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Operator: Greetings, and welcome to the PolyPid Fourth Quarter and Full Year 2022 Conference Call. . As a reminder, this call is recorded. And I would now like to introduce your host for today’s conference, Brian Ritchie from LifeSci Advisors. Mr. Ritchie, you may begin.

Brian Ritchie: Thank you all for participating in PolyPid’s Fourth Quarter and Full Year 2022 Financial Results Conference Call. Joining me on the call today will be Dikla Akselbrad, Chief Executive Officer of PolyPid; Ori Warshavsky, Chief Operating Officer for PolyPid’s U.S. operations; and Jonny Missulawin, PolyPid’s SVP Finance. Earlier today, PolyPid released financial results for the 3 and 12 months ended December 31, 2022. A copy of the press release is available in the Investors section on the company’s website, www.polypid.com. I’d like to remind you that on this call, management will be making forward-looking statements within the meaning of the federal securities laws. For example, management is making forward-looking statements when it discusses the regulatory pathway for the potential NDA submission for D-PLEX100, including the potential of the SHIELD I results and SHIELD II study to provide support, the potential for wide use of D-PLEX100, the timing of resumption, completion of patient recruitment, the design and top line results of the revised SHIELD II study, the company’s expectations regarding its cash runway and financing opportunities, goals for 2023, including with respect to interactions with European regulatory authorities, its ability to attract additional partners and enter collaborations and the potential timing thereof and the expected timing for the commercial manufacturing process and packaging validation for D-PLEX100.

Forward-looking statements are subject to numerous risks and uncertainties, many of which are beyond our control, including the risks described from time to time in our SEC filings. Our results may differ materially from those projections. These statements involve material risks and uncertainties that could cause actual results or events to materially differ. Accordingly, you should not place undue reliance on these statements. I encourage you to review the company’s filings with the Securities and Exchange Commission, including, without limitation, the company’s Form 20-F, which identifies specific factors that may cause actual results or events to differ materially from those described in the forward-looking statements. PolyPid disclaims any intention or obligation, except as required by law, to update or revise any financial projections or forward-looking statements, whether because of new information, future events or otherwise.

This conference call contains time-sensitive information. It speaks only as of the live broadcast today, February 8, 2023. With the completion of those prepared remarks, it is my pleasure to turn the call over to Dikla. Dikla?

Dikla Akselbrad: Thank you, Brian. On behalf of our team at PolyPid, I would like to welcome everyone to our fourth quarter and full year 2022 earnings call. Before discussing the details of our clinical program, I would like to reiterate how thrilled we are to now have a clear regulatory pathway for the potential NDA submissions for D-PLEX100 in the U.S. following a positive Type C meeting communication with the U.S. FDA on the SHIELD I Phase 3 data. As a reminder, in advance of the Type D meeting, we provided the FDA currently available data from the SHIELD I study evaluating D-PLEX100 in abdominal colorectal surgeries. Based on these data, particularly the 54% reduction observed in the primary endpoint in a prespecified subgroup analysis of 423 patients with surgical incisions greater than 20 centimeters compared to standard of care, which represented a p-value of 0.0032.

The FDA acknowledged that the SHIELD I results may provide supportive evidence on this population. The agency also recommended that the company conduct an additional study to support a potential NDA submission. The FDA confirmed that the ongoing SHIELD II study, which to date, has enrolled approximately 40 patients with the appropriate large surgical incisions could potentially serve as such a study. Importantly, the FDA also recognized that since D-PLEX100 proposed indication is for the prevention of infection, this has potential for wide use. While we are currently working expeditiously to finalize the design of the revised Q2 trial and expect to resume patient recruitment next quarter, we wanted to take the opportunity today to provide some color around what this study will look like.

First, we view SHIELD II as a derisked Phase III trial, given the more focused patient population in which we have already generated highly positive data in SHIELD I and the fact that it will not be conducted within the tight COVID-related restrictions that were in place during the pandemic and throughout the duration of SHIELD I. Moreover, we have the opportunity to leverage the key learnings from the SHIELD-1 study, notably with regard to countries and specific site and patient profile. In order to ensure we are properly leveraging these key learnings, we conducted a Clinical Advisory Board meeting late last year to gather clinical feedback from key U.S. opinion leaders specialized in SSI, including both surgeons and infectious disease specialist.

