PolyPid Ltd. (PYPD) Earnings Call Transcript & Summary

Good morning, and welcome to the PolyPid Virtual KOL event. [Operator Instructions] as a remainder, this call is being recorded, and a replay will be made available on the PolyPid website following the conclusion of the event. I'd now like to turn the call over to Ori Warshavsky, Chief Operating Officer of PolyPid. Please go ahead.

Thank you, Tara. Good morning, everyone, and welcome to our Virtual KOL event discussing the unmet need of prevention of surgical site infection. Sorry, someone have made it to the end of the presentation. So just a look at the forward-looking statement. In terms of our agenda for today, so we will start by a presentation by Professor Charles Edmiston, discussing the unmet need in the space of surgical site infection. Then I will give a brief update from the company, specifically on the progress of our SHIELD II Phase III trial. And then we will open the floor for Q&A, which will be for Dr. Edmiston, for Dikla, our CEO; and myself. So this morning, we are honored and excited to have Professor Edmiston with us on the call. Professor Edmiston is an Emeritus Professor of Surgery at the Medical College of Wisconsin in Milwaukee, Wisconsin, where he also served as Director and Professor of Surgical Microbiology and Hospital Epidemiology research. He also served as Hospital Epidemiologist at the Froedtert Hospital in Milwaukee, Wisconsin. Professor Edmiston served as an Adjunct Professor at the Vanderbilt University School of Medicine in Nashville, Tennessee, and an SSI Expert Liaison for the state of Wisconsin Division of Public Health. He completed his doctorate in Vanderbilt University, joining the Surgical Faculty in Milwaukee in 1984 to develop a Surgical Infectious Disease Research Program. Professor Edmiston is a fellow of the Infectious Disease Society of America, Association of practitioners in Infection Control and Epidemiology, Surgical Infection Society and Society of Healthcare Epidemiology of America. He is board credentialed in both Infection Control and as a Specialist in Clinical Microbiology. He has served as a consultant to the U.S. FDA as an expert on the infection control implications of implantable biomedical devices, including as Chairman of the General Hospital and Personal Use Device Panel of the Medical Device Committee of the FDA. Professor Edmiston has also served a Surgical Infection Society, liaison to the Hospital Infection Control Practice Advisory Committee of the CDC. Professor Edmiston is the current member of two Editorial Boards, Infection Control and Hospital Epidemiology and Surgical infections and a past board member of Surgery, American Journal of Infection Control and JAMA Surgery. His major research interests include intravascular device-related infections, nosocomial risk in the operating room environment, biomedical-device associated infections, impact of selected risk factors for SSIs, perioperative antibiotic prophylaxis, surface disinfections, innovative strategies for reducing the risk of SSIs, molecular epidemiology of SSI and perioperative antisepsis. Professor Edmiston is the author of over 400 published peer-reviewed publications, including book chapters, editorial reviews, manuals and abstracts and has delivered over 500 national and international invited lectures and workshops. I'm pleased and excited to have Professor Edmiston with us. Professor Edmiston, please, the floor is yours.

