PolyPid Ltd. (PYPD) Earnings Call Transcript

Good day, and thank you for standing by. Welcome to the PolyPid 2030 Virtual Investor Day. [Operator Instructions] Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Yehuda Leibler. Please go ahead.

Good morning, everyone, and welcome to PolyPid's Investor Day. My name is Yehuda Leibler from ARX Investor Relations. With me on the call today, you have Dikla Czaczkes Akselbrad, Chief Executive Officer of PolyPid; Ori Warshavsky, Chief Operating Officer, U.S. of PolyPid; our guest, Dr. Warren Joseph, and joining us on the live Q&A will be Jonny Missulawin, Chief Financial Officer of PolyPid. Earlier this morning, PolyPid issued a press release outlining today's announcements. That release and the presentation you'll see today are available on the Investors section of PolyPid's website. The prepared remarks were recorded ahead of today's event, and the Q&A session you'll see at the end is live. Before we begin, I'd like to remind you that during today's event, management and our guests 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 U.S. Food and Drug Administration's or FDA's review of the New Drug Application or NDA for D-PLEX100. That includes the priority review designation and the Prescription Drug User Fee Act or PDUFA goal date of November 28, 2026. Forward-looking statements also include possible label expansion beyond colorectal surgery, the FDA pre-approval inspection of the company's manufacturing facility, the potential approval of D-PLEX100 and the expected commercial launch of D-PLEX100 by Azurity Pharmaceuticals in the United States in 2027. They also include the company's exclusive commercialization partnership with Azurity for the United States and Canada. That covers the partnership's economic structure, potential milestone payments, tiered royalties and transfer price and the joint development activities as well as label expansion programs contemplated under that agreement. The forward-looking statements on this call also cover potential reimbursement for D-PLEX100, including the new technology add-on payment or NTAP status. Additional forward-looking statements include the European Medicines Agency or EMA's review of the Marketing Authorization Application, or MAA, for D-PLEX100 and the anticipated timing of that review. They also include the company's plans for commercialization of D-PLEX100 in Europe and other territories following the reversion of European rights from Advance Pharma, including potential partnerships. Forward-looking statements also include the design, development, planned regulatory pathway and anticipated timing of the investigational new drug application and clinical trials of PB01B as well as its potential benefits. Finally, they include the company's Kinetrix technology and other pipeline programs, including its long-acting metabolic program and the company's growth strategy and expected milestones through 2030. Forward-looking statements are subject to numerous risks and uncertainties, many of which are beyond the company's control. These include the risks described from time to time in the company's filings with the Securities and Exchange Commission. Accordingly, you should not place undue reliance on these statements. I encourage you to review the company's filings with the SEC, including its annual report on Form 20-F filed on February 25, 2026. PolyPid disclaims any intention or obligation, except as required by law, to update or revise any forward-looking statements. PD01B is an investigational product candidate and has not been approved by the FDA or any other regulatory authority. Dr. Joseph's views are his own. This event contains time-sensitive information and speaks only as of today, October 28, 2026. With that, I'd like to turn the event over to Dikla Czaczkes Akselbrad, CEO of PolyPid. Dikla?