We intend to recruit a total of approximately 600 patients or an additional 550 subjects behind the 40 patients already recruited into SHIELD II. Total recruitment time into the study is expected to be approximately 12 months from the time we resumed SHIELD II enrollment next quarter. Top line results are expected mid next year 3 months from completion of enrollment. I would highlight that this anticipated time line is similar to the one seen in SHIELD I. We also plan to conduct an unblinded interim analysis once a total of approximately 400 patients completed their 30 days follow-up. To put this in context, you will recall that it took us 22 months to recruit 977 patients into SHIELD I, and it was during the most challenging period of the COVID pandemic.

Importantly, the ability to leverage the ongoing SHIELD II study will significantly reduce the time and resources needed as compared to having to initiate a new trial. The design of the SHIELD II trial will be very similar to the SHIELD I study in terms of primary and secondary endpoints with patient intervention arm receiving D-PLEX100 on top of standards of care and subject in the control arm receiving standard of care alone. The primary endpoint of the trial will be a combination of SSI, reintervention and mortality rate at 30 days post index surgery and defined in the CDC SSI guidelines. Patient safety will be monitored for an additional 30 days. The study will take place in the U.S., EU and Israel. In Europe, as we have done with the FDA in the U.S., we are also preparing for expected near-term interactions anticipated in the first half of this year with the European regulatory authorities regarding D-PLEX100.

I should add that we are working closely with our European partner, Advanz Pharma with regards to the EU pathway and are fully aligned on the regulatory strategy for this region. In regard to our financial position, we continue to expect our current cash runway to extend well into the third quarter of this year. With that said, we anticipate having a number of compelling financing opportunities to enhance our balance sheet in 2023 and to fund Q2 to a successful completion. We are grateful for the continued support shown by our largest institutional shareholders. Moving on, we have a number of operational goals in 2023. I will now ask Ori to review those. Ori?

Ori Warshavsky: Thank you, Dikla. We view 2023 as a potentially transformational year, not only in the clinical and regulatory areas, but also on business development and manufacturing fronts. From a business development perspective, first, we intend to focus on attracting additional strong partners for D-PLEX100 in different geographic territories like U.S. and China. Second, SHIELD I validated the PLEX technology platform in a large clinical trial, providing local and controlled release of drug molecules directly at the disease target organ over a predetermined period of time. This validation of the platform can serve as a starting point for platform-related collaborations. Importantly, we have in-house research development and GMP manufacturing that can support various potential partnership opportunities.

Using our in-house capabilities, it is a matter of only months to encapsulate new API into the PLEX platform and achieve proof of concept. PLEX platform collaborations will be focused on 2 key areas. The first, the delivery of innovative drug specifically local delivery, where systemic delivery is either not effective enough or too toxic, for example, in oncology. Second, the life cycle management of an approved drug, where prolonged local delivery provides significant clinical benefits. Specialty companies are always looking to differentiate their existing product portfolios and leveraging the PLEX technology is an excellent way to accomplish this. Our planned objective is to formalize 2 partnerships in 2023, although the exact pace of partnership discussion is inherently difficult to predict.

On the operations side, we expect to complete the commercial manufacturing process validation and packaging validation for D-PLEX100 in the first half of this year. We plan on having the CMC and preclinical data needed to support an NDA submission by the end of the year. With that, it is my pleasure to turn the call over to Jonny to review our current financials. Jonny?

Jonny Missulawin: Thank you, Ori. As of December 31, 2022, the company had cash, cash equivalents and short-term deposits of $12.6 million as compared to $32.2 million at the end of 2021. Now let’s turn to our income statement. Research and development expenses for the 3 months ended December 31, 2022, were $4.7 million compared to the $9.6 million in the same 3-month period of 2021. The decrease in R&D expenses resulted primarily from the completion of the SHIELD I Phase III clinical trial. For the full year ended December 31, 2022, and 2021, R&D expenses were $28 million and $30.6 million respectively. Marketing and business development expenses for the fourth quarter of 2022 were $350,000, a decrease from the $1.1 million during the prior year period.

General and administrative expenses, for the fourth quarter of 2022 were $1.6 million compared to the $2.9 million recorded in the same 3-month period of 2021. For the fourth quarter of 2022, the company had a net loss attributable to ordinary shares of $6.5 million as compared to the $13.5 million in the fourth quarter of 2021. For calendar year 2022, the company had a loss attributable to ordinary shares of $39.5 million, compared to a loss of $42.6 million in the full year 2021. We will now open the call to your questions. Operator?

Operator: . And your first question comes from the line of Brandon Folkes from Cantor Fitzgerald.

