PolyPid Ltd.
Q4 2020 Earnings Call Transcript

Published: 10 Feb 2021

[Operator:]

[Bob Yedid:]

Thank you all for participating in PolyPid’s Fourth Quarter and Full Year 2020 Earnings Conference Call. Joining me on the call today will be Dikla Czaczkes Akselbrad, Executive Vice President and Chief Financial Officer of PolyPid; and Dr. Noam Emanuel, Founder and Chief Scientific Officer. Earlier today, PolyPid released results for the 3 and 12 months ended December 31, 2020. A copy of the press release is available on the Investors section of the company’s website. I’d like to remind you that on this call, management will make forward-looking statements within the meaning of the federal securities laws. Forward-looking statements are subject to numerous risks and uncertainties, many of which are beyond our control, including the risks and uncertainties described from time to time in our SEC filings. Results may differ materially 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.

[Dikla Czaczkes Akselbrad:]

Thank you, Bob. On behalf of our team at PolyPid, I would like to welcome everyone to our fourth quarter and full year 2020 earnings call. I will begin today with an overview of our accomplishments in 2020, and then we will provide a detailed update of our business. Dr. Emanuel, our Founder and Chief Scientific Officer will review our recent progress with our OncoPLEX oncology program. Finally, I will review our financial results, after which we will open the call for questions. Unfortunately, Amir Weisberg, our Chief Executive Officer is having a medical procedure and cannot be with us today. We wish him well and expect him to be back at work shortly. As we enter what we expect to be an exciting year, I would like to take a moment to reflect on what was truly a remarkable 2020 for PolyPid. Most importantly, we have achieved significant progress in advancing our development programs and in continuing our evolution towards becoming a commercial company. Our Phase 3 program for our lead asset, D-PLEX100, for the prevention of surgical site infection or SSI is well underway. Our ongoing SHIELD I trial is enrolling well, and our second Phase 3 trial in abdominal surgery SHIELD II was recently initiated. We are thrilled to have both Phase 3 trials now opened and enrolling patients in the U.S., Europe and Israel. The execution of these two clinical trials will be a core focus for PolyPid in 2021. As a reminder, these two Phase 3 clinical trials will serve as the basis for PolyPid’s first new drug application or NDA submission. Beyond our lead indication, we also have an ongoing clinical development program for D-PLEX100 for the prevention of SSIs in bone tissue, such as the sternum in open heart surgeries. In addition, our promising OncoPLEX, local intratumoral therapy preclinical program, for which we recently announced promising preclinical data, continuously advanced as planned. From a regulatory standpoint, we were excited in the fourth quarter to have received breakthrough therapy designation for D-PLEX100 from the FDA for the prevention of SSIs in patients undergoing elective colorectal surgery.

[Noam Emanuel:]

Thank you, Dikla. It is my pleasure to join this quarterly call, especially following the informative KOL call in which I participated with three KOLs in mid-December. As Dikla announced, I’m the Founder of PolyPid and serve as the Chief Scientific Officer. Now, I would like to further elaborate on the potential of OncoPLEX, our intra-tumoral chemotherapy product candidate to overcome tumors including those that are chemotherapeutic resistant.

[Dikla Czaczkes Akselbrad:]

Let’s start with PolyPid’s balance sheet information. As of December 31, 2020, the company had cash and cash equivalents, short-term and long-term deposit of $66.6 million as compared to $26.6 million as of December 31, 2019. Cash used in operations for the 12-months ended December 31, 2020 totaled $22 million. We expect that our current cash runaway we will extend into 2022. We believe our strong balance sheet will allow us to complete our first Phase 3 trial SHIELD I in abdominal soft tissue infections to conduct the second abdominal surgery study SHIELD II and to prepare for the submission of an NDA. On another positive note, PolyPid is very proud that our company’s shares as of December, 2020 were helped by ARK Israeli Innovative Technology ETF. This is one of the active funds managed by Cathie Wood, a well-known investor who founded ARK Investment Management.

[Operator:]

Thank you. And the first question comes from the line of Elliot Wilbur from Raymond James. Please go ahead.

[Michael Pagliari:]

Hi, guys. This is actually Michael Pagliari on for Elliot. Thanks for taking my questions. So two main ones for you guys today. First one, going on, on the basis of R&D and SG&A, how should we look at spending over the course of 2021? Is it going to be in line with 2020 levels? And is it expected to peak at any particular point in time throughout the year? And then second question on the OncoPLEX program, the Phase 1 studies, are you guys expecting to conduct those in any specific tumor type or is it just general solid tumors? And then is it for sure going to be using the docetaxel or are there any other taxanes or chemo agents that we should be considering? Thank you.

[Dikla Czaczkes Akselbrad:]

Okay. Thanks. Good morning. So we’ll go one by one. With regards to our research and development expense, we do expect to see some increase as we recruit more patients. If you might recall, we started the Phase 3, the SHIELD I this last July and the second one in December, so this will be the first full year when we have the two trials running. So we do expect them to increase and this is budgeted. We don’t see much of an increase – expected increase in the G&A, just the facts of being a full year publicly traded company. So the two quarters are quite indicative of the coming year, but we do expect that increasing the research and development to reflect the clinical trials. But still we are very comfortable with our statement in today’s press release as our cash is sufficient into 2022 while running those two trials.