Thank you, Yehuda, and good afternoon, everyone. It is great to be here. We are now exactly 1 month away from our PDUFA date. So it is obviously a very exciting and important time for PolyPid. This is also our first event since we signed our U.S. partnership other than our quarterly call. For a long time, one of the questions I was asked more often by investor was, when are you going to sign a U.S. partnership? And what will that partnership look like? I think we can now say that this question has been fully answered. So today, I would like to move the discussion forward and focus on the next question. What will PolyPid look like in 2030? I will start with a very brief recap of where we are today, and then I will focus on 3 key growth levers that we believe can drive PolyPid through 2030. We will also introduce our next product candidate, PD01B and its potential role in diabetic foot infection. Ori will take you through the program, and then we will hear from Dr. Warren Joseph, who will provide his perspective on the significant unmet need in diabetic foot infection. So let's start with where we are today because the last 6 months have been a period of significant progress for the company. In July, we signed an exclusive licensing agreement with Azurity Pharma covering U.S. and Canada. Under the agreement, we received $30 million upfront payment, and we are eligible for an additional over $290 million in development, regulatory and sales milestone. We are also entitled to tiered royalties on net sales ranging from the mid-teens to mid-20s, and we have a prenegotiated transfer price for each vial that we will manufacture and supply to Azurity Pharma. Another important compound of our agreement is label expansion. Azurity Pharma will fund the clinical development for label expansion. Since signing the agreement, our working relationship with Azurity have been excellent. Azurity is building out its sales force, national accounts, market access and medical affair team ahead of potential launch in 2027 with a hospital footprint that reaches more than 1,700 leading U.S. hospital and academic centers. Our teams meet regularly across medical, regulatory, supply chain and commercial functions, and we are working closely together to prepare for day 1 of launch. On the regulatory front, the NDA that we submitted earlier this year is under priority review with a target PDUFA date of November 28, 2026, and all scheduled FDA interactions on track and aligned with D-PLEX100's PDUFA goal date. In addition, an application for a new technology add-on payment, or NTAP, was submitted to CMS in October this year with a decision expected next August. If approved, NTAP would provide additional hospital reimbursement for D-PLEX100 in the inpatient setting. In Europe, we submitted our marketing authorization application to the EMA in September, and it was validated at the end of that month. So D-PLEX100 is now under formal review by the EMA. And earlier this month, we regained full European commercial right to D-PLEX100, which I will come back to in a moment. The bottom line of this, over the past 6 months, we told you what we would do, and we did it. So why hold this event now? From day 1, we built PolyPid to be a platform company. D-PLEX100 was always meant to be our first product, not our only one. Our technology delivers a drug at high concentration over a controlled period of time, and the value of that goes well beyond colorectal surgery and well beyond surgical site infections. So why now? With D-PLEX100 approaching potential approval and with a commercial committed partner funding the U.S. launch and label expansion, we are now in a position to move forward on several fronts at once. D-PLEX100 has demonstrated what our technology can do. Now we are putting the platform to work. We think about value creation over the next several years through 3 key levers, stemming from near, mid and long term. First, maximize the potential of D-PLEX100 throughout our U.S. partnership, including label expansion beyond colorectal surgery; second, bringing D-PLEX100 to additional territories, starting with Europe; and third, build a pipeline based on our technology platform, beginning with PD01B. Our base case is the D-PLEX100 subject to approval, will be approved for patients undergoing colorectal surgery with large incision. That is the patient population covered by our initial U.S. application. But surgical site infection isn't only a colorectal problem. It is a surgical problem, and it carries a significant burden, both clinical and economically across many different surgeries. Our first step is to expand into broader abdominal surgery, including GI procedures and hysterectomies. This represents around 4 million surgeries each year in the U.S. with close to half of them being open procedures. We plan to initiate discussions with the FDA in the fourth quarter of this year. Beyond that, we see additional opportunities in soft tissue surgeries such as breast reconstruction and post-weight loss body contouring. This is a fast-growing segment as more patients experience significant weight loss with GLP-1 therapies. These are also procedures involving very large incisions. And then there are opportunities in bone-related surgeries, including trauma and fracture fixation as well as lumbar fusion. Importantly, under our agreement, Azurity funds the clinical development of the label expansion programs that we pursue together, while PolyPid retain clinical and scientific role. This makes label expansion one of the most capital-efficient growth opportunities available for us. The product is already developed and manufactured, and it is already in the hands of a commercial partner that is funding the clinical development work. The decision on which indication to prioritize will be made jointly with Azurity following potential approval, and we will update you as those plans take shape. Our second lever is geography. In the U.S., launch is expected in 2027, subject to approval. And in Canada, we plan to submit a new drug submission in 2027. With the MAA validated and under EMA review and full European right now back with PolyPid, we control our European