Well, thank you very much, Ori. Let me make a statement, starting out the gate here. You can see this is my very first slide. Also, you can see very easily that I have an e-mail address on that slide. If for any reason, there are any concerns that have not been addressed or any other comments that you'd like to make or questions, queries to me, please, please feel free to e-mail me. I'm more than happy to walk you through any of this because this is somewhat of a complicated topic. So without further ado, let me turn myself off and let's get this show on the road here. I want to start out with a primer on surgical site infection sort of reflection of our current knowledge. Because I know many of you probably have very little experience dealing with surgical site infections. And this is a new topic for you. This is one of my heroes. This is Lord Moynihan. He published a paper in British Journal of Surgery in 1920, in which he said in that paper, every operation is an experiment in bacteriology and to a great extent, that's true. We have to look at our flora on the surface of our body and on the internal service of our body. There is significant risk, especially with patients who have like three or four comorbid risk factors. I'll give you some examples of that. The other thing you should be aware of, and this is well known within the surgical practitioner field is that every single surgical wound is contaminated to some degree at closure. Why would I say that? Well, because when a surgeon cuts across the skin, he transects sebaceous glands and hair follicles and organisms cascade into the surgical wound whether or not that's going to rise to any level of significance is dependent entirely on comorbid risk. And we try and put in place interventional strategies to mitigate that risk. So it's all about the surgical wound and comorbid risk. As I indicated, we have this human microbiome on the inside and the outside. And if you look at this data that's been developed over several years in our facility. You can see the microbial surface contamination on the scalp, axilla, abdomen, forearm, breast, hands and perineum. In some cases, those numbers are approaching a trillion organisms per centimeter square. And that's very important to realize, especially when you're developing interventional strategies. Having said that, if you look internally, what's going on internally in the abdomen, we know that in the stomach, the concentration is relatively low because of the acid secretions. But in the small bowel and in the large bowel, the microbial populations are abundant. We have what are called aerobic organisms and anaerobic organisms, Anaerobic organisms are organisms that live in an environment devoid of oxygen. And many of these organisms are associated with surgical site infections. So we're talking about in the colon anywhere between 10 to 12 log-based tens poly forming units per gram of material. Again, these are very, very large populations. And let me give you a picture of what's going on in the colon. This is a study that we performed if you had several years ago where we actually did colonoscopies and then took samples of the bowel and then looked at them under a scanning electron microscopy. On the left-hand side, this is a surface of bowel mucosa, which is covered by this mucin, this sheath. And you can see sequester within this mucin microbial organisms and of various shapes and sizes. If you look deep down into this SEM picture, you can see organisms on the surface, surface of the bowel, what we call the brush border surface. On the right-hand side of the slide is an enlargement of this brush border surface. And again, you can see a myriad of organisms, which represent these aerobic and anaerobic microbial populations, which populate the entire colonic surface. So you can see you have this microbial microbiome in the colon, which could potentially be a risk postoperatively in terms of infection. This is a remarkable paper. I present this paper whenever I'm giving lectures on SSI. This is my group at Mass General in Boston. These authors is something very, very intriguing. They look at the comorbid risk of their patients and then they layered one comorbid risk one upon another. On the top part, you see risk stratification. We have to understand there are multiple comorbid risk that includes smoking, alcohol abuse, type 2 diabetes, obese patient population, the BMI is greater than 30%; in some cases, greater than 40%. We also know long durational operative times or incision size can actually have an impact on infection. But when you layer these together, any patient who has one or fewer, 0 or one risk factor, the infection rate is 2.3%. But as you increase the comorbid risk factors, the infection rate exceeds 13.5%. We actually published a paper a few years ago with our group looking at some of these factors and the comorbid risk. But one of the things we had to also look at was the incidents of SSIs. And according to the CDC, the incidence is anywhere between 2% to 5% and the attributable costs associated with these infections ranges from $10,000 to over $25,000. However, are these data points accurate? And what we discovered in our own analysis is that these data points are not accurate. They reflect data that's only been collected within a 30-day period and not beyond that 30-day period. An example of this is a study that we published in disease of colon and rectum in 2020, where we looked at over 107,000 colorectal patients. Now where this data come from? We've been using the IBM MarketScan database, which is data that has been provided to vendors and consolidators. And that includes healthcare data, laboratory data, post discharge data on over 200 million American citizens. It's a very robust database. And based upon that database, we were able using ICD-9 codes, ICD-10 and laboratory codes and pharmacy codes, we were able to determine that the actual infection rate for patients undergoing colorectal surgery was about 23.9%. 50% of these infections were diagnosed within 25 days, 75% were diagnosed after or by 2 months. Now the CDC and the American College of Surgeons, their own analysis strategies closed the books on colorectal surveillance at 30 days. So any of us who developed one of these infections beyond that 30-day period, that is not even counted. So we were able to ascertain that between 30% and 35% colorectal infections due to our current surveillance strategies are actually missed. The other issue, which was an eye opener for many of us, is that if you look at the types of infections that occur and we differentiate them from superficial on the skin surface to deep or organ space, deep fascia infections or organ-based involving, for instance, the peritoneal cavity, the costs are substantial. Remember, the CDC said the cost of infection varies from $10,000 to $25,000. You can see on the left-hand side that for commercial payers, those of us who have commercial health insurance, the 24-month cost associated with deep incisional or an organ-based infection is about $164,000. If you're a Medicaid patient, the 24-month costs associated with caring for that infection is about $121,000. Now the superficial infections cost less. But again, in most cases, they cost more than what a CDC has indicated in their publications. We've also looked at total joint procedures. Now in general, we always like to benchmark these studies. Is this database actually accurate well, the musculoskeletal societies or orthopedic surgeons who actually look very closely at their own patient population, the infection rate for total knees and total hips is somewhere around 2%, 2.1%. However, the revisions that occurred in many cases, beyond that 30-day period, the infection rate can be substantial. For hip, the infection rate exceeds 8%. For a revised knee, the infection rate may equal or exceed 15%. And during the review of that patient population, we actually were able to discern 34 comorbid risk factors associated with this patient population. And again, the cost and because