[Noam Emanuel:]

Yes. Thank you, Dikla. I would add that we selected docetaxel and we keep using docetaxel in the OncoPLEX, although we can use different drugs with the PLEX technology because docetaxel has a very wide affinity against many very important central type of cancer and have a mechanism of friction against these types of tumors. This is very, very center in the equilibrium. So with that, it should be effective against wide varieties of tumors. Now if we are going to mention head and neck cancers, so they can be divided into several types of tumors. And we believe, as I said earlier, that with the FDA we will decide together how bundled, and how we’ll collect that, and how we’ll divide that, size it to target one of them or a group of them. Same with the brain cancers, primary brain cancers. So it should be still discussed, but we believe that OncoPLEX has wide affinity against many.

[Operator:]

Thank you so much. And the next question comes from the line of Gary Nachman from BMO Capital Markets. Please go ahead.

[Rafay Sardar:]

Hey, good morning. It’s Rafay Sardar on for Gary. Could you comment on what portion of the sites are activated for both SHIELD I and SHIELD II? And specifically for SHIELD I, could you talk a bit more about your level of confidence in the sample size re-estimation still occurring in mid-2021? How is the current pace of enrollment trending relative to your expectations? And what kind of impact are you seeing from COVID-19 on enrollment? Thank you.

[Dikla Czaczkes Akselbrad:]

Thank you, Rafay. Good morning. And you’re raising some very good point. With regards to the number of centers that are opened in SHIELD I, SHIELD II we just opened on December, so it’s too early to relate to the number of centers that we are very happy with the numbers of centers that opened for SHIELD I. We said that we plan to have 60 centers in place and majority of the centers are open and active. I think that one of the things that we’ve done since we’ve initiated those trial were when COVID was already out there. So we have to do this. We might face some issues. To start with decided to open relatively a large number of centers, 60, and we’ve also separated the centers, but between SHIELD I and SHIELD II, those are different centers. So they’re not competing in one another and they’re not holding back any of the recruitment. But also in SHIELD II the plan is to have 60 centers. And we’ve also assumed relatively modest number of patient per center, one patient per center – average along the trial. So this is quite conservative. And with that, we are still very much confident that we will reach the 500 patients around mid this year and finalize the recruitment before the end of the year. So we are on track on that and we are very confident. The world out there is surprising us, but unless we have other surprises, we are quite confident that we’re on track.

[Rafay Sardar:]

Sure. That’s good to hear. Thank you for that color. Could you comment on what you are able to see in deep aligned data for SHIELD I, and specifically the overall rate of infections, and whether that is trending in line with your expectations?

[Dikla Czaczkes Akselbrad:]

I can only say that it’s early with about 100 patients overall, and we do expect to be reporting an average patient for SHIELD I separately, although the majority is there, but I can say that it’s in line with our expectation.

[Rafay Sardar:]

Got it. And then just last one for me, it’d be helpful if you could comment on your key objectives in 2021, with respect to market research and commercial preparation. How much further do you plan to expand your organization over the next year?

[Dikla Czaczkes Akselbrad:]

So we are now conducting a quite robust market research, as we said, that would help us re-evaluate again, if there’s anything that needs to be dealt with in advance in terms of challenges and pricing. So this is still in progress and we hope to be able to give some more color on the outcome of this as we progress. On the other hand, we said quite clearly that we are evaluating and we are in discussion with pharma companies with different markets. And we will continue with that with our business development strategy that is clearly to commercialize D-PLEX100 with partners in Europe and the rest of the world, and with some strategic partnering in North America while having our footsteps. So we’ve increased our office in Summit, New Jersey. And this is part of the increasing expenses that you see in the sales and marketing, but we will continue to do it in a modest way. We are not expanding our expense here without seeing data coming because things will be accelerating one another. So once we have the data out there, which we hope will be very positive, this will be helpful also in all of our commercial discussions. So we are doing it step-by-step in terms of the expense, but we did increase the personnel there and we are spending more cash there in terms of market research that are required in supporting the discussions and evaluation process that we have.

[Rafay Sardar:]

Got it. That’s helpful. Thank you. Just one more for me actually, could you comment on your current thinking around the assumption of the cardiac sternal trial. What would you need to see to move forward there and is that’s something that could potentially happen in this year? Thank you.

[Dikla Czaczkes Akselbrad:]

So, because we are prioritizing SHIELD I and SHIELD II that were on path to an NDA. We don’t want to risk our financial resources by expending too much and we are also budgeting the oncology program. So we are holding on that to make sure we have the sufficient resources but in any case the sternal indication is the plan to be submitted as a supplement to the NDA. This was to start with, so it shouldn’t hold us into the commercial stage, but we will need additional. As we said in the last year, we’ll need additional resources in order to complete this trial.

[Rafay Sardar:]

Thank you very much and congratulations on the progress.

[Dikla Czaczkes Akselbrad:]

Thank you so much.

