Operator: Greetings, and welcome to the PolyPid Fourth Quarter 2024 Conference Call. [Operator Instructions] 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 2024 earnings conference call. Joining me on the call today will be Dikla Czaczkes Akselbrad, Chief Executive Officer of PolyPid; Jonny Missulawin, PolyPid’s Chief Financial Officer; and Ori Warshavsky, Chief Operating Officer U.S. of PolyPid. Earlier today, PolyPid released its financial results for the three and 12-months ended December 31, 2024. 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 make forward-looking statements within the meaning of the federal securities laws. For example, management is making forward-looking statements, when it discusses the potential efficiency of D-PLEX100 and the probability of success of the trial that the gross proceeds from the company’s recent financing extend the company’s cash runway into the third quarter of 2025 beyond the expected top-line results from SHIELD II.

The expected timing for completion of enrollment of the SHIELD II trial, the expected timing for top-line results from the SHIELD II trial, potential NDA submission, accelerating preparations for regulatory submissions and pre-launch activities potential, clinical benefits of D-PLEX100, potential market size for D-PLEX100 in the United States potential partnership opportunities, potential benefits from the collaboration with ImmunoGenesis that the exercise of the warrants from the pipe in full would result in additional $27 million in gross proceeds that proceeds of all warrants issued in the pipe, if exercised, would provide the company with capital beyond NDA approval, opportunities for the use of D-PLEX100 in additional procedures and the company’s long-term prospects.

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. The company’s 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 annual report on 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 and speaks only as of the live broadcast today, February 12, 2025. With the completion of those prepared remarks, it is my pleasure to turn the call over to Dikla Czaczkes Akselbrad, CEO of PolyPid. Dikla?

Dikla Czaczkes Akselbrad: Thank you, Brian. On behalf of our team at PolyPid, I would like to welcome everyone to our fourth quarter and full year 2024 earnings conference call. We are very pleased with the recent critical advancement in our business, most notably, as it relates to the recommendation by the independent Data Safety Monitoring Board or DSMB. To conclude the SHIELD II Phase 3 trial assessing the efficacy of D-PLEX100 for the prevention of surgical site infections in patient undergoing abdominal colorectal surgery upon enrollment of 800 patients, which is the lowest sample size reassessment staff after the minimum planned number of patients. We view the DSMB’s recommendation to conclude SHIELD II upon the enrollment of 800 patients as a favorable outcome, as it is suggestive of positive efficacy signals from D-PLEX100.

As a reminder, the data generated from SHIELD II to date remain fully blinded to PolyPid and others outside of the DSMB until top-line results are available. As previously reported, we concurrently announced that, we entered into a securities purchase agreement for a private placement financing, led by existing institutional shareholders for $14.5 million in gross proceeds. The gross proceeds from the financings extend PolyPid’s cash runway into the third quarter of 2025 beyond the expected top line result from SHIELD II. More on this transaction in a moment. First, however, some further discussions around the DSMB recommendation and our planned next steps. Most importantly, the sample size reassessment is an opportunity to ensure the study has sufficient power to conclusively confirm D-PLEX100’s treatment benefit, and we believe, this increases the trial’s overall probability of success.

The study has enrolled over 700 patients to date. And at the current enrollment rate of roughly 20 patients per week, we expect to complete enrollment of SHIELD II next month. We anticipate reporting top-line results in the second quarter of 2025. Upon potential positive Phase 3 data, PolyPid expects to submit a new drug application or NDA with the advantages of Fast Track and Breakthrough Therapy designations. We are thrilled to welcome Mr. Yitzchak Jacobovitz to the company’s Board of Director. Mr. Jacobovitz is a partner and a lead health care analyst at AIGH Capital Management and Affiliates, the lead investor from the December financing. He is also a board member at Myomo Inc. Mr. Jacobovitz earned his MBA from Johns Hopkins University and is a Chartered Financial Analyst.

We look forward to completing the trial and are focused on accelerating preparations for our regulatory submissions, pre-launch activities and expediting partnership discussions in and outside of the United States. I will now turn the call over to Ori to discuss market potential, partnering efforts and our recently announced technology collaboration. Ori?