of the inference in time, let's pay our attention to the bottom slide, which has the blue headings. If you look at the 12-month cost for a revision of a total hip, that cost varies between $21,516 to $89,695. The mean is somewhere around $55,000. So again, the infection rate, especially for revisions are substantially higher than the primary procedure and the costs are substantial. One anecdotal story, we actually had a 70-year-old woman who had her hip procedure performed in another institution outside the state of Wisconsin. She developed an infection. She came back having local orthopedic surgeon do a revision. That lasted for about 6 to 9 months. She came back for another revision. At that time, she came to our institution. It was determined that it was going to be a significant revision. In fact, the woman at this point had osteomyelitis and there was a long discussion as to whether or not we should actually do a revision or doing disarticulation, which involves removal of that hip, the decision was made to do a disarticulation. The reason I mentioned this is that it's very rare that we discuss the impact these infections have on our patients. And when I was talking to the orthopedic surgeon about this particular case, he told me he's sitting apposite to him in his office that while [indiscernible] what we needed to do to resolve this issue, she started tearing and her comment was. Once I lose my right hip, I'm not going to be able to walk in the park with my grandchildren again. We forget quite often that the infection rates are devastating. The cost is devastating, but the personal impact on patients is also devastating. It's a study that we published a couple of years ago. This is abdominal hysterectomy. The colorectal population and abdominal hysterectomy population are the population which is monitored and is used to determine the quality metric for our institution and institutions throughout the United States. The published infection rate for abdominal hysterectomy is somewhere between 2% to 3%. However, this study showed very clearly, again, many of these occur beyond that 30-day period that for Medicaid patients, the deep organ space infection rate is somewhere around 7.8%. And for the Medicare, it's somewhere around 5.8%. And for the commercial, it's lower, significantly lower at 3.9%. But overall, these infections, the infection rates are higher than what we've seen in traditionally published studies. The costs are also substantial. The Medicare patient population is about $44,000; for commercial, it's less $27,000. And interesting enough, the Medicaid patients because of the reimbursement component, it's less. But again, we've got to think about the personal cost to our patient population. And finally, a study that we published very recently, looking at the risk and economic burden of infections following spinal fusion. We showed that in a previous analysis probably about 22,745 patients, the incidence of infection was somewhere around 3.1%, of which 1.4% was superficial involving the skin surface, for superficial surfaces and 1.7 were deep. However, when we looked using again the IBM MarketScan database and looked at over 200,000 patients, we discovered a higher infection rate, a total infection rate of 6.6%. 4.9% were actually deep incisional and 1.7% were superficial incisional infections. The median postoperative time to infection vary between 28 days to 44 days. So obviously, we were missing some of those routine surveillance that is conducted throughout all hospitals in the United States. But again, in the bottom box, you can see the infection rate is not only substantial, but also the cost is substantial. For a commercial payer group, that cost can exceed $90,000 at 24 months. And this is another patient of ours. This is a patient that we had some difficulty with came from up north Wisconsin. And he had prior surgery to the same joint. This patient had 10 co-morbid risk factors. He had a history of immunosuppressive medication because of his rheumatoid arthritis. He was a type 2 diabetic. He was 75 years of age. He had prior surgery at that same joint. He had psoriasis. He was morbidly obese and it's important to realize that 1/3 of our morbidly obese patients are malnourished. They have a deficiency of micronutrients. His serum albumin was less than 3.5. He had a remote site of infection in a previous area. We had actually done surgery on him on the vascular group. He has severely diabetic foot infections, some of which require amputation of toes on its right foot and he was a smoker. He was a 2-pack a day smoker and his ASA score, his risk score was greater than 4. ASA goes from 1 to 5, so he was at 4. So this patient did need surgery. We had to sit down and think about what interventions are available to put in place to reduce the risk of this patient population. And thankfully, we were able to get this gentleman through surgery without any significant adverse event post operatively. So we now know that the risk of surgical site infections and the cost to manage these serious infections are both underestimated. So what can we do to minimize that risk. We have available to us a number of interventions that vary from anywhere to moderate to high where high being 1A. There are actually 14 interventions that are in the literature that are available to us. For instance, warming the patient's body prior to surgery with a normothermia. The use of weight-based antimicrobial prophylaxis, glycemic control, making sure that patients who are diabetic have blood glucoses that are going to be somewhere around 120 to 130. We also use separate wound closure trays because there has been studies that show that in the instruments that are used in the surgical patient, many of these instruments are exposed to the operating room air and about 1/3 of those instruments are at risk for contamination because of air currents. Smoking cessation is also a very important component. But again, there are times when we cannot put in place many of these interventions because of the acute nature of the surgery. I should also say that there are those times where it's impossible to mitigate all these comorbid risk factors, but that's what we have available to us. Are they beneficial? While there is data out there suggesting that in some instance, especially in those infections that supposed to occur with under a 30-day interval, that selective interventions can be beneficial. This is a study came out of the University of Michigan, Skip Campbell was the Director of the Michigan Surgical Quality Collaborative and they showed in colorectal procedures that as they add one evidence-based intervention after another to a total of 6. They were able to show a reduction of infection rate in some cases, approaching 25% to somewhere down to a mean of about 2% to 3%, keeping in mind that these are infections that were recognized within or under that 30-day window. We actually published a paper looking at statistical benefit of using a surgical care bundle. We did a systematic review and cohort meta-analysis of 8,500 patients. And we show that the patients who have a surgical care bundle, the statistical benefit, risk reduction benefit for that patient population is P less than 0.0005. But again, we're looking at those patients under that 30-day window, and we actually published a paper a few years ago looking at the prevention of orthopedic infections using evidence-based surgical care bundles. But again, those bundles are only beneficial in those patients under that 30-day period from an acute perspective. One of the concerns we have going forward in terms of many of these infections is the development of a biofilm within the wound or on devices that are within the wound. And what we have recognized over the past 10 to 15 years that many of the infections that we see in our patients are called biofilm-mediated infections. Remember, every single wound is contaminated at closure. That wound gets contaminated on that very first incision. So in some of those patients, those