strategy. We are evaluating how to maximize the value of D-PLEX100 in Europe, including active partnership discussions. I will also say that having the U.S. partnership gives us a strong template to what such a collaboration should look like, what are the key elements that needs to be agreed on, and we can leverage this into a European agreement. And our third lever and the one we are focusing on today is the pipeline. Kynatrix allows us to do 3 things with the drug. First, improve its efficacy by achieving a high concentration exactly where it's needed; second, extend the release of the molecule over time; and third, minimize systemic side effects and toxicity. We applied these capabilities across 3 therapeutic areas: surgical site insertion where D-PLEX100 sits, infection treatment where PD-01B sits and metabolic disease, including obesity. Here is how that all comes together, one platform covering both prevention and treatment. D-PLEX100 in colorectal surgery with our PDUFA date on November 28, 2026, our MAA under review in Europe and Canadian submission planned for 2027, followed by label expansion into additional surgeries. In infection treatment, we have PD01B, which is moving towards a pre-IND meeting and a first-in-human study. And in metabolic disease, we have PD03A, our long-acting GLP-1 program, where early preclinical work is ongoing. It is encouraging to see how much interest there is across the industry in long-acting delivery for these drugs. Our nearest and most mature opportunity for a new product is in infection treatment. With that, I will hand over to Ori to introduce you to PD01B.

Thank you, Dikla. So why did we choose this indication? There are over 40 million people with diagnosed or undiagnosed diabetes in the U.S. and close to 1/3 of those will develop a diabetic foot ulcer at some point in their lifetime. We know that 50% of ulcers can be infected. And from literature, we see that 1.5 million to 1.6 million people live with diabetic foot infection every year. When we look at complications, in diabetes, the #1 complication that leads to hospitalization is an infection. Looking at severe and moderate DFIs, up to 20% of those with diabetic foot infections will end up with some level of amputation, whether it's a toe or a foot or maybe a larger part of the leg. So the implications are huge in terms of times with the doctors, surgery time, surgeon time and even downstream after an amputation, quality of life implications and implication on caregivers and the patient itself. So why did we choose this indication? It's a big market with great unmet need. It's a space where both physicians and investors know very well. There have been attempts in the past to apply local antibiotic to treat infections. And I think more important, diabetic foot infection is a local problem. It's a problem of poor blood flow, and it's a problem that systemic antibiotic does not solve completely. Very similar to what we saw with SSI, where Kynatrix manage -- applying locally managed to impact infection rates. And this is what we plan to do, take Kynatrix apply local high concentration for a long enough duration of time to close that gap in current infection treatment. So what is PD-01B? It's a hyperlocal high concentration doxycycline released in the diabetic foot wound for several weeks. The indication would be treatment of moderate to severe diabetic foot infection after wound debridement, and it will be developed under a new NDA under the 505(b)(2) pathway. So let's talk about what PB01B is and what it isn't. What it isn't, it's clear, it is not D-PLEX100. The 2 products have different goals, different indications that will be prescribed by different physicians in different settings. So while D-PLEX100 is designed for prevention of surgical site infections after colorectal surgery, PD01B is for treatment of moderate to severe diabetic foot infection. It will be prescribed by podiatrists and wound care specialists in the wound clinic as opposed to surgeons applying D-PLEX100 in the operating room. The 2 products have different release profiles and PD01B will have its own intellectual property portfolio. And just recently, we applied for a patent application for a new patent from PD01B. In terms of commercial rights, we own all the worldwide rights for PD01B, while Azurity maintains the rights for D-PLEX100 in the U.S. and Canada for surgical site infections. So in short, we have a platform, Kynatrix, with 2 distinct products coming out of it. Now the fact that we do share the platform means that we are not starting the development of PD01B from 0. We can leverage a lot of the experience and the knowledge that was gained over the years to really hit the ground running. So first, Kynatrix as a technology is a validated technology. It's been proven in a large Phase III. Also, doxycycline, a broad spectrum antibiotics is well known. It's been on the market for many years. It's well characterized with a clear safety record. The formulation design is relying on what was done with D-PLEX100 as well as the CMC and manufacturing processes. We will be using the same manufacturing site that is used for D-PLEX100. Now that is not to say that there's no work to be done. There's adaptations that need to happen, some of the methods, some of the testing need to be designed, but we are not starting from scratch. Even more specifically, in the preclinical work, over the years, we've generated a lot of information, preclinical safety information, toxicity information, microbiology information. All that work will serve as the base for the new development. Some of it will need to be adjusted. Some of it will need to be done based on the DFI indication, but we're not starting from 0. In terms of time line, we are expecting to meet the FDA for a pre-IND meeting in the second half of '27 and also have a first-in-human trial also in the second half of 2027. And with that, it is my pleasure to introduce Dr. Warren Joseph to talk about the clinical need in diabetic foot infection and the place in therapy of locally applied antibiotics. Dr. Warren, please, and if you don't mind, just introducing yourself as you start your presentation.