Ori Warshavsky: Thank you, Dikla. I would like to provide some additional color on our market potential for D-PLEX100 and our related partnering discussions. We believe the total addressable market for D-PLEX100 in the U.S. is just over 12 million surgeries per year based on IQVIA data, the leading industry source on procedure and prescription data. There are approximately 4.4 million abdominal soft patient surgeries annually, both open and minimally invasive procedures, principally comprised of hernia repair, appendectomy and colorectal surgeries. We also believe that, there is an opportunity for the use of D-PLEX100 in an additional $2.1 million abdominal procedures in gynecology and urology, including hysterectomies and related procedures.

Other D-PLEX100 potentially relevant surgeries, which either have high SSI rates or have high clinical and financial costs, if an infection develops, includes sternotomies and joint replacements. According to the CDC, SSIs are a substantial cause of morbidity, prolonged hospitalization and mortality. It is reported that, SSI accounts for 20% of all hospital acquired infections and is associated with a 2 to 11 fold increase in the risk of mortality with 75% of SSI associated deaths directly attributable to the SSI. SSI is the most costly hospital acquired infection type with an estimated annual cost of $3.3 billion and extends hospital length of stay by 9.7 days with cost of hospitalization increased by more than $20,000 per admission. A CDC report published in November 2024 tracking hospital acquired infections in over 3,000 hospitals showed an increase of 3% in SSIs across all surgeries in 2023, as compared to 2022.

The outcome of this report confirms what we have seen in our own clinical data, a reduction in SSI in the COVID years and subsequently an increase in SSI post-COVID. Collectively, this market data reflects a large and broad unmet need and commercial opportunity for D-PLEX100 in the U.S. without even considering the more substantial global market. If approved, D-PLEX100 could potentially significantly transform the surgical landscape, where postoperative SSIs remain a costly program. Turning to our partnering efforts. We remain in active discussions with several potential partners for the commercialization of D-PLEX100 in different regions with the U.S. being our priority after the exclusive licensing agreement already signed with Advanced Pharma for Europe.

Following the recent interim results and DSMB recommendations, we have seen an uptick in discussions with potential partners and just as important, a positive shift in the tone of those conversations. We are also focused on partnering efforts centered on our proprietary drug delivery technology that enables controlled and prolonged intratumoral drug delivery. As such, last December, PolyPid and ImmunoGenesis, a Houston-based, clinical-stage Biotechnology Company, announced a research and development collaboration focused on combining PolyPid’s technology with ImmunoGenesis’ potent STimulator of INterferon Genes or STING, agonist drug candidate to enhance treatment for solid tumors. STING agonists are very potent, but have a short half-life in the tumor microenvironment, limiting their ability to shrink tumors when administered alone.

This collaboration aims to take advantage of prolonged drug release enabled by our delivery technology with the goal of enhanced STING antitumor activity. This strategy could potentially overcome existing challenges of uneven distribution and limited exposure in dense tumor tissues, while enhancing immune cell infiltration and activation, within the tumor microenvironment. We believe this collaboration could create a cutting-edge approach to immuno-oncology and will continue to explore additional opportunities to bring value to innovative partnerships. With that, it is my pleasure to now turn the call over to Jonny to review the financials. Jonny?

Jonny Missulawin: Thank you, Ori. We are thrilled to advance each of our initiatives from a significantly enhanced financial position. As of December 31, 2024, the company had cash and cash equivalents of $15.6 million. We expect that our cash flow will be sufficient to fund operations into the third quarter of 2025. Now let me briefly review the highlights of the private placements we recently entered into with existing investors for $14.5 million in gross proceeds. The investors also received warrants, which will expire upon the earlier of 9 months from the date of issuance and 10 trading days following our announcement of top line results. Exercise of the warrants in full would result in an additional $27 million in gross proceeds.

Proceeds of old warrants issued in this transaction exercise would provide the company with capital beyond NDA approval. We believe that the participation in this transaction from a leading group of life sciences-focused existing investors is indicative of the substantial transformative potential of D-PLEX100. We are grateful for this continued demonstration of confidence and support. Now let’s turn to our income statement. Research and development expenses for the 3 months ended December 31, 2024, were $7 million compared to $4.6 million in the same 3-month period of 2023. R&D expenses in the most recently completed fourth quarter were driven by the ramp-up of the ongoing SHIELD II Phase 3 trial. For the full year ended December 31, 2024 and 2023 R&D expenses were $22.8 million and $16.1 million, respectively.