wounds will develop biofilms and those biofilms are recalcitrant in some cases and traditional antimicrobial prophylaxis. So over a period of time, days, weeks and months, that biofilm develops. When I say a biofilm, an analogy to a biofilm is those of you who would like to go fishing, trout fishing, fly fishing. As you walk across the stream, you probably slipped on rocks, well, that's a biofilm. That's a natural biofilm. The same thing happens in units when the wound gets contaminated or a device gets contaminated, these biofilms develop. And over a period of days, weeks and months, the biofilm is dispersed and dispersed into the adjacent tissues and that quite often occurs after that 30-day period. What other possible options are available to mitigate these infections that occur after the traditional 30-day surveillance period. Well, what we're talking about here is the D-PLEX100 technology. This is a localized, prolonged release technology that is used as a prophylactic at the end of the surgical case. It provides a constant release of doxycycline, which is a broad-based antimicrobial at the incisional target site to reduce the risk of surgical wound infections. Why doxycycline? Its broad spectrum and it covers the common gram-positive and gram-negative surgical wound pathogens. The D-PLEX technology is a novel technology that contains a matrix of alternating layers of polymers and lipids that entrap the antimicrobial, the doxycycline within a protective reservoir enabling a prolonged delivery of the drug over a period of days to weeks. Current analysis that was published a few years ago in cardiac surgery patients demonstrated no significant local or systematic adverse events, suggesting that the D-PLEX100 provided a safe, localized, prolong release at the incisional target site at a concentration that was effective reducing the risk of postoperative surgical site infections. Moving beyond that, there was a paper published in 2022, which was a prospective randomized controlled trial of a novel, localized antimicrobial technology for the prevention of surgical site infections. Patients were randomized to either standard of care or D-PLEX100 plus standard of care in a 1:1 ratio starting at Day 0. In the final analysis, 179 patients were evaluated in the per protocol population, 88 in the interventional arm and 91 in the control arm. The encapsulated doxycycline, this polymer, lipid matrix. D-PLEX100 formulation was applied to the soft tissue wound services following fascial closure prior to skin closure. The incisional sites were assessed at postoperative days 1, 5, 14, 30 and 60 by a blinded observer and blinded endpoint adjudicator committee. The rate of superficial and deep SSIs within that 30-day postoperative period reviewed a 64% relative risk reduction in the D-PLEX100 cohort versus a 22% infection rate in the standard of care group. Now that was a randomized controlled trial. What's very important when we look at this is to look at this from an intent-to-treat analysis. What do I mean by intent-to-treat analysis? It's something that always been very fascinated by, and we strive to do this in our own studies. Remember, we are randomizing 1:1, but patients dropped out in this earlier study. Well, in the intent-to-treat analysis, we count all patients. All patients are eligible. And why would we do that? Because if we don't do that, we encounter bias on the interventional side or we encountered bias on the control side. So intent-to-treat analysis is very, very important. So if we look at the data from an intent-to-treat analysis, patients again were randomized to standard of care, or D-PLEX100 plus standard of care in a 1:1 ratio. We're counting everybody. The primary outcome assessed include a 30-day superficial and deep incisional SSI in this -- and also, it was very important to look at treatment emergent adverse events that any occur. This 30-day SSI rate was examined, again, in the intent-to-treat patient population. And also looked at 2 co-morbid -- patients with greater than 2 co-morbid risk factors. The rate of superficial and deep SSIs within a 30-day post-index surgery showed a 53% relative risk reduction in the D-PLEX100 cohorts compared to 21%, infection rate was 9% in the D-PLEX100 cohorts, 9% infection rate compared to a 21% infection rate in the standard of care group, 9% in the D-PLEX100 infection rate compared to a 21% infection rate in standard of care. When you assess the risk factor, the impact of the risk back, very similar to what the group in [ Mass General ] did, patients with greater than 2 risk factors, the SSI incidents was 15.8% if treated with D-PLEX100 compared to a 37.5% infection rate if treated with standard of care alone. The risk reduction benefit was about 58%. D-PLEX100 Concentration exceeded the minimum inhibitory concentration, the MIC90, which is the metric that we use quite often to determine efficacy within the target wound site for the 30-day duration of the study. Very, very important. In a study that was published in an European Journal of Pharmaceutical Sciences, I looked at what risk reduction benefit does doxycycline encapsulated D-PLEX100 provide in reducing the risk of postoperative infections. The minimal bacterial studies documenting 3-log reduction for both -- a minimum greater than 3-log reduction for both gram-positive and gram-negative surgical wound pathogens. If you look at e.coli in an abdominal and sternal wall model, an animal model. There was a greater than 6-log reduction. Also, they saw a greater than 3-log reduction, again, in an abdominal and sternal wall model against methicillin-resistant staph aureus, MRSA, which is a significant surgical pathogen. A clinically relevant incisional model, sternal and abdominal wall document that local doxycycline concentrations remained constant over the 30-day period. The length of the surgical incision was not a limiting factor in the insight to antimicrobial activity of the D-PLEX100 complex. So whether it was a short incision or a large incision, the length of the incision had no impact in terms of the efficacy. A pharmacokinetic animal study demonstrated that systemic doxycycline values. We're 3 to 4 orders of magnitude lower than the local Cmax concentration. So if we looked at the concentration in the site where the Cmax was located, we were talking about 79.9 or 93.9 micrograms per mL in the sternal and abdominal wall model, respectively. The concentrations present in the serum were significantly reduced, which is very, very important. So the final consideration is this. Traditional evidence-based interventions have a maximal benefit within the perioperative and immediate postoperative period. The benefit of the D-PLEX100 technology supports prolonged doxycycline concentrations within the surgical wound exceeding the MIC90 for the most common surgical wound pathogens regardless of the length of the surgical wound. Keep in mind that the concentration -- focused concentration at the potential site of where an infection is likely to occur was a maximal concentration. The concentration in the [indiscernible] was significantly less, which is very, very important. So the activity was really focused within that wound base. While further studies Phase III studies are warranted, current findings indicate that the D-PLEX100 was effective at reducing the risk of postoperative infection in the colorectal patient population and should be considered as an important adjunctive component of future surgical care bundles. There's no doubt in my mind we're going to see future studies looking at this technology. These studies will be published in the literature, and I would also hypothesize that we're going to see studies published in other surgical disciplines, including abdominal hysterectomy and orthopedic. This technology is not going to be limited to the abdominal surgical patient population because of what we're seeing in terms of efficacy. I want to thank you very much for your attention, and I'm more than happy to answer any questions you might have.

