in the interim. We know what deteriorates the top line should meet, and this is what we have disclosed in today's press release.

Okay. Great. I know you guys -- you sound confident in going to the pre-NDA meeting with the FDA. But do you have a threshold in mind for the final benefit in the final readout to go for that meeting? If it comes in below 50%, do you have a certain number where you would still seek approval for SHIELD I? And then in the partner discussions, are the partners able to see the unblinded data from the interim?

No one can see the unblinded data, including us. The only one that saw the unblinded data is the DSMB. So no one is exposed to the unblinded data at this stage, besides for the committee, the 3-people committee of the DSMB. And this is in order to make sure that the trial is still blinded until we get to the point of top line results. And you were asking also regarding what was your -- the second part of the question?

Speaking about the pre-NDA meeting, you guys sound very confident in going forward for the pre-NDA meeting. I just wanted to know if there was a bar, presumably benefit was under 50%, would you still go for that meeting.

So I'll tell you again, of course, we are still -- will need still to wait for the top line results, which are expected during the third quarter, next quarter, actually, third quarter of this year. But with regards to the bar that we have put this all the product, SHIELD I and the design of SHIELD I is quite aggressive in the essence of demonstrating at least 50% reduction of infection, incision on infection. This is not something that you see every day pharmaceutical product that is targeting such an effect. And we'll need to see exactly -- it's not one parameter. It's also a matter of powering and alpha. We look on 400 patients that were recruited in our previous Phase II trials and other trials. And we see there that the effect that we've shown was at least 60% reduction of infection and even went up to a higher effect rate in previous trial. So this puts us in a very good scenario and we'll need to wait and see.

Your next question comes from the line of James Molloy from Alliance Global.

Just a quick question on gearing up for potential launch, again, assuming the data looks good and the FDA approves which certainly seems likely bought potential. I think in the past, you've mentioned 60 to 80 reps is something is perhaps a number that would make sense. How much does that depend on, obviously, what your partner -- a potential partner might bring to the table? And what sort of activity can you do at this point without knowing yet who would be the partner if there would be one, how much of a prelaunch are getting ready for getting the sales force together can you guys be doing now?

Ori, would you like to refer to this one?

Yes, of course. So first, I would say that we are preparing right now as if there is no partner, right? We're doing all the activities that are needed. And once a partner comes in, we will scale down depending on the structure of the partnership will decide which activities we keep and which activities will go to the partner. Ideally, a partner that has already an existing sales force that calls on surgeons, will take all the sales activities, all the cause of the sales activities, and we will take some of the other field activities like the MSLs on the medical side or some of the calls on the [ IDN ] administration, contracting activities and so on. That can give us both some presence on the ground, build our relationship in the hospitals, but also live for the partner, what they do best in terms of selling, and we don't have to build our own sales force. So that's kind of from that perspective. In terms of activities, there's already quite a lot to do before we get to actually putting the sales team together. We have to build our entire HUR activities. There is a big message around costs and on pharma economics for D-PLEX, and we'd like to leverage that as much as possible. And for that, we need to do significant work around the HUR piece. We need just to prepare the market. We can already start putting MSLs in the field, start mapping up the accounts, start mapping out the different P&T activities in the different accounts. So there's quite a lot to do before we get to the actual sales team. Does that answer the question?

It does. And just final question, I guess. I know you discussed a little bit about SHIELD II. Any update on sort of SHIELD III, the sternum surgery and what you might be doing in that program?

Right. Yes. So again, this is all part of our strategy of our broad labeling strategy. And we will refine that after we have the top line results, our hope and understanding that SHIELD I could be a very good starting point for an abdominal indication that can later on be expanded to other soft tissue as well as some bond-related surgery that has a compound that has a large infection. Some of them I've just mentioned in today's formal presentation, so this is part of our strategy, and we will refine that as part of those discussions.

As there are no further questions, I would like to hand the conference back to management for any closing remarks.

Thank you again to everyone joining us today for this positive announcement, representing a key gating event in the development path for D-PLEX100. We remain grateful to our team members, external partners, the clinician and patients that participated in the SHIELD I trial, and in all of our programs for their dedication, and we look forward to speaking with you on our next conference call. Thank you.