Thank you very much, Ori. And I have to say I'm very honored to have been invited by PolyPid to speak to you all today. Just to give you a little bit about my background. As Ori mentioned, my name is Warren Joseph. So I'm a podiatrist, I spent most of my career in the Philadelphia area now based out of Arizona, but I have a little bit of an unusual background. I was the first podiatrist to have formal fellowship training in infectious diseases. I trained at Hanman University Hospital in Philadelphia in ID. After I finished my infectious disease fellowship, I joined the faculty of what's now the [indiscernible] University School of Podiatric Medicine, where for 15 years, I taught a course on lower extremity infectious diseases and I ran a diabetic ulcer clinic. This was before everybody and every hospital had wound clinics and everybody was a wound specialist. We basically just treated diabetic foot ulcers. I left the university about 25 years ago. I've been on staff at a number of hospitals in the Philadelphia area, credential in both podiatry and infectious diseases. So my entire career has essentially been the in and outpatient treatment of patients with diabetic foot infections. Currently, I am an adjunct clinical professor at the Arizona College of Podiatric Medicine Midwestern University in Glendale, Arizona, where I give lectures in infectious diseases, and I run a course on evidence-based medicine and research. So just about everything I say in any lecture I give, I try to make sure it is backed with research. Also for the past 35 years, I've been Editor and Chief of the Journal of the American Podiatric Medical Association, which is the largest circulation peer-reviewed index in our profession. And again, it goes to my background in believing everything has to be evidence-based. I also will tell you that I was the first podiatrist, in fact, there are only 2 of us to this date ever elected as a fellow of the Infectious Diseases Society of America. And I was invited back in 2004 to sit on the IDSA diabetic foot infection guidelines, and I've been an author of the original guidelines and the 2012 revision, which we're going to talk about somewhat in this lecture. Now -- before I start, I do realize that we probably have quite a variety of levels of expertise in this particular audience. Some of you have a lot of biomedical experience. Some of you may even be physicians, some not so much. So I'm going to try to thread the needle a little bit here to keep it interesting for those of you who already know a lot and not to bore people with too many technical terms for those of you who might not be as comfortable with it. So you have to let me know at the end or during the question and answer whether I was successful with that or not. What I'm going to do is talk about topical antibiotics for the treatment of diabetic foot infections. Now the topics I'm going to cover include what is the scope of the problem? What happens when the treatments we have up to this point don't work, something goes wrong. What are the theoretical advantages of topical antibiotics and where might they find a place? Now there have been topicals that have been tried. What are they? And if they've been tried, how have they done and why have they failed? And then finally, we'll end up with just a little bit of a discussion on where exactly does PD01B fit in. Well, let's start by, again, looking at the scope of the problem of diabetic foot infections. The International Diabetes Federation estimates that there are 589 million people in the world with diabetes, of which about 38.5 million are in the United States. That's somewhere in the neighborhood of 10% to 12% of the U.S. population has diabetes. And that number is probably an underestimate because it is thought that about 4 in 10 people who have diabetes may not even realize they have it. And this is just going to keep growing. By 2050, so only about 24 years from now, the IDF estimates that, that number is expected to reach 853 million people worldwide. Now of those now 589 million people, 1 in 3 of those will eventually develop an ulceration on their foot somewhere in their lifetime. In North America, we have some of the highest rates of diabetic foot ulcerations in our 38.5 million patients with an estimate of about 13% having an active ulcer at any given time. So it's a huge problem that affects a lot of people. It goes on, though, because once the patient has that diabetic ulceration, that hole in the foot, usually due to neuropathy or loss of healing because the patient with diabetes has an inability to feel pain, 50% to 60% of those ulcerations will become infected and require antibiotic treatment sometime during the course of the presence of that ulceration. In fact, diabetic foot infection is the single most common cause of hospitalization in patients with diabetes. It's not hyperglycemia, it's not renal issues. It is diabetic foot ulcer, diabetic foot infection. Those ulcerations that become infected aren't just necessarily superficial infections. About 20% of them, 1 in 5 will develop bone infection, osteomyelitis. And once you have osteomyelitis, there's a high risk of amputation. In fact, patients with diabetes are 25x more likely to undergo amputation than people with any other condition. In fact, diabetes is the #1 nontraumatic cause of amputation. So a lot of these patients are getting amputated. And of those patients who are getting amputated, 85%. So essentially all of them are preceded by foot ulceration. So this is what we have the natural history of the disease. Diabetes leads to neuropathy or loss of feeling. Loss of feeling leads to that ulceration or that hole in the foot. That hole in the foot leads to infection, that infection can lead to bone infection or osteomyelitis and all of that can lead to amputation. It used to be said that somewhere in the world, a limb is lost every 30 seconds. That's not said anymore. Now every 20 seconds somewhere in the world, a limb is lost. That being said, there is hope. The widespread acceptance of the GLP-1 receptor agonists that are being used in diabetes have actually been shown in a number of observational cohort studies. In other words, studies just looking at large populations of people to reduce the number of amputations. So better control diabetes, loss of weight, maybe even better control of the neuropathy leads to fewer amputations. But we're not there yet. That's the future. And hopefully, that will keep growing. It will make my life a little less -- a little more boring, but at least we know we're headed in the right direction. Now I do admit I'm going to have a couple of gory pictures, nothing too bad for you. Some of you will enjoy these, some maybe not so much. But this shows you how rapidly a diabetic foot infection can progress. This is a 1-page article that was published in the New England Journal of Medicine a number of years ago. And what happened here is a 50-something-year-old male developed an infection on his foot, and you can see that picture on day 1. He decided that instead of going to the emergency department and seeing his doctor, he was just going to sit home and take pictures of his foot over the next 10 days or so. So every day, he took a picture, and you can see from one day to the next, how significantly that infection progressed until day 10, where you actually have dead tissue canangreen there. He finally decided to go to the hospital. And fortunately, he was treated by some people who clearly knew what they were doing because you can see he saved his foot. But this is just such a clear example of why and how exactly these go bad and how quickly they can go bad. Not only that, let's compare the complications of diabetic foot ulceration and amputation to cancer. This is an editorial that was written about 20 years ago in the International Wound Journal from some friends and colleagues of mine that looked at diabetes-related wound complications and how they compare to mortality with cancer. Most people don't think to compare those 2. But what they did is they looked at the 5-year mortality rates of patients presenting to their primary care physician for the first time with a diabetic foot ulceration compared to the 5-year mortality rates for the most common cancers. And what you see here is -- if you look at neuropathic ulcer, the 5-year mortality is significantly higher from a diabetic foot ulcer than the 5-year mortality for breast cancer, prostate cancer and Hodgkin's lymphoma. If you