Hello everyone, and thank you all for joining us during the Lytham Partners Spring 2025 Investor Conference. My name is Ben Shamsian, I'm the Vice President of Lytham Partners, and today we welcome PolyPid and Ori Warshavsky, Chief Operating Officer. We'll be taking us through slide presentation followed by a Q&A discussion. PolyPid trades under PYPD on the NASDAQ. With that, let's get started. Ori, welcome, and I'll turn the floor over to your presentation.
Thank you, Ben. I'm happy to be here. I think the audience will see that we are really at the final stages or weeks from a very meaningful milestone, end of phase III with data coming, and I'll take the audience through where we're at and what to expect. Very high level who we are and what we do. PolyPid is a clinical stage biopharma with a drug delivery platform, what we call PLEX, and PLEX stands for Polymer Lipid Encapsulation Matrix. In a nutshell, what PLEX does, PLEX can take many types of APIs from small molecules to chemotherapy all the way up to large molecules and antibodies and turn them into a local high concentration prolonged release.
A lot of buzzwords, but basically what it means is that we can release a molecule over a duration of anywhere from days to weeks and even months of sustained linear release. Just as a comparison, some of our competitors that talk about local release talk about 72 hours or 96 hours, so we are in a different scale talking about weeks and months. We have our lead product, D‑PLEX₁₀₀, at the end of phase III with data, as I mentioned, expected before the end of this quarter, and then we have earlier programs in oncology, including OncoPLEX. The platform and the products are protected by over 170 patents. We are backwards integrated, based in Israel. We have all the capabilities from R&D to regulatory to clinical to the manufacturing, all in Israel. As Ben mentioned, we are traded in NASDAQ under PYPD.
High level how PLEX works. Imagine on a nanometric level a structure that looks like an onion, layers of layers of layers of polymer that serves as a backbone, and then layers of lipids, or what is here, this orangey, white and orange pieces, lipids that surround the API, protect the API from body fluids, from enzymes, from a harsh pH. What happens every time the outer layer of this onion structure comes in touch with body fluids, it disintegrates and the API is released, and then the next layer comes in touch with body fluid and the API is released again and again and again. We can control, we can control the number of layers, and this is how we can customize the duration. The more layers, the longer the duration is. We have completed one phase III trial, Shield 1 in 2022.
We are in the final stages of Shield II. I'll go over the design and the results in a minute, and then we have additional plans on a future expansion of the label and pipeline work. The focus of this conversation is D‑PLEX₁₀₀ for the most part. D‑PLEX₁₀₀ takes the PLEX platform and combines it with doxycycline, which is a known broad spectrum antibiotic, approved many years on the market, safe, with a target of preventing abdominal surgical site infections or SSIs. SSIs are basically infections that come post major surgery. It is under this umbrella of hospital acquired infection. A patient comes into the hospital for a surgery, whether it's a colectomy or a joint replacement or open heart procedure.
The procedure went well, but then there's an infection, and because this infection happened within the hospital, it's now the hospital's responsibility to clear the infection. Everything that has to do with it from a clinical perspective, from a cost perspective, it's all the responsibility of the hospital. It's a 505(b)(2) approval, which means we have three years of market exclusivity. We also are, we have breakthrough therapy and fast track and QIDP designations, which gives us another five years of market exclusivity. All in all, eight years plus six months for pediatric expansion. We'll have eight and a half years of exclusivity in the market. The product itself, as I mentioned, it's an antibiotic.
We designed it, we customized the release for 30 days of prolonged release because the CDC guidelines of what surgical site infections are are any infections that come within the first 30 days post surgery. We really wanted to align what the product does to what the CDC guidelines are and make sure that the patient gets an umbrella protection for the entire duration. You can see on the right here the total addressable market. It's a big market, close to 12 million procedures, and we can split it into two different buckets. One are the procedures with high infection rates like abdominal procedures, colon resection, open hernia, some of the complicated appendectomies, gynecology procedures like hysterectomy, complicated C-sections, and so on. This is one bucket when there's high infection rates.