Brandon Folkes: Congratulations on the progress. Maybe just a few for me, if you don’t mind. Maybe just as we think about SHIELD II, can you just elaborate in terms of how you control for the potential of a lower infection rate in the comparator arm? And then similarly, how do we think about the health economic benefit? So assuming we are successful in SHIELD II, how do we think about the proposition to hospitals when commercializing the product in this sort of larger incision surgeries? Just any pushes and pulls there? And then maybe just — I’ll ask also upfront, if you don’t mind. On the interim analysis, what should we expect there? Any chance of stopping early?

Dikla Akselbrad: So Brandon, first, thank you for joining us, and I will start with the first question around the infection rates and how we look at it in terms of SHIELD II. And then I’ll let Ori elaborate about the health economic and I will also cover the aspect of the interim. So first of all, what we’ve done, we now have a very robust data of close to 1,000 patients, which is the basis for our assumption. Although it was all conducted during COVID, and we mentioned several times that this has an influence on the infection rate. We are taking what we’ve seen in this period, although it might be a bit conservative as our baseline assumption. And this is also when we are talking about the derisk program. From our perspective, this is another aspect of why we think this is a derisked Phase 3.

Because we are taking under assumption infection rate that were during the 2 years of COVID. There are a number of papers showing that there was a reduction in infection during this time and this is a plus, obviously, that we’re taking. Other than that, and we referred to it briefly in today’s prepared remarks, we’ve done a process to evaluate as many as lessons learned that could be taken both internally, but also with external adviser. We had at the end of last year, a Clinical Advisory Board, trying to evaluate and look at the patient population, many parameters that were reviewed them. Some of them are also potential health economics and how in the future surgeon and hospital would look at the product, but also looking at the specific countries, specific centers.

All of these parameters are now into the protocol as well as into the operational planning. As to the interim, so the interim has, obviously, a possibility for an early stop due to efficacy, also sizing modification as well as if things are not as we expect, stopping for fertility. So it’s a full entry. And we do have — prior to the entry, we also have some — as we did also in SHIELD I, blinded assessment that can help us refine things as we go along. Ori, you want to touch the aspect of the health economics?

Ori Warshavsky: Brandon, I think what we see in this trial is — I think the story itself hasn’t changed from a health economic. If anything, we just even made it a little bit more clearer to the hospitals. We’re now better defining the population, we will make it easier for a surgeon to understand where the potential issue is, right? If a patient comes in with either patient-related risk factors or procedural-related risk factors, the surgeon can flag this as this is a patient in risk and they apply D-PLEX. So when a hospital kind of assesses the risk factor where should — where the problem is we — I think we’re making it a little bit more clearer for them. And as before, right, when there is an infection, there’s additional costs from additional time in the hospital, reintervention, readmissions and so on. So we just — if anything, we just made the story a little bit clearer to the hospital.

Operator: And your next question comes from the line of Balaji Prasad from Barclays.

Unidentified Analyst: This is for Balaji. You mentioned that it took about 22 months to recruit 990 patients for SHIELD I and for SHIELD II given that the patient eligibility criteria could be different for the 2 trials. What is your expectation on timing of the patient enrollment for SHIELD II?

Dikla Akselbrad: So thank you for this question. We were very clear on that. So we expect that the recruitment time will be 12 months. And this is also what we’ve done here — we’ve also looked at the pace of recruitment of patients in SHIELD I. Those specific, more focused population, what was the pace during SHIELD I and how fast we got to those numbers and extract from that. By the way, we are hopeful that we’ll have a faster rate. Although, again, our assumptions were based on what we’ve seen in SHIELD I, because we need to remember, SHIELD I was completely conducted during the COVID time, which obviously slowed down processes in terms of opening centers as well as patients going and taking surgeries and having laparoscopy test and then getting surgery when needed.

So all of those points have slowed down recruitment. But still, at the end of the recruitment, we had around 250 patients per quarter and close to 45% out of those patients were patients with incision length of over 20 centimeters. So this can give you a sense of what our expectation was in terms of recruitment at the peak.

Operator: . And your next question comes from the line of Roy Buchanan from JMP Securities. .

Douglas Buchanan: I guess just a follow up on the last few questions. Just want to make sure I’m clear on the — what’s the prespecified patient group for the primary endpoint in SHIELD II. Incision over 20 centimeters, are there any other criteria? And then I think you just said, Dikla, but I kind of missed it. So I think you had about 200 patients in SHIELD II and 40 with the large incision, so it implies about 20% with the appropriate criteria? Is that accurate?