move a little bit to the right there, and you see that now you have an ulceration with peripheral arterial disease, the 5-year mortality rate is even higher than colorectal cancer. Now it's not the ulceration. It's not necessarily the infection that's killing the patient, but it's a marker for the deeper systemic issues. But this changes the way we need to think of this condition. If a patient is diagnosed with cancer, they will undergo chemo, radiation, surgery, everything known demand to take care of that cancer. But if a patient has a diabetic foot ulceration, some of them, we can't stop them from drinking their sugary soft drinks and their refined sugars to try to bring their glucose under control. This disease, this diabetic foot disease will kill patients more readily and more commonly than most of the cancers everybody fears. I mentioned before that I'm a fellow of the Infectious Diseases Society of America and back originally 2004 and then in 2012, we published the first actual clinical practice guidelines for the diagnosis and treatment of diabetic foot infections. And this is the face sheet from our 2012 guideline. And in this guideline, we actually came up with a classification system for diabetic foot infections that's still in use today. Now 2012, this guideline is a little bit outdated. It has been superseded by this document, which came out in 2023. And this is a joint guideline between the Infectious Disease Society of America and the International Working Group on the diabetic foot. You can see the website there, iwgdfguidelines.org. Now a lot of these guidelines are very similar. This joint guideline took a lot of what we did in 2012 and just expanded upon it. But one of the things that really did not change is the infection severity scale. Now what we did in originally in 2004 and then again in 2012 is we classified foot infections as 1 of 4 types. These infections are these wounds were either noninfected, had a mild, a moderate or severe infection. Just using plain English. To me, that's a lot easier to remember than saying this is a grade 1 or grade 4 ulceration. No one ever remembers that. But a non-infected mild, moderate or severe infection. What do each of these mean? Well, a non-infected ulceration is just that. It's a wound that has no clinical signs of infection. We diagnose infection looking for clinical signs and symptoms, redness, warmth, tenderness or the presence of puss. If you have none of those, the wound is not infected. A mild infection has to have at least 2 of those signs, and you can see them listed here, swelling, erythema is redness, tendnderness or pain, increased warm or in duration, which is hardness and then perurialent drainage, which basically just means puss. But that redness, that warmth can't extend more than 2 centimeters. That's a mild infection. Our moderate and severe infections look exactly the same. They have basically 2 or more of these conditions of these signs, the redness, swelling, pain, pus, but it extends more than 2 centimeters from the wound. The difference between our moderate and our severe infections is that the moderate infections, the patients are well. They're systemically well. The severe infections, these patients are septic. They are systemically sick. They have the signs of what we call systemic inflammatory response syndrome. So that's really the main difference between moderate and severe. Clinically, they're going to look very, very similar. So let's look at some pictures. This is a non-infected wound. And you can see it's clean. There's a good, what we call granulation tissue, good beefy red tissue in the base of this wound. There's no redness or swelling around that wound. This is a clean non-infected ulceration. Now look on the left picture, this is under a big toe, Halex. The ulcer looks pretty good. I mean, again, you have good red granulation tissue. But if you look at the whole toe, look at the top of the toe, the so-called dorsum of the toe, you can see the entire toe is red. The entire toe is a little swollen. So we would consider this a mild infection. Moderate infection. Here, you see a wound. Again, the wound doesn't look too bad, but you'll see there's a little hole right where that probe is. And I actually took that probe and was able to go into that hole and stick this all the way up through the top of the foot. And what you see, if you now look at the top of the foot is the entire forefoot is red and swollen and you see that blister between those 2 middle toes there. That's a sign that this is at least a moderate, maybe a severe infection. How do we differentiate again? Well, this patient was not sick. They didn't have a temperature. They didn't have a high white blood count or any of the signs and symptoms of sepsis. On the other hand, this is a different situation. You can see here the wound on the bottom of the foot. It does not look as clean and healthy as those other wounds look. You can see off to the right, there is some pus stripping out of some further openings. This entire foot, ankle and into the leg was red and swollen. This patient had elevated white blood count, white blood cell count, had a fever, chills, all the signs and symptoms of sepsis. This is what we call a severe infection. So what are the guidelines either the IWGDF or originally our IDSA guidelines say about topical antibiotics. I think it's worth reading -- I've highlighted a couple of lines here, but I think it's worth reading this whole little paragraph. Treatment with topical antimicrobial therapy has many theoretical advantages, particularly requiring only a small dose directly at the site of infection, thus potentially limiting issues of cost adverse events and antibiotic resistance. So there is at least a theoretical advantage to these topical antibiotics. The potential advantage of topical antibiotics over systemic antibiotics and by systemic, we mean antibiotics that are given by mouth orally or by IV, what we call parenteral therapy, intravenous therapy, is to deliver very high concentrations of an antibiotic at the site of infection that can't be used by giving an antibiotic that has to go through the entire system before it gets to the wound. And the other potential advantage of just treating the wound with high doses of antibiotics and not the whole system is limiting adverse reactions, limiting side effects of antibiotics, the most serious being what we call C. diff colitis or chstraniitis difficile colitis, which is a severe form of diarrhea and colitis that can actually be fatal. So what they say in the latest international working group, the 2023 document about topical antibiotics doesn't look particularly promising. They say, we suggest not using topical antibiotics in combination with systemic antibiotics for treating either soft tissue infections or osteomyelitis in patients with diabetes. Now notice that they put after this conditional and low. That's what we call a grade. A grade is used to give a strength of recommendation and the amount of evidence based on which they base that recommendation. You notice it says conditional here. According to the grade guidelines, a conditional recommendation means that there is a potential benefit to the intervention, topical antibiotics, but we just don't have enough evidence to support it yet. That's why it says low or low level of evidence. So this was a conditional recommendation based on a low level of evidence. And they gave a rationale for this. They said there's insufficient evidence, just what I said, on whether adjunctive agents, topical antibiotics meaningfully affect clinical outcome and the safety of routinely using local antibiotics have not been clearly established. They say, we suggest against the use of topical antibiotics, future studies should apply learning from prior studies to ensure statistically robust and clinically universal randomized controlled trials. What this means is that we don't have the evidence now, but we certainly believe that there is potential that topical antibiotics are going to work, and we should, therefore, be doing randomized controlled trials. At the very end of the guideline, they put a list of controversial topics and things that they feel are areas of high interest. And one of the areas listed of high interest is studying the effectiveness of topical antibiotics for diabetic foot infections. So let's now switch gears a little bit and talk specifically about topicals. What are the advantages of topicals? Well, it's already been