Thank you, professor Edmiston. So what we'll do now is I will go through really a high-level intro to PolyPid and D-PLEX just for those who are new to the story, give an update on where we are in the trial, and then we'll open it up for Q&A. So again, for those who are new to the story, PolyPid is Israel-based biopharma with a proprietary drug delivery platform, what we call PLEX as we heard before, stands for Polymer Lipid Encapsulation matriX. And really what this platform can do is take many types of APIs from small molecules all the way to peptides and antibodies and turn them into a local high concentration prolonged release. And for us, when we talk about prolong, we're talking about anywhere from several days to weeks and even months of constant release. Our first product is D-PLEX100 which we talked about, and I'll show some of the Phase III in a minute. And then we have an earlier program in oncology, in a pre-IND stage targeting solid tumors. Both the products and the platform are well protected by a large portfolio of patents. There's -- we have about 65 employees in the company, anywhere from the R&D to clinical, regulatory. We sit in Israel. We have own manufacturing suite, fully GMP, just passed a European inspection and ready for commercial manufacturing based in Israel. And of course, we are a NASDAQ traded under the ticker PYPD. D-PLEX100, as we heard in the presentation, taking the PLEX platform, encapsulating doxycycline broad spectrum into the PLEX for prevention of SSI. It is being -- will be reviewed by the FDA under the 505(b)(2) pathway. We also have breakthrough therapy designation for this product. We have fast track designation and QIDP designation, which gives us an additional 5 years of market exclusivity in addition to the 3 years of the 505(b)(2) pathway. So all in all, 8 years of market exclusivity. The release rate, as I mentioned, we can customize the release rate. We decided to design D-PLEX100 for 30 days of release to feed to with the CDC definitions as Professor Edmiston was talking about before. And finally, in terms of the total addressable market, you can see on the right, just like we discussed before, some of the surgeries are ones with higher infection rates like the abdominal surgeries, one like gynecology, urology surgeries, but also some of the surgeries that may be infection is not as high, but a consequence of having an infection is terrible. We heard Dr. Edmiston talk about orthopedic surgeries. In open heart surgery, if there is an infection, there's a 40%, 4-0 chance of mortality if there is an infection in sternal bone. So all in all, this is the market. And of course, the plan is to start with colorectal abdominal surgeries and then expand with additional data and additional surgeons using the product, expand the label into other -- under other surgeries as well. In terms of where we are in the trial, so we are now at SHIELD II Phase III trial, and the trial is targeted its aim to assess the efficacy and safety of D-PLEX100 in the prevention of post abdominal surgery incisional infections, prospective, multicenter, randomized, controlled, two arm, double-blind study. The patient population for this trial is looking at patients undergoing colorectal resection with large incision, which, in this case, the definition of large incision is patients that have incision larger than 20 centimeters. The structure of the trial is looking at the standard of care. All the different bundled components that Professor Edmiston was talking about and comparing that to D-PLEX in addition to standard of care with the idea, again, like it was discussed, adding another tool in the toolbox for surgeons another way to prevent the SSI. Primary endpoint looks at the reduction in SSI, reduction in intervention and mortality over 30 days and then another 30 days of safety as requested by the FDA. So the overall trial is 600 patients. There will be an interim review of the data at 400 patients. And this interim review has design built into it stop for efficacy if the data will show the right p-value, p-value below 0.01 should be sufficient for stop for efficacy. In terms of our timing assumptions, the unblinded internal analysis is expected within the next few months. And then the top line results will be by beginning of 2025. We already have approximately 250 patients recruited for the trial. So we're more than halfway to the interim and approximately 50 centers opened out of the planned 60 centers in U.S., Europe and in Israel. So how does this patient population fit with what we saw in SHIELD I? And how does it fit with, say, what we heard in the presentation, so looking at SHIELD I, our previous Phase III trial, if we only look at the large incision subgroup, and this was a prespecified request by the FDA looking at the patients that have incisions over 20 centimeters. You can see that D-PLEX really worked, very well worked as designed in large incisions. D-PLEX showed a 54% reduction in infection with a very significant -- very low p-value. And this entire group was 423 patients. So again, if I'm looking at the SHIELD II right now, SHIELD II is 600 patients with an interim at 400. If we see similar results in our current Phase III trial to what we saw in the prespecified subgroup, this will be sufficient for stop for efficacy. If you look at the right side of the slide, really across the board in our previous trial, when we look at the large incision across the board, the product worked as designed, 54% reduction in primary endpoint. If you look at nice reductions in the secondary endpoint, 49% reduction in superficial SSI, 100% reduction in deep SSI, 40% reduction in mortality and 55% reduction in re-intervention. So all in all, product worked as designed. Now one last thing I would like to touch on is connecting our data to what the Professor Edmiston was talking about before, and he was talking about risk factors. So we went back -- post hoc, we went back to our data from the previous SHIELD I, the previous Phase III and looked at risk factors and to see how D-PLEX100 impacts risk factors. So we looked at procedural-related risk factors like the patients with large incisions. We also added the patient-related risk factors. Those patients, the smokers, the diabetics, the high BMI exactly like Professor Edmiston was talking about before, looked at this entire pool and see what the impact of D-PLEX is. And you can see this is a large pool of patients, 816 patients out of the total Phase III, which was 977. and D-PLEX showed a nice reduction of 37% with an impressive p-value of 0.0162. So this is, from our perspective, again, strengthening this point of having another tool in the toolbox for surgeons. And a tool where surgeons needed the most. So this is a patient population that we know has a high risk of infection. When the patient comes in, the surgeon knows that with this patient, there might be a larger chance of a problem, a larger chance of an infection, and I should take that additional layer of protection to prevent infection. And this is where D-PLEX comes in. Okay. So this was the update, and I'd like to open the floor for Q&A. Professor Edmiston, question for him, question for Dikla, CEO or for me, please type in your questions in the submission box under the webcast and we'll try to -- we have about 15 minutes. We try to get for as many questions as we can in the time. Tara, I'm handing it over to you, please.