The other bucket are procedures that infection is not as high, but if there is an infection, the consequences are really terrible. For example, if in open heart procedure, in a sternum procedure, if there's an infection in a sternum bone, there's a 40% chance of mortality, four zero. In the orthopedic procedures, if there's an infection in a hip replacement or knee replacement, if there is an infection, this can mean the patient in the hospital is in the hospital for four or five weeks, multiple surgeries, multiple touch points with the doctor. In worst cases, the joint is taken out and then there's a period of time when the patient has no joint and he's completely kind of stuck to a wheelchair. There's quite a lot of downstream consequences that we're trying to prevent with D‑PLEX₁₀₀.
This is what it looks like in surgery for those who can handle it. This is PLEX, the white powder. As you can see, the doctor at the end of the procedure, once the procedure itself is done, when the surgeon is ready to close, they take the D‑PLEX , which is a powder, mix it with saline, it turns into a paste. It looks almost like a toothpaste. The surgeon or the nurse applies it directly on the incision. In this case, in this video clip here, this is an open heart surgery. Applied directly on the sternum bone and then on the layers of fat, fascia fat, muscles all the way to the skin. It is relatively straightforward. Doctors do it either with their hands or with an applicator.
It doesn't really change much how the doctors close the incision today, as you can see here. Once the D‑PLEX is administrated, it's a one-time shot. There's no need to reapply. There's no need to wash everything. From this point on, there's 30 days of release. If I'm looking on where we are on the clinical program, as I mentioned, we are at the final stages of phase III. Phase III, and if I'll try to point you. Our phase III right now, shield two, is 800 patients comparing the standard of care, which is IV antibiotics, to D‑PLEX on top of standard of care. We are not looking to replace anything, but we are adding another layer of protection.
We are looking at a reduction in infection, reduction in reintervention, and reduction in mortality over 30 days, plus another 30 days of safety assessment. Now, we announced last patient into the trial on March 11. So the 800 patients were recruited on March 11. The 30-day assessment was on April 11. The 60-day follow-up was on May 11 or May 10. Basically, this path is finished, and what is left now is really to close all the different patient files, make sure the data is clean, lock the data, and then let the statisticians do their work. We are on time. We are on the timeline, as we said, to have the results, the top line results by the end of this quarter, middle to end of June.
What we'll be able to share at the end of June is basically the top line, maybe some of the secondary endpoints, and some information on demographic, most likely. Maybe a point on how we got to the 800 patients. We had an interim analysis done by an independent Data Safety Monitoring Committee or DSMB, and the role of the DSMB was twofold. It was one, to look at the data and ensure that there are no safety issues, and two, to right-size the trial for the highest probability of success. What we heard from the DSMB is, one, we do not have any safety issues with the product, and this we heard again and again over the duration of the trial. Two, the DSMB sent us to the lowest stopping point they could.
They could have sent us to anywhere from 800 patients all the way to 1,100 patients. The fact that they sent us to the 800 patients first says that there is efficacy, meaning there's no scenario of futile trial at this point. With 800 patients, we see a high probability of success. All to say, from our perspective, this is a relatively de-risked trial, definitely at the stage that we are at this point. The SHIELD I, the SHIELD II trial is a repeat of a subpopulation of SHIELD I. SHIELD I, the large incision subgroup, and you can see these are the results of the SHIELD I, and you can see really the effect on the right column across the board.
The product worked as designed, showed over 50% reduction in primary endpoint, 55% reduction in infection, 40% reduction in mortality, 55% reduction in reintervention. Really, the product worked as designed, and we are repeating the same patient population this time around. Between that, between knowing that the product worked well in the previous phase III, the fact that the DSMB looked at the data in an unblinded way, and the fact that we are, you know, did a lot of this lesson learned and refining on how we do the trial, we are very confident or feel confident in the probability of success of this trial.
We also looked on the previous trial, we looked on how the product reacts to high-risk patients when the risk of infection is greater, with the thought that this is where really the most of the problem is, and this is where hospitals will try to use the product first. We looked, this is post hoc work, but we looked at in SHIELD I at patients that either have procedural related risk or just patient-related risk like smokers, high BMI, diabetics, and to see how the product reacted. What we saw is that again, even in this high risk where the risk of infection is greater, the product worked well as designed with a very low p-value. Again, another boost for us to feel confident about what's coming for us next. Finishing with the clinical, just touch a few words on the commercial side.