talked about that they do achieve high local concentrations with limited systemic absorption -- so you're not getting the antibody going through the system and causing side effects, and that limits overall antibiotic exposure. This is what we call antimicrobial stewardship. That's a buzzword in pharmacy and infectious diseases. That basically means we want to cut down the amount of antibiotics being used in the world in order to prevent the development of multidrug-resistant bacteria and to reduce the number of adverse events. So using topical antibiotics is a perfect fit for this huge area of antimicrobial stewardship. And the benefit is there are essentially no disadvantages. The studies that have been done show that there's no danger to using topical antibiotics, and there is a lot of potential upside here. So what are some of the rationales for using topical, some of the questions that need to be answered. Well, we know all wounds are colonized. That's why, again, they become infected. They start with bacteria just living on the surface. Many of these are colonized with multidrug-resistant organisms like methicillin-resistant staphlooccus aureus or MRSA. So let's look to maybe reduce the amount of MRSA that's on a wound. [indiscernible] reduction in that colonization decrease the subsequent infection rate. [indiscernible] reduction in colonization increase the healing rate. So again, this is looking at not only the treatment aspects of topical antibiotics, but the prevention aspects of topical antibiotics because the only way to prevent that wound from getting infected, as I said before, is to heal it. So what's been out there? What's been tried? Well, this is probably the most notorious infamous. I could use a couple of different phrases, study that was -- a product that was looked at in the area of topical antibiotics, and this is Pexiganin. Pexiganin is an antimicrobial peptide derived from the skin of the African clawed swamp frog, fascinating story behind it, discovered by this Dr. Michael Zasloff, you see listed here. And it had very broad spectrum antibiotic activity, incredibly broad spectrum antibiotic activity. So they did this Phase II study. And once again, you see Dr. Lipsky's name here, was a study that looked at the use of Pexiganin versus ofloxacin, which at the time was an oral antibiotic that was being used. It's really not used anymore for treating mildly infected diabetic foot ulcer or diabetic foot infections. And this was a multicenter randomized controlled double-blind study. Now what they found is basically the combined data from the 2 trials demonstrated equivalent results. In other words, whether you use the topical pegxiganin or the oral ofloxacin, the outcomes were the same. That's really promising. And they furthermore came out to say that bacterial resistance to ofloxacin emerged in patients who received ofloxacin, but no significant resistance emerged on the patients who received paxiganin, get back to antibiotic stewardship, preventing development of resistance. And that's what you see happening here. Well, this was enough to allow them to go on to a Phase III clinical trial. I was Vice Chair of this study. Dr. Lipsky was the Chair of this study. It was the first ever placebo-controlled study for a diabetic foot ulcer infection and it failed and it failed. And you can see here, we learned some lessons from this failure. We found that a trial of topical antibiotic therapy in treatment of mild diabetic foot infection is feasible and can be safely conducted. There were no adverse events because of the conduct of the study. We were able to get it through multiple IRBs around the country. That was not a problem. It helped us gain more information about the natural history that I discussed about mild diabetic foot infections. But unfortunately, the topical treatment with pexiganib did not show statistically significant superiority over the vehicle in terms of either clinical or microbiological outcomes. In fact, just treating the wound, standardizing good wound care did fairly well. The patients got better about 50% of the time. So this study failed. But again, it opens the door for further well-done studies, and we know now that we can safely conduct this sort of study on topical antibiotics. So to kind of wind up a little bit, let's look at what does the overall evidence show. This is a systematic review, again, a review again across all studies in the world literature. This is updated from that cochre review, which was 2017. This was just published a couple of months ago in Journal of Diabetes. A meta-analysis on local versus systemic antibiotics for diabetic foot infections, systematic reviewing that analysis. There's conclusions with the combination antibiotics or the combination of local plus systemic antibiotics improved healing rates. You got faster healing times. However, they did say that high-quality -- high-quality blinded randomized controlled trials are required. So there's a need for this. There's an urgent want to get these good clinical trials. This is what we call forest plot. I teach reading forest plots in my course of evidence-based medicine. I'm not going to teach it to you other than to say, if you look at that big black vertical line that goes to the #1, that is the line of no difference. If you have anything to the right of that line that favors systemic antibiotics with local antibiotics over to the left of that line favors -- excuse me, just systemic antibiotics. And you can see across all the studies that were done in this field, every one of them does favor systemic with local antibiotics. Some of them just don't meet statistical significance, but it's there. The basis is there. We know that this combination is beneficial, and we know theoretically just using a topical could be the answer. So to finish up, where does PD01B fit in? Well, they're not reinventing the wheel here. This is not using a new antimicrobial peptide like pegxiganin or a new antibiotic that's never been approved. PolyPid is using doxycycline. Doxycycline is an excellent antibiotic. In fact, it's been my antibiotic of choice for the treatment of MRSA infections, methicin-resistant CFOs for probably 20-plus years. It has a long track record it's active against most of the organisms we find in diabetic foot, including staphylococcus I mentioned before, plus MRSA and Streptococcus. These are the gram-positive organisms that cause most diabetic foot infections. Doxycycline has a unique property of being inherently anti-inflammatory. What that means is it helps cut down the redness, the swelling, all those signs you get of infection. And by cutting those down, it can actually improve wound healing. There have been studies on topically applied tetracyclines for wound healing, not just treatment of infection, actually wound healing. And clinical data supports claims that it helps heal wounds and decreases scarring. Here is a drug, doxycycline with well -- it's well characterized with an established clinical safety profile. Again, PolyPid is not coming up with a new antibiotic and reinventing the wheel. It's a new delivery system. And that new delivery system leads to elevated and prolonged local antibiotic levels with no systemic absorption. Getting back to antimicrobial stewardship, you don't want that antibiotic in the system causing resistance and causing adverse events. And because of that high level, you can get rid of the organisms on the surface of the wound and hopefully prevent the wound from becoming infected or if the wound is already infected, hopefully treat that infection. This is ideal from an antimicrobial stewardship perspective. And with their prolonged delivery system, it makes it a lot easier for the patient and the clinician. They're not changing the dressing. In the Pexidanin study, patients had a dressing twice a day. You don't how much room that opens for complications. Here, you don't have that. It's a prolonged dilution of antibiotic. They're not going to have to be fiddling around with the dressing and potentially causing complications. And quite frankly, if you look at their data from their studies on abdominal surgical site infections, to me, that portends a very good potential outcome in the treatment of diabetic foot infections. So with that, I want to thank you very much for your attention. I know we're going to have a question-and-answer period at the end of the session. I'll be happy to answer any questions you may have. Thank you for your attention.