So our first question comes from Balaji Prasad at Barclays. So it reads as if we compare the patient difference criteria between SHIELD I and SHIELD II, it seems like the biggest difference in patient enrollment criteria is the abdominal incision size, so 10 centimeters versus 20 centimeters. Could you add some color on the rationale of this difference and how will longer-incision size help to show efficacy in SHIELD II.

Maybe I'll start, and I'll hand it out to you. So first, obviously, the observation is correct. In SHIELD I, we had a combination of both, always open abdominal, but we had half -- about half of the patient with longer incision of 20-centimeter or more and the rest were 10 to 20. And this is something that is both supported by literature and obviously, we actually saw that in SHIELD I. The longer incision are proxy to the complexity of the surgery, larger tumor, more than one place of operation. And they are as far associated with the more of higher frequency of surgical site infection. And for us, being a prophylactic agent, we need to have sufficient event rate to support the efficacy that we are hoping, and we saw that very nicely both in the slide that Ori just showed with the result that we had in this group in SHIELD I, and this is why we are focused on this group also in SHIELD II. There is a higher incident rate in this patient population and this increase or reduce the risk of the study. Professor Edmiston, I don't want to -- if you want to add something.

No. What really caught my attention with this technology was the fact that this organization did their due diligence by an intent-to-treat analysis. And I think a lot of folks really understand what that intent-to-treat analysis is all about. But I think what's important to realize is that, again, you have to look at where is the bias that may occur in these studies. By having an intent-to-treat analysis, you eliminate that bias both on the interventional and also on the control arm. And one -- if you look at a colorectal procedure or a patient who has a rectal cancer, if you're going to remove that rectum, that's going to require a large incision and not only that you remove the rectum, but you also remove the what's called the mesorectal incisional tissues. And the reason for that is you have these lymph nodes there which need to be looked at. And also at the same time, if you're going to remove the rectum, then you're going -- which is a large structure in itself, you're going to also most likely create either a permanent or a temporary ostomy or ileostomy depending on whether or not that can be reconnected again. So you do need larger incisions in specific patient populations. The other thing that's very important is, when you have a larger incision, you also most likely have a longer time on the operating room. And we know that long-durational operations also play a significant risk in terms of patient morbidity. So that's why I think the intent-to-treat analysis was very, very important. And the idea that we have this prophylactic component present within that 30-day period. In my mind, addresses many of those deficiencies that I see in the current way in which we assess or do surveillance and surgical site infections because we know very clearly that in many patient populations where they have significant comorbid risk. And in fact, in many of our colorectal patients they may have 5, 6 or 7 comorbid risk factors that need to be addressed. You have to have a protective component that extends into the 30 and possible beyond that 30-day window. So that's what really impressed me about this technology, and that's where I see the benefits going forward, not only in colorectal procedures, but also in other surgical procedures, which require a long incisional component.

So our next question comes from Roy Buchanan at JMP.

A couple for Dr. Edmiston. First. I guess -- sorry if I missed it, but maybe could you go into a little more detail on the standard of care today for surgical site infection prevention. And is it being underutilized? I'm guessing it is given the 15-or-so items you had on the evidence-based processes slide. So if that's true, why is it underutilized?

That's a great question, and I'll tell you why. That's -- if you look at -- there's a process called implementation science, where we try and improve compliance to standard of care. And for instance, I've had three surgeries myself, within my own institution during my years as the Hospital Epidemiologist at Froedtert, and I'm the cheerleader for my institution. I think they do a superb job. But I saw during those three surgeries, potential errors or ways, which we could improve the process. We just recently published a paper using some of the premier database, where we looked at three institutions, three different institutions at the compliance rate for the surgical care bundle. And in some cases, the compliance rate was under 15%. So the idea of having a technology prior to closure that you place within the fashion or surgical wound bed in my mind is kind of a hardwired component. We know antimicrobial prophylaxis is hardwired, but I would tell you, and this is why your question was perfect. Normothermia is not hardwired, glycemic control is not hardwired. It's hard to believe it is, but many institutions is not hardwired. But having something that you put into the wound bed at the time of incisional closure, which provides this protective component is very, very important. In an ideal world, the standard of care should be weight-based antimicrobial prophylaxis, and we sort of pioneered that at Froedtert because we realized the old strategy of 1 to 2 grams prophylaxis was not sufficient, especially in our higher-weight patient population. We now do 2 versus 3 grams. So that's should be hardwired. Perioperative skin antisepsis should be hardwired. Normothermia should be hardwired. In colorectal procedures, hyper oxygenation, inter- and postoperative should also be hardwired. So those would be important interventions for the colorectal patient population. What we discovered significant deficits in terms of compliance within those various formats. If you're talking about orthopedic procedures, we're talking about a different strategy, nasal decolonization types of things that are now been hardwired in many orthopedic practices, but reducing risk, especially when patients have multiple co-morbid risk factors. And I have to tell you, I'm not going to kid you, we can't mitigate all risk factors, but we can mitigate enough of them to get us through that patient population in the postoperative environment to reduce risk. I also have an engineering background in addition to being a Microbiologist and Hospital Epidemiologists. And the analogy I make is I always tell folks in the audience, how did we make it to the moon in 1969, and they all kind of look at each other. We've built a robust engineering system that when one system failed to mitigate the risk, another system kicked in, and there were multiple episodes of failure on that moon mission in 1969. The analogy to the surgical care bundle is almost identical. Many of the interventions put in place mimic other interventions, but we have to have duplication in certain components within that surgical arena so that if one intervention fails for whatever reason, we have a secondary intervention that comes into play. So that's a great question, and I love talking about this process, but tells me that you think about these issues yourself quite a bit. But overall compliance can be very, very poor, especially when we're talking about moderate-to-high 1A interventional components. Does that answer your question? Is that helpful?