Marketing and business development expenses for the fourth quarter of 2024 were $0.2 million compared to $0.2 million during the prior year period. General and administrative expenses for the fourth quarter of 2024 were $1 million compared to $1.2 million recorded in the same 3-month period of 2023. For the fourth quarter of 2024, the company had a net loss of $8.5 million as compared to $6.4 million in the fourth quarter of 2023. For calendar year 2024, the company had a net loss of $29 million compared to a net loss of $23.9 million in the full year 2023. With that, we will now open the call to your questions. Operator?

Operator: [Operator Instructions] We will now take our first question from the line of Roy Buchanan from JMP.

Roy Buchanan: I guess just wanted to start, Can you just help us think about your expectations for the label, assuming the data is positive, which we expect and then just — I know Ori went over the TAM in pretty good detail, but just how you’re expecting to target those different segments and your commercialization readiness and plans.

Dikla Czaczkes Akselbrad: Thank you. So we — our expectation is that at the first stage, we will have both in U.S. and in Europe labeling that is in the area of the abdominal surgery. This is how we see ourselves launching the product with a general nominal. It could be more focused 1 on, let’s say, let’s call it, large incision or things like that. But this is where we stand in terms of our expectation, and we have a very detailed plan on how to expand that. So that’s with the label. You were asking about the commercialization and marketing effort.

Roy Buchanan: Yes. Yes.

Dikla Czaczkes Akselbrad: Ori, you want to take the second part?

Ori Warshavsky: Yes. Yes, I’ll take it. So kind of 2 parts to the sensor, I went over the numbers have, like we said, about half of the total addressable market is related to soft tissue, abdominal, then gynecology, urology, some of the C-section can go in there, breast reconstruction can go in there. I think the point is, from our perspective, is really finding a strong partner that can drive these — have these conversations both with surgeons, with pharmacy directors, with an infectious disease specialist. I think it’s — we understand that selling into the hospital is — it’s a complex task, and we need the right partner for that. And this is really kind of top of mind, at least for me and for all of us is to find the right partner for that that can really have this deep conversation.

So — but it will be gradually, right? It’s not day 1, all these 12 million surgeries or even just the abdominal. We’re starting our foot in the door in the colorectal and then expanding just like Dikla mentioned on the label, gradually expanding. I can tell you anecdotally from my conversations with surgeons, what I heard is once the product is on formulary they understand that if an incision is made in the abdominal for a colorectal resection or an incision is made for appendectomy. It’s the same incision in a way broadly speaking. And once it’s on formulary, they will use it more broadly and get the experience with the product.

Operator: We will now take the next question from the line of Chase Knickerbocker from Craig-Hallum.

Chase Knickerbocker: So I guess just to start, can you give us a general idea of kind of how similar are these kind of subsequent 270 patients from a baseline kind of characteristic perspective, like geographies of the facilities that are enrolling these patients, et cetera, when you compare it 200 to 430 that informed interim analysis? Just trying to get a sense of kind of the — how similar these patients have been to the kind of interim analysis patient from a baseline perspective.

Dikla Czaczkes Akselbrad: Sure. Thank you for the question. So it is in line with our expectation. We outlined it so we don’t really know how the infection rate is divided between the 2 arms. But we don’t see anything that is alarming us in a sense that it is not in line with our expectation or what we’ve seen up until now along the recruitment and in the interim. Again, also the interim was blinded, but overall. And in terms of geography, again, it’s very similar since all the centers were open and recruiting at the time that we recruited the patient for the interim data. So we don’t have new geographies or new centers so this is also continuing. We are very pleased with the rate of the recruitment. And I expect that within a few weeks, we will be announcing last patient team.

Chase Knickerbocker: Great. And so yes, on that — those enrollment dynamics. So you kind of returned to that, call it, 80 patients per month. And then just seconds, after the kind of Christmas time slowdown and holiday time slowdown. And then just second, on the readout timing. Just so we kind of understand on the primary, obviously, a 30-day follow-up and then kind of post that, we should think a month or 2 for kind of data cleanup and all the normal things. So fairly confident if you enroll — finish enrollment next month that we’re talking, call it, late 2Q kind of read out on the top line?

Dikla Czaczkes Akselbrad: Yes. Yes. Very confident. I would expect that we will be announcing in March, hopefully, at the beginning of the first half of March, last patient in. And from that point, exactly, as you said, 2 months for a follow-up or 1 month for follow-up for the primary and sometimes for the cleaning of the data. So a quarter from the time that we announced last patient in, this is around the time that we will be announcing top line results.

Operator: We will now take the next question from the line of Ram Selvaraju from H.C. Wainwright & Co.