So I spoke about the 12 million patient addressable market for this product. The parallel for that in Europe is 8 million procedures in Europe. The trial Shield II is designed in a way that it meets the requirements of both the FDA and the EMA. So we'll file for FDA approval and immediately after that, file for a European approval. What is nice in Europe is that the European authorities already told us in writing that because colorectal resection is the most complicated abdominal procedure, they will use the data to give us a broad label for all abdominal procedures. So from day one, we will have access to all these abdominal procedures. So you have the volume here in terms of pricing. We are looking at around $600 per vial.
Open procedures, or all in all, the dosing is small incisions, one vial, medium-sized incisions, two vials, and large incisions over 20 centimeters, three vials. On average, we like to calculate about 2.2 vials per procedure. Maybe a point about access and how we see the uptake of the product. I think the clinical story of D‑PLEX is relatively clear. If we show doctors or when I talk to doctors and talk about 50% reduction in infection, they understand immediately what that means for their patient, what that means for their clinic, and for themselves personally. The other side of this or the additional lever that we're looking to pull in terms of uptake is looking at the pharmacoeconomics. What we know from literature is infection, soft tissue infection can cost as much as $25,000 per patient.
Infections in bone-related procedures like joint replacement can cost as high as $100,000 per surgery or per patient. It is important to know that all these costs are completely paid by the hospital, meaning the insurers, because these are inpatient procedures, the insurer pays the hospital a pre-negotiated sum. Let's take, for example, patient goes to colorectal resection. The insurance pays $10,000 per the procedure. If the patient left on time and the procedure went well, the hospital makes money. If there's an infection and now the patient stays another 7-10 days in the hospital, all that cost, all that additional $25,000 is paid by the hospital. Our conversation in terms of access and use is really talking to the hospital and not the insurance, talking to the hospital on how can we prevent these very costly infections to improve the margin.
In addition to that, there are programs by CMS, by Medicare to improve quality. The worst offenders in terms of hospital-acquired infections get penalized on all their Medicare reimbursement, and this can sum up to a few million dollars per hospital. The flip side of that is this program called NTAP, which we're eligible for, new technology add-on payment. This program reimburses, CMS reimburses the hospital for up to 75% of the cost of the drug. On one hand, on the left hand, we save money for the hospital by preventing infection. On the right hand, NTAP program reimburses the hospital for the use of the product. One more point on the commercial piece. We have a partner in Europe, Advanced Pharma, that will be responsible to fully commercialize the product. We will approve it, and they will commercialize it.
This is a deal that is valued at over $110 million in upfront payment, milestone payments, development milestones, and sales milestones, and royalties. Advanced Pharma is a hospital-focused, anti-infective-focused company, really the model for what we're looking for. We're looking for partners in other markets, including the U.S., that will commercialize the product for us, similar structure, upfront payment, and milestone payments and royalties. We start with the U.S., and we'll go to other markets following that. Two quick points. One, we manufacture the product. A lot of the know-how for the product is how it's manufactured. We have our own fully GMP manufacturing suite in Israel. It went through a European inspection. It's ready for European commercial manufacturing. It will go through FDA inspection as part of the NDA process. It has enough capacity.
We have also plans on how to expand capacity when the time comes. One touch on other molecules in the pipeline. We signed a deal with Immunogenesis end of last year. Immunogenesis is an MD Anderson-based technology for solid tumors. They have a STING agonist molecule, and they showed really strong results in animals, but when they got to the clinic, they saw toxicity with administering the product systemically. IV, the product reached really toxicity levels before it could impact the tumor itself. Our collaboration will take their molecule, combine it with our PLEX, inject it directly into the tumor for a prolonged release of a few weeks of a high-concentration STING agonist without the systemic toxicity that we see with the IV injection. This is an early stage, and we'll hope to report on this later in the year. Final point before I open it for questions.
We had a quarterly call, Q1 call recently. We finished the quarter with $8 million, which should take us all the way to Q3 this year. Beyond the top line results, the trial is fully funded. We have enough cash to finish the trial. We have warrants that are tied to the success of the trial. We have $27 million in warrants that expire 10 days after the top line results. If all the warrants are exercised, that's another $27 million. If the top line results is positive, we'll get a down payment from our European partner. All in all, this should take us all the way through NDA submission and all the way up to approval. You see some of our shareholders here, no name in this space. They've been with us for a number of deals now, a number of years now. We have nice coverage.