Thank you, Dr. Joseph. Let me bring it all together. For D-PLEX100, we have a PDUFA a month from now with U.S. launch expected, if approved in 2027, followed by NTAP decision in August 2027 and expected label discussion that are initiated later this year and will allow us to support potential approval in the following years. In Europe, MAA was submitted on September this year and EMA decision is expected on the second half of 2027, with a potential European launch in early 2028. Canadian submission is expected for 2027 following NDA approval and PD01B pre-IND meeting and first-in-human clinical studies are expected on the second half of 2027. With that, I will now turn the call over for your questions.

[Operator Instructions] We will now take the first question from the line of Brandon Folkes from H.C. Wainwright.

Congrats on all the progress. So maybe just sort of firstly, why do you think this product, PD01B, could have success with some of the other local antibiotics have failed. I know we touched on it a little bit, but just elaborate there. And within that, if you could just elaborate on the release profile and what you believe the time frame of that release profile needs to be successful? And then maybe secondly, how do we think about the standard of care in the control arm in a clinical trial moving forward here?

Thank you, Brandon, and good to see you here. So let's start and you -- since there were a couple of questions, I will get back to you to make sure we are answering each one of them. I'll start with the first one of why should PD01B be successful where other products have failed. So a couple of things here that I think are important. First, some of the programs that have failed, especially in Phase III were tested in mild infection. We are targeting where -- and Dr. Joseph related to [indiscernible] in comment, where good wound care alone has a good effect. The real problem comes when we start to see moderate DFI and severe DFI, and we are targeting that area. That's one thing. The other is our unique formulation, and you asked about it in the sense of the release profile and the difference. We've shown with D-PLEX100 that our control long-acting approach of 30 days or weeks in the PD01B is very efficacious. This is -- and we see it, by the way, also when you look at the DFI and the patient journey, infection is not something that is cured or treated within matters of hours or days. It takes days to weeks to eradicate the bacteria. So our approach here is very applicable. And the other thing is -- and this is also looking at broadly on development other than localized what we refer to as hyperlocalized approach being at the site of infection, avoiding some of the problems that are associated with DFI, for example, poor blood supply to the area and so on makes it stronger and much more appropriate for this indication. So that's about both in terms of the length and why we think [indiscernible] PD01B could be successful when other products have failed. And you were asking also on the standard of care and how we will be. So the plan is to be on top of standard of care. Again, from the point of view that these products, we are going to be targeting patients with moderate to severe. So we will be on top of standard of care. Ori, you want to add something on that? Or maybe Dr. Joseph, you want to add something about the standard of care today?

Thank you. I mean it's a great question. You bring up a lot of interesting points. As for the standard of care, if you're looking -- I think you were asking what the control would be in this clinical trial. And I'm sure that's yet to be negotiated with the agency. But I would almost guarantee that the agency would require a systemic antibiotic as the "standard of care" or the control arm here. I think it remains to be seen whether or not they're able to negotiate a combination of maybe a third arm or a combination of the 01B with systemic antibiotics or just by itself. But the control arm would probably be systemic antibiotics, which is the standard of care. Now usually, we're looking at oral. Certainly, we have said in the guidelines that oral can be used for mild, moderate and even some severe. But for the severe infections, particularly by definition where the patient is septic, that would probably have parental or systemic IV antibiotics. The other thing you asked about why would this maybe be successful when the others aren't. And I touched on that a little in my talk is because PolyPid is not reinventing the wheel here. When we were working with pexiganin, it was a brand-new compound. This -- the whole idea of antimicrobial peptides back then, the science was relatively new. It's developed quite a bit since then. But it was a totally different molecule. There was really no experience. There was some in vitro work, in other words, in a test tube work that had been done with it and that Phase II study against ofloxacin had been done. But -- it was a large compound. It didn't get into the wound very well. The patients had to apply it twice a day. So you open up an incredible can of worms, if you will, when patients are changing their dressing once or twice a day, all sorts of things can go wrong, where this would not happen with this product because this product has the ability to stay in place and elute antibiotic over that long period of time. And I would defer to the PolyPid folks to talk about the release -- the actual pharmacokinetics of the release and the carrier. But -- so you eliminate that variable right off the bat. You eliminate the variable of the patient having to change their own dressing multiple times a day. And thus, every time they open the wound, that exposes the wound to more bacteria. I reviewed the case recently where diabetic foot got badly infected with an organism that is only found in cats mouth. And the theory was that the cat was either licking the wound or the cat hair was all over. All sorts of variables occur when you have the patient changing their own dressing and opening the wound twice a day. That's not happening here. And I think also -- the other lesson we learned in the Pexiganin trial was you have to stay on top of these patients in the evaluation and who is who's admitted to the study and enrolled in the study and who is not. And we didn't have that ability in the Pexiganin study where we live time had video on every patient or photographs on every patient to decide whether they met inclusion criteria. I'm actually working on a clinical trial now where I am looking at every patient before they're enrolled in the study to see that they met criteria. And I think the problem with pexiganan, a lot of patients did not meet criteria but were enrolled anyway. So with a well-controlled, well-designed clinical trial, I think we've learned those lessons, and we can control for that going forward with the 01B study.

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

Maybe just a little bit more on what a potential registrational study would look like. Would you expect a superiority study? Or is the kind of door open for non-inferiority? And then just to be clear, the thought would be that this is an add-on to systemic therapy compared to systemic therapy in the control arm. I understand a lot of that's probably yet to be discussed with the agency. And then if you could discuss the primary endpoint per guidance document, that would be great.

Okay. Thank you for that. I think maybe the most important thing for investors to understand, especially investors that have been following the PolyPid story all along and following us through the SHIELD I and SHIELD II studies, this is a treatment product, and those are treatment Phase III studies. So we are not talking about studies of 1,000 patients like we needed to perform when we had a prophylactic drug, a prevention drug. All the patients that are enrolled to the study are already with the DFI. And when you look at the kind of studies in order to show statistical meaning efficacy, you see studies that are around 100, 200 patients. So those are relatively smaller Phase III. With regards to whether we will be looking at superiority or non-inferiority, this will be dependent on our first study that we plan the first in human that is planned for next year. And at that point and also as part of the discussion with the FDA, the pre-IND meeting, we will be able to answer that. There are pros and cons to both strategies. and we will be able to say more once we see the feedback from the discussion. I think you are also asking about what will be the endpoint of this study. So the guidelines around DFI are always relating also to wound healing. So in addition, if you look at the -- very simplistically, but if you look at patients with DFI, you have 3 parameters that need to happen in order for the infection to and the wound to heal. You have the first portion, which is the portion of the drive of the wound to create the wound, then you have a portion of treatment -- treating the infection and then you have the wound healing. Now it's not really one out after the other. Some of those stages are happening in parallel. And the endpoint in terms of the agency is the wound healing, but what our portion is around treating the infection. So we'll need to discuss this also with the FDA and see whether we could have the primary treating the infection or we'll also need to show wound healing. But that's something to -- again, that I will be able to answer after we get feedback from the FDA.