Ram Selvaraju: Firstly, on the commercial front, I was wondering if you could give us some more insight into what you expect the properties of an ideal commercial partner to be specifically in the U.S. for D-PLEX100. And also, if you could give us some sense of if we think about the hypothetical ideal scenario, how the responsibilities might be divided between yourselves and a potential commercial partner. Would you expect to have any involvement in sales and promotional activities? If so, in what specific sales and promotional activities would be targeted to a specific subpopulation of prescribers, for example? And also, if you could elaborate on the extent to which you expect to have sole control over the manufacturing and supply of D-PLEX100 for the U.S. market.

Dikla Czaczkes Akselbrad: Sure. Thank you, Ram. So the ideal partner is a partner that has a presence in the surgery suite and the hospital in the surgery suite that has frequent visit to the surgeon. And the broader the sales force within the surgery suite within the hospital, the better — and you could look at the companies that has presence in this way, divided in a way into 2 arms. One are the large pharma companies and the other are the large med device companies. Both are very good partners that can — and speaking with them frequently for the last few years, I can tell you that they’re looking at the area of surgical site infections, many of them, it’s part of their strategy. It’s part of the where they are looking to expand their pipeline.

And in general, when you look at the surgical site infection is a subsection of hospital-acquired infection. And when you look at the days post-COVID, you see products that were approved drugs that were approved in this area of hospital-acquired infection. After many years where we didn’t have any new drug there. And I can tell you that those are being adopted very nicely by clinics and hospitals, and we see ourselves being the first in the area of surgical site infection, alongside those new launches that were looking at other things, not necessarily of the portion of SSI. You were also asking about manufacturer. So we definitely see ourselves manufacturing the product. As part of partnership, we believe this is 1 of our strength, bringing a full solution, bringing a product that is fully — being fully integrated biopharma company.

And we spent a lot of efforts and time these days to get ready to this stage. This is something that we understand that requires efforts and investment in order to be ready for the commercial stage. We did had about 1.5 years ago a GMP review — commercial-stage GMP review by the European and Israeli health care, and we are getting ready for the FDA inspection that obviously will be after we submit the NDA and this is — in all of our discussions, something that is in our advantage and also 1 maybe important things manufacturer is very unique here. It’s septic, it’s unique. There is a lot of know-how around the manufacturer, and we think this is one of our strengths. Ori, you want to touch briefly on the aspects of what we believe will stay in our end and what will be fine on the responsibility of the partners.

Ori Warshavsky: Yes. I’ll take it. I think — so first, I think a lot of this will depend on the partner and what the capabilities the partner brings, but I think in the ideal scenario in our preferred scenario everything that has to do with the day-to-day activities, the boots on the ground, right, the sales reps, the MSLs, the national accounts that go into the hospitals or by the partner. And what we do is more a global view of the global activities meaning looking into expansion of indication, looking into global medical activities, publications, [HEOR], kind of global review. And looking forward, that what else can be done with D-PLEX beyond prevention of [indiscernible] there’s quite a lot that can be done with the product. So kind of if you look at it in terms of traditional pharma kind of the global marketing will stay with us, the global medical fair will stay with us and the global [HEOR] and the day-to-day on the ground activity will be with the partner.

Ram Selvaraju: That’s very helpful. Just 2 other quick items, if I may, on the R&D front. Could you perhaps remind us of some of the existing approved API for which you already have knowledge, data evidence that your platform would be able to effectively reformulate, potentially reposition and optimize those approved APIs beyond what is in D-PLEX100 and then also if you could just elaborate with respect to ImmunoGenesis, the collaboration that you have there, what specific clinical development activities are currently ongoing with their candidates how you expect your technology to be integrated into the future development plans for that candidate? And how broadly they expect to develop that asset and in combination with what drugs — and you mentioned previously that STING agonist has historically been difficult to deploy as monotherapy because of the short half-life, but do you also think that potentially pairing ImmunoGenesis candidate with your platform would actually enable it to be more combinable with other existing approved for example, checkpoint inhibitor modalities for the treatment of solid tumors.