I think that's it. Ben, I'm handing it over to you.
All right. Thanks, Ori. Just wanted to touch on some topics. Let's talk about how will a positive top line result in June impact your U.S. distribution and who might be the type of partners in the U.S. who would be appropriate for you?
Yeah, yeah. I think it's important to emphasize that we are not looking to, we are not looking to sell this product on our own, and we are looking for partners. We know hospital space is a complicated space. You need the experts that know how to sell in the hospital, know how to go to P&T, know how to talk to surgeons. This is the strategy. Some examples could be either some of the anti-infective companies like Paratek, Innoviva, or some of the other local administered products like Pacira, Heron.
These are some of the possible names. The other type of targets are some of the medical device companies. These guys have infection prevention units. They are in every single surgery room in the U.S. So a Medtronic, a J&J, a Becton Dickinson, these are some of the targets. I can tell you that we've seen really an increase in interest over the last few months. We have a few companies that are already in due diligence, a few of them that are in the data room already going through some of our market research and our correspondence with the FDA, really starting to build their business case. I know I've been doing this for a while now. I know that there are a few companies that are sitting waiting for the data, and they will come into the process once the data comes in.
All in all, I target or I hope to be able to announce a deal before the end of the year.
Okay. A positive phase III announcement obviously sets the stage for D‑PLEX Akselbrad and DA and also validates the PLEX platform. What would your next steps be for OncoPLEX and Immunogenesis?
Yeah, yeah. We have a lot of ideas, a lot of stuff that's in the pipe. Up until now, really, all the focus and all the resources were on D‑PLEX Akselbrad. Once the trial finishes, we kind of divert some of the resources to the other products. In terms of OncoPLEX, just to remind everyone, this is combining the PLEX platform plus chemotherapy, targeting solid tumor. We already had conversations with the FDA, pre-IND meeting with the FDA on this program in glioblastoma.
Actually, the FDA suggested that this could be a first-line treatment together with resection in glioblastoma. The next step, there are a few preclinical studies that we agreed with the FDA that we should do before going into the clinic. That is coming up. Immunogenesis, as I mentioned, we are now kind of in the initial stages. They gave us the molecule. We put it into our platform. Once we know that it releases over time as we want, the profile that we want, the duration that we want, Immunogenesis will take this into preclinical models. If all goes well, we will go together to the clinic. This as well, I think before the end of the year, we will be able to report some progress on how this is working. I think overall, there is quite a lot we can do with the platform.
You can think of anywhere where local treatment is needed, frozen shoulder, or local steroids, or even something like some of the GLP-1s. All of these ideas where the local impact, when the long-duration impact is what is needed, is areas that we can play in and we can, I think, improve existing molecules.
Okay, great. I just want to touch on the cash runway again. You mentioned it during your presentation. If you do get positive results here, talk to us about the warrants and sort of how that all leads to what you guys need to do over the next year or so.
Yeah, yeah. A few points here. First, again, the trial is fully funded, and that's point number one. We did a PIPE end of last year, raised $15 million with investors like AIGH, Rosalind, Daphne Capital.
The deal was structured in a way that those investors will, one, ensure that the trial is funded. Those were the $15 million. Once the trial is funded, there are warrants that will be exercised to continue to fund the company. Ten days after top line, there are $27 million of warrants that will expire at $4 a share. There is also another set of another $18 million that expire January 2026 at $5.5 a share. All in all, over $15 million in these warrants, plus milestone payment from our commercial partner Advanced Pharma for successful finishing the trial, plus a potential upfront payment from a US partner. All in all, over $50 million. If all of those are exercised, this will take us well into 2027, beyond the approval and beyond the launch.
Thank you, Aaron. Thank you, everyone, for watching.
If you have any questions, would like to schedule a meeting with PolyPid, please send me an email at shamsian@lythampartners.com. That's shamsian@lythampartners.com. If you'd like to learn more about Lytham Partners, you can visit our website at lythampartners.com or follow us on LinkedIn to stay connected about future events. We hope you all enjoyed the rest of the conference and have a great day. Thank you.