Dikla Akselbrad: So first, yes, this is right. We had about 20% of SHIELD II meeting the prespecified criteria or the more focused population that we are targeting in SHIELD II. I’ll just remind everyone that SHIELD II originally had a broader eligibility criteria. It wasn’t just open abdominal colorectal, but also minimally invasive. So it makes sense that you wouldn’t see the same ratio of large incision that we’ve seen in SHIELD I. And this is why in SHIELD I, we had around 45% of the patients having longer incision. And in SHIELD II, with the 200, it’s about 20%. But now that we are focusing the trial based on the FDA feedback, we expect to see this number growing. Now you had another point that you wanted to cover, Roy? Did you get it? .

Douglas Buchanan: Yes, exactly.

Dikla Akselbrad: So same type of surgery, same patient population that we had in SHIELD II, we are just focusing on the subgroup, the prespecified sub group that we had in SHIELD I, which was the longer incision where we received a p-value of 0.0032 and also discussed this with the FDA and the FDA view it as a supportive data and recommended that we add additional data focusing on this group.

Douglas Buchanan: Okay. Great. And then a couple on the interim. On SHIELD I, you had a max enrollment threshold, does that also apply for the unblinded interim in SHIELD II? And you mentioned some blinded assessments prior to the unblinded assessment. Do you have a sense of when you can expect the first blinded assessment to occur?

Dikla Akselbrad: So those are — first of all, there is — the blinded assessments are done internally on an ongoing basis. There is no real point to do that until the point we have sufficient patient where we can actually get some understanding, but this is something that was done in SHIELD I and will be done in SHIELD II on an ongoing basis. It’s something that helps us see that we are within the statistical plan, within the underlying assumption, obviously, there is no blinding here, so nothing about the effect. But an idea about the overall management of the trial and that things are going well. With regards to the interim, we do have, in the interim, the possibility to have a sample size reassessment. I think it is a bit early to go into those details because the blinded assessment, what we are doing is around the SSI or, I would say, the primary endpoint, the understanding of the primary endpoint versus a — overall versus our underlying assumption.

And once we’ll start to see how this is progressing, we can discuss in more detail, but we do have the possibility, if needed, to have a sample size reassessment.

Douglas Buchanan: Okay. Great. I guess — sorry, a couple of more. You had partnering discussions ongoing for D-PLEX100 previously. Are those pretty much continuing? Or do you kind of have to hit reset with the SHIELD I data? And then what about OncoPLEX, what about partnering that? It seems like it’s going to be kind of on hold for a year or more as you deal with D-PLEX100? Is that true any way to get that advanced maybe more expeditiously?

Dikla Akselbrad: Again, I’ll start with the latter part of your question. Our top priority right now is, obviously, D-PLEX100, but we are fully intending to continue the development of OncoPLEX and potentially also other products in our pipeline and it’s remained a priority. What we have done up until now is developing the CMC processes. And as we continue our effort to begin clinical development, this will be a very valuable asset to get to this stage. I think another thing that is quite in a good stage is the preclinical package. Obviously, we will need a decent study to go into the clinical stage. But this is a priority. But you’re right, as I said before, our focus is on D-PLEX100, so obviously, the resources that are invested in OncoPLEX in the near terms are limited.

Ori Warshavsky: Yes. And I can add on the D-PLEX partnerships. All of the conversations that we had in the past, we’re still in contact with all of these potential partners. There’s actually a few new ones from other geographies that showed interest in partnering for different territories. So this is all ongoing. Obviously, a lot of it will depend on the trial, but no one really stepped back and lost interest in the product.

Dikla Akselbrad: I would add to that one thing, which is — the new thing that we are seeing with the robust data, the robust clinical data that we have from SHIELD I is a better understanding and some additional interest around our platform, around collaborating, around the PLEX platform pairing it with novel or known molecules in different areas, and this is very encouraging for us.

Operator: There are currently no further questions. I will hand the call back to you.

Dikla Akselbrad: Thank you for joining PolyPid’s Fourth Quarter and Year-End 2022 Financial Results Conference Call. I would like to emphasize our firmly, we continue to believe in our long-term prospects, especially the potential of our promising late-stage product candidate D-PLEX100. We remain grateful to our team members and all of our external partners for their commitment to our mission and their support in continuing to advance towards achieving our goal of bringing D-PLEX100 to health care providers and patients as quickly as possible. We look forward to speaking with you again on our next call.

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