Dikla Czaczkes Akselbrad: Thank you. In terms of D-PLEX platform and other approved drug that we have worked with in the past and are working on, I can only relate to those that have been disclosed. We do have in our pipeline some new programs that were not disclosed yet around approved drug and known compound. But I can mention chemotherapy that we’ve worked with, and we have OncoPLEX with chemotherapy. We’ve been doing in the past some work with growth factors and steroids as well as with analgesics all have been tested pre-clinically in vivo, in vitro. And I think the potential here is literally, we’ve not even touched the beginning of what could be done around that. And this is the only thing that we’re disclosed. We also did some work with things that are not yet to prove, for example, siRNA, some peptides, proteins as well as be specific.

So those are — in terms of looking at the capability of the platform, we have all of that in our tool kit and there are some new things that we’ve been working on in the last 2 years, and we are waiting for the top line to share this with investors and continue to develop that and hopefully also do that in some sort of collaboration in areas that are very lucrative so that in terms of the capability of D-PLEX. In terms of the STING agonist, so STING in general, have, as you said, have short life, but also tends to be deployed from the tumor very quickly. And we think that this, together with the overall very potent immune response that STING has being able to deliver the drug locally at the tumor site, avoiding most of the systemic exposure together with having it on a prolonged and continuous basis could overcome those challenges.

Both ImmunoGenesis thought that this is a good approach to overcome those challenges and make the drug much more efficacious, but that is always with — potentially will be also with other modalities and other therapeutic agents. As good as the drug will be, I think patients will only benefit with something that — combination with immune checkpoint. So that’s definitely something that when we get to the preclinical stage, we will be looking on that as well, together with ImmunoGenesis, what’s the best model to show the efficacy of the combined product.

Operator: [Operator Instructions] We will now take the next question from the line of Brandon Folkes from Rodman & Renshaw.

Brandon Folkes: Congratulations on all the progress. Maybe just firstly for me, you talked about the potential label language, right, being sort of maybe just abdominal surgery or large incisions. Can you just talk about the pushes and pulls that we should expect in terms of the different label language possibilities? Is it just how compelling the Shield II results are how much color do you think you get sort of post Shield II in terms of whether the label may be going or how much color partner may get post Shield II you versus sort of this just being regular way, you submit the NDA for the broadest indication and sort of during regular way approval process kind of that’s where you get the color on the label.

Dikla Czaczkes Akselbrad: So I’m not sure I got all your points, we had there some gap in the line. But if I missed anything, please Brandon add — repeat some of that. I think that — obviously, the most important thing is the Phase 3 data and how efficacious it will be. If you recall, we also had in SHIELD I in this — on this pre-specified subgroup that is now the basis of SHIELD II, an effect on re-intervention and mortality. That could also be influenced — make an influence on the way the agency see the data. We also have in this study group of patients that are not part of the primary endpoint but that had smaller incision. So about 170 patients out of Shield II that are not part of the primary. They are on top of the 800 that are the primary had smaller incision.

So we’ll need to look at the data together with the agency, but our plan is to immediately meet the FDA to pre-NDA meeting. And obviously, once we sit with the agency, we will also start the discussions around label and label expansion.

Brandon Folkes: That’s very helpful. And then maybe just secondly, just a bit more sort of strategically, post the partnership, how do we think about PolyPid’s capital allocation and development strategy? Obviously, we expect you to sort of deploy funds into future development of new indications across the platform, which you partner out. But do you look to take those molecules through the approval process as you’ve done with D-PLEX100? Or do you look at perhaps a partnering strategy earlier stage given the validation that D-PLEX100 approval would bring to the platform?

Dikla Czaczkes Akselbrad: We look at — thank you. That’s a very good question, and it’s important to stress this. We look at partnering earlier not just because — obviously, because of the validation that we have from the D-PLEX100, but also because of the area that we are choosing for our next in line, those that we’ve disclosed and those that we have not disclosed yet that are in area where pharma company as partnering are partnering at a much earlier stage. So we look to partner earlier and have most of the heavy lifting in terms of the clinical development than either by the partner or together with the partner.

Brandon Folkes: Congrats on all the progress.

Operator: Thank you. I would now like to turn the conference back to Akselbrad for closing remarks.

Dikla Czaczkes Akselbrad: Thank you for joining PolyPid’s fourth quarter and full year 2024 earnings conference call. We remain highly confident in our long-term prospects especially the potential of our promising late-stage product candidate, D-PLEX100 and look forward to enrollment completion and top line results. As always, we are grateful to our team members, shareholder and all external partners for their commitment to our mission and support in continuing to advance towards our goal of bringing D-PLEX100 to health care providers and patient as quickly as possible. We look forward to speaking with you again on our next conference call.

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

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