Yes. No, that's great. And actually, you may have had a follow-up that you may have answered now, but -- so I think in that paper that you mentioned, you distinguished -- it's pretty complicated paper. So -- but I think you distinguished implementation versus sustaining the changes. I guess do you have any evidence from centers where changes have been made, how sustainable they've been? And maybe that gets back to your engineering systems, but...

Here's the issue. When we put in place a bundle because we have a problem. We're very enthusiastic. We get the teams together. We sit down, talk about it. [indiscernible] actually wrote a paper several years ago and talked about -- talking about how to have a sustainable bundle. And what we did at Froedtert at hospitals, we have, what's called, a surgical wound taskforce, where every other month I invite surgeons to come to a room. We'd sit down with him and when we talk about infections not just on his service, but infections that we're seeing in other interventional processes. And the purpose of that was to sort of ingrain how we need to move forward to improve patient outcome. Now surgeons do what they do very well because surgeons have internally standardized themselves. It's the world around surgeons, which is not well standardized. So when you put in place interventional strategy, there has to be a component of that implementation that is recurrent, that occurs over and over again, which means that on a routine basis, you have to review your outcomes. If you don't review your outcomes on some scheduled interventional process, you sort of lose sight of where you're headed. Remember, we're enthusiastic in the beginning, but then the enthusiasm begins to wane, and what I saw in my own experience as the Hospital Epidemiologist having surgery in my own institution, I saw scenarios where processes like normothermia weren't being followed through. I saw processes where glycemic control was not being fully implemented. The normothermia was very interesting because one of the arguments they made to me was, Chuck, it's very hard to measure core body temperatures because you don't have an esophageal probe, we have to use other strategies. And I said, it's easy. That's an easy fix. Use tympanic probe that we use in our pediatric population because the blood that surrounds that tympanic membrane. That's [indiscernible] blood so that's a very easy to measure, pre-intra and postoperatively. So there are scenarios answers to some of these difficult questions, but requires a consistent focus. Just going through it once, getting the team members on board pre, intra and post-operative team members and reviewing what we're going to do, providing the data to them is not going to be sufficient. There has to be a recurrent review, looking at how are we going, how do we improve the process. There's a lot of work involved in this, brother, I'll tell you, they occupied a lot of my day.

And I want to make sure -- thank you, Roy. I want to make sure that we hit a few more questions, just looking with one eye in on the clock here.

So our next question is for you, Professor Edmiston. So have you seen any changes in SSI rates during the COVID pandemic? If yes, what were the reasons for these changes? And are we now back to pre-COVID SSI rates?

This actually Roy's question actually dovetails into this because, obviously, we had a period of time where we weren't doing elective procedures -- we also saw this is unfortunate that because of some of the misinformation whatever, we have individuals who have sort of lost faith in the healthcare system per se. So we were doing fewer surgeries during the pandemic. So we were having which could be good fewer infections. But now we're getting back up to scale. And the problem is, this is relevant to Roy's question is, as we get back up to scale, you have to kind of review that process all over again. So what we are seeing is our more infections relative to that COVID period of time, which was a year to 2 years because, again, we weren't doing a lot of procedures, a lot of the more difficult, elective procedures, we weren't doing. We're doing the emerging procedures. But again, the threshold of the number of infections was actually down during that period of time. So we're in a scale-up period right now. And again, to Roy's question, that scale-up sort of involves a reinvigoration of the team responses. Surgeons are always going to do their thing because they're -- as I said, they're internally standardized but that process around the patient, which continues to be -- needs to be nurtured and that's what we're lacking at this point, to be perfectly honest. Thank you.

So our next question comes from Mitchell Kapoor at H.C. Wainwright.

My question is on behalf of Ram Selvaraju and I have two. The first one I wanted to ask about what the specific surgical procedures are that are most likely to benefit from deployment of D-PLEX100. And separately, on the SHIELD II study, I think I saw you had enrollment around 250 at this point. What factors are having an impact on that enrollment rate? And are you exploring any ways to accelerate the enrollment? Or is it kind of proceeding as planned?

Thank you. So maybe Professor, if you can take the first one and then I can take the second one.