[Operator:]

Thank you so much. And now we will take our next question that comes from the line of Cindy Lee from Barclays. Please go ahead.

[Cindy Lee:]

Hey, this is Cindy on for Balaji. We just had a couple of questions. Are you guys seeing any greater on your KOL interests as you guys continue to flag D-PLEX potential? And if there are any updates on commercial outlook based on any new insights you may have. Thanks for taking the question.

[Dikla Czaczkes Akselbrad:]

Cindy, good morning. Could you repeat the first half of your question, we couldn’t hear you well?

[Cindy Lee:]

Yes. If you guys are seeing greater or nearer KOL interest as you guys continue put flag D-PLEX potential?

[Dikla Czaczkes Akselbrad:]

Sure. So definitely, we see that by the way both from the surgeon that we are with discussions with the hospital, so we see it in different area. We see it with the ease to get the surgeon to engage, and hospital engage. And be part of our SHIELD I and SHIELD II trial. And clear messaging to the unmet needs, I think this was also very nicely covered in our last KOL event in December, but we also sit in discussions with pharma companies.

[Cindy Lee:]

Thanks. That’s helpful. And then if you guys could just comment on any updates for partnerships or licensing on PLEX matrix development or future commercialization.

[Dikla Czaczkes Akselbrad:]

So as always in our industry, it’s very hard to comment on that as they are in process because those processes take a long time and there are different consideration that needs to be taken, so it’s hard to comment. I could only repeat what we said, yes, we are in discussion and our strategy to strengthen our strategy and we’re also in that respect because of the need of broaden the personnel in our New Jersey office with the personalities coming from business development, and sales and marketing.

[Cindy Lee:]

Great. That’s helpful. Thanks for taking the questions.

[Operator:]

Thank you so much. And the next question comes from the line of Jim Molloy from Alliance Global. Please go ahead.

[Jim Molloy:]

Hi, good morning guys. Thanks for taking the questions. Could you walk us through how you allocate between SHIELD I or SHIELD II – just thinking that – I know that SHIELD I, potentially the data looks good enough you’re fileable right there on SHIELD I alone. And so how do you sort of takeout the algorithm to put people in SHIELD II when you are getting SHIELD I done as soon as possible is potentially the fastest route to market.

[Dikla Czaczkes Akselbrad:]

So good morning Jim and thank you, this is a good question. So it’s quite simple in the sense that we’ve separated the center. So it focused on the center. So once the center is open, it’s either open for SHIELD I or for SHIELD II, so they don’t have this dilemma whatsoever, but what we have done, we’ve opened first as fast as possible centers for SHIELD I. Exactly because of what you’ve mentioned, because this is the first trial that will end and potentially could serve as a trial for approval for the NDA that will be sufficient for approval and in Europe, it is sufficient. So we don’t need – for the European approval we don’t need any additional trials, but potentially also for U.S., this could have serve as the pivotal trial for approval. So this is our priorities and we open first center for SHIELD I. SHIELD I is also up and running since July, so we had more time to open and we’re pleased to say that more than 50% of the centers are recruiting patients.

[Jim Molloy:]

Okay. Thank you for that. And then how will you guys know or how will us as outsiders looking in know, that you’ll definitely be able to hit the fourth quarter 2021 for SHIELD I data. And I guess also – then I’ve one final follow-up question please.

[Dikla Czaczkes Akselbrad:]

Sure. So as we promised in our last quarterly call, we said we will update next once we reach 100 patient, we have overall 100 patient in extra and our next press release will be when we reach 100 patient in SHIELD I, which will probably be very soon from now. And we will continue to update that, not every patient that is recruited but we’ll make sure that the investors are aware of our progress and can evaluate where we stand in terms of recruitment. We’ve put a lot of efforts on that internally and externally. This is our main objective for this year. And the company is very much focused on that.

[Jim Molloy:]

Yes. Just final question would be then. How would – obviously you started in July of last year, you’re almost at a 100 in the first trial, I would say the need to accelerate dramatically. At what point will you know that acceleration of recruitment is happening and when we know on the outside looking in?

[Dikla Czaczkes Akselbrad:]

The main hurdle here or the main obstacle to get to this point is to open the centers. The thing that takes the longest is to have all the centers in place. Most of the centers are up and running, we see them recruiting quite nicely. And this is something that is working very nicely with centers that are open. So we do expect you to the next time which we will report our recruitment you’ll be able to judge what’s the pace of recruitment now the centers are recruiting are open and recruiting.

[Jim Molloy:]

Excellent. Thank you very much for taking the questions.

[Dikla Czaczkes Akselbrad:]

Thank you, Jim.

[Operator:]

Thank you so much. There are no further questions at the moment. So please go ahead for the closing comment.

[Noam Emanuel:]

Thank you. Thank you for joining our fourth quarter and full-year 2020 earnings conference call. I would like to repeat how excited we are about the focus we have achieved to-date as well as the compelling opportunities that lay ahead of us. We will remain grateful to our team members, also our external partners for their strong commitment to our mission and their collaboration to ensure we continue to advance by achieving our goals of bringing D-PLEX100 to healthcare providers and patients as quickly as possible. Thank you all.