The no-brainer for that is obviously the colorectal procedures, especially the rectal procedure where you have the largest incisions involving sometimes multi-organ systems. That also includes HPB , hepatobiliary surgery. From my perspective, where I kind of really see a benefit to this technology is in some of the orthopedic procedures, the revisions where we have the highest infection rate. And again, quite often having a large incision with some of those patients. The other issue that's very important is that the comorbid risk, large incisions plus comorbid risk is a formula for disaster. And I think that's something we have to always address. We have to look at that very carefully, and I'm going to be very interested in the Phase III studies to look at what are the comorbid risks that were identified within that patient population because that is going to be very telling in terms of the efficacy of this technology. If you have patients with 5-or-more comorbid risk and we're able -- and we see a significant reduction in the SSI rate within that patient population with colorectal, that's going to be colorectal in this group. That, in my mind, will be very, very telling in terms of the efficacy. Okay. Ori, you're on.

Okay. I'll take this. So yes, we are -- we also updated that we are with approximately 250 patients enrolled into the Phase III study. And we are doing quite a lot to increase the recruitment rate. We are in the process of opening additional centers and adding countries. We've updated that we have about approximately 50 centers that are now open, and we expect to be with 60 centers opened -- so obviously, this will have an impact on the rate of recruitment. And in addition to that, we are also doing quite a lot of promotion within the centers, within the [indiscernible] that are leading those trials. So yes, there is -- we do expect to see some increase in the rates of recruitment going forward.

Now I jump in, I'm very happy to see that the recruitment numbers are going up because I will tell you, during the pandemic, I was involved in running 2 studies. During the pandemic recruitment was horrendous. On one hand, patients didn't want to volunteer. And number two, we didn't have the threshold of studies that we needed. So I'm very happy that we're now in this phase where we have starting to develop a robust recruitment scenario.

So our next question from the audience. Looking at your risk factor slides, what would you estimate as the percent of patients undergoing open surgery that have one or more risk factors?

That's best. If you're talking about colorectal, we're talking about the age. Remember, the colorectal population, even though we do see younger individuals having colorectal cancers, but majority of the patients who have colorectal procedures are over the age of 55, right? A lot of them have been in their 70s. Those patients are going to have multiple comorbid risk factors, and I will stick my neck out and say they will all have comorbid risk factors of some type, especially those who are in their 60s and 70s. One of the real concerns we have is the incidence of obesity within our patient population. There's a very famous orthopedic surgeon named Jay Parvizi, who's at the Rothman Institute in Philadelphia. He and I are very good friends. We published together We're sitting down, having a drink and Jay said to me, Chuck, you baby boomers are a disaster, right? And that's true. I mean when you think about the comorbid risk within our patient population is significant. Well, right behind us is the next group, and they also have comorbid risk. And I think what we're seeing is smoking, even though smoking has diminished overall in the United States, and I'm not sure for certain countries in the world, but definitely in the United States, patients who present as smokers one or two packs a day, they have a deficiency of angiogenesis, the ability to produce new vascular conduits that has a significant impact on patient outcome, especially postop wound healing. So the number is -- to be safe, conservative, the number is well over 50% in terms of comorbid risk within the patients we see having these large, surgical procedures, especially having large incisions.

Great. So we have another question from Ram Selvaraju at H.C. Wainwright. He's asking to please describe the likely reimbursement process for D-PLEX100 and how it could be optimized.

Yes. I can take that. And just looking at the clock, I think this might be our last question. So in terms of reimbursement, first, we need to remember that these are all major surgeries and therefore, at least at the beginning, all of them are inpatient procedures. So the reimbursement process is really not PolyPid with the commercial payers, it's PolyPid with the hospital, right? So the hospital gets reimbursed by the payer as a lump sum for an inpatient procedure. Based on DRG, these are set reimbursement amounts. They differ between hospitals and different between states, but it's kind of predefined. The hospital knows coming, when a patient comes in, what will be the reimbursement rate for this procedure. Now if the procedure went well and there is no infection, then the hospital makes money. If there is an infection and now the patient stays in the hospital for another 10 days, and we saw the numbers, it cost the hospital another $20,000 or $30,000. All these costs are borne by the hospital. So this is under the category of hospital-acquired infections or hospital-acquired condition and the payer do not pay for it. So the conversation of reimbursement or the discussion between us and the hospital as the payer at this point is how do we overall reduce your cost from infection and kind of better your overall margins, right? So this is a discussion, and this is where we'll bring some of the data from the 2 Phase II that we had to show how we reduce infections with -- from economic models to show that the overall population in the hospital and the overall budget in the hospital improves. Now to add to that, because we have the QIDP designation qualified infectious disease product, we are eligible for the CMS program. The NTAP, new technology add-on payment, which means that in addition to this whole bundle sum that the hospital gets, they get a separate payment for D-PLEX, up to 75% of the cost of the program. So again, when we put the numbers into the pharmacoeconomics model, there's an overall savings to the hospital, but actually, the actual cost per vial for the hospital is reimbursed by 75%. This is the going assumption. In addition to the direct costs here, we put into these models, penalties by CMS for infection. So the hospitals are all required to report their infection rates and the bottom 25%, the worst offenders in infection get penalized on the Medicare reimbursement. So that's also kind of part of the calculation. So there's quite a few economic levers of a patient getting an infection. And if we plug this into the model and show that we can reduce by 50%, possibly even more, all this translate to a reduction or to savings to the overall budget of the hospital. Dikla, anything else to add here?

No, I think you've covered it all.

So I think we are just at time. So first, I would like to thank everyone who joined this important topic, Special thanks to Professor Edmiston for the great presentation. And again, this presentation first will be on our website under the Investor tab on our website, if not today and tomorrow, and it's available to download. And any questions directly to Professor Edmiston his email was at the beginning slide or to us, well, we are happy to answer and follow up on any of these topics. So thank you very much.