Understood. Maybe just any initial thoughts on what this first-in-human study could look like? Do you expect it to have a control arm and will be single arm? Just any thoughts there?

So we are looking at that. It is a relatively small study, and we are considering whether this study will have a control or not. But the idea is really here in addition to preclinical work that we have is to make sure we have an understanding that can support an approval study in terms of the patient journey, in terms of the efficacy of the product, the safety of the product, all of these elements we would like to see dosing. So I can't tell you now if it will have and what kind of control it will have -- but the idea is to end this first in human with better understanding on what we need for an approval study.

Got it. And just last, maybe for Dr. Joseph. Could you just give us maybe a little bit more detail on your workflow today with these patients? Which patients are you treating with antibiotics for an active infection? How severe do they need to be? And then what antibiotics are you using particularly? How often are they changing their dressings as well? All that would be helpful.

Sure. It really varies based on the severity. As for the infection itself, if there is an infection in the foot, we're treating with antibiotics. You can't get away in most cases with just, say, wound debridement and offloading if there's an actual infection. You can certainly get away with that if you're just looking at the wound healing aspect. And then in those cases, sure, you debride, you offload, you use whatever dressings you're going to use. And the endpoint is healing of the wound. In an infection, when we're looking at infection, we have to use antibiotics because we don't really have an effective topical at this point. In most cases, we're looking at systemic antibiotics. And those systemic antibiotics, it varies based on -- if it's a mild infection, you can certainly get away with oral therapy. Most common oral therapies would be something like cephalexin, first-generation cephalosporin Keflex is the the well-known brand name on that. If that's if you're not concerned about having MRSA. If you're concerned about having MRSA, right off the bat, doxycycline is -- has been my go-to antibiotic for a very long period of time because not only is it active against MRSA, it's also active against regular run-of-the-mill methicillin susceptible path. It's active against many streptococci. It has very -- some gram-negative coverage, relatively limited. But it works against the organisms that we have in diabetic foot infections, particularly if we've got patients who are concerned with MRSA. And as I mentioned, because it is also works through as an anti-inflammatory, it does very -- it does a nice job of knocking out the clinical signs and symptoms of infection, the redness, the swelling, that sort of thing. So cephalexin, Keflex, if you're not concerned about MRSA, if you are concerned about MRSA, certainly, doxycycline, I think, is first line. Many people use Bactrim, trimethoprim and sulfamethoxazole, I'm not a big fan because of the side effect profile of that. If the patients have a moderate infection, again, you can go topical -- excuse me, you can go oral antibiotics, pretty much the same drugs. Sometimes if it's a mixed infection, you may have to use combinations of therapies. So if you've got a mixed gram-positive gram-negative, you may need to use something like a cephalexin with quinolone, a fluoroquinolone if you have gram-negatives. And finally, if you're looking at severe infections in the patients in the hospital and they have -- they're systemically unwell, they're septic, then you're going to use intravenous antibiotics. You've got drugs like the carbapenems, certapenem, meropenem, some of the penicillins like [indiscernible] tazofactam. Vancomycin is probably the #1 used IV drug in the hospital. I hate it with a passion. There are just too many renal issues with it, especially when you combine it with [indiscernible], different time, different topic for a different lecture at a different time. So we're using either oral or IV antibiotics, and they're some of the most commonly used drugs that we would use because we just don't have a reliable topical at this point.

We will now take the next question from the line of Jason Butler from Citizens JMP.

One question for the company, and then I have a couple for Dr. Joseph. Dikla, can you maybe talk about the preclinical data you have generated so far and any data you have around the PK profile? And specifically, when you think about the platform, how do you think about the predictive value of translating from a preclinical profile to a clinical PK profile and ultimately drug exposure for the wound. Effectively, as you mentioned before, you're not starting from scratch here, but what can you learn from D-PLEX100 that kind of speaks to the predictive value of early data for PD01B?

So I'll start with the latter in terms of what we can learn, and there is quite a lot of things we can learn from D-PLEX and not just learn but also shorten the development path. In terms of what we can learn, a lot of it is around safety. Because our approach in D-PLEX and the same goes to PD01B is long-acting, many of the safety aspect was around that, around showing that the product is safe and that the excipients are safe on a month basis, on a long-term basis. All of that are things that we believe will not need to repeat and show how the drug is acting in the tissue, whether it's all resolved and disappear. These are things that we have a lot of safety on them in terms of the overall approach. We also have a lot of knowledge and a lot of basis in everything that has to do with the development of all the [indiscernible] processes. So since we are building on the knowledge that we have on method that has been developed here for over years, we can use those methods. We can use this -- all of these validation processes for PD01B. And you were also asking about...

No, go ahead. Yes. That's great.

So think about it as a product that has a basis for all CMC as well as for safety and preclinical work. And what the extra work that needs to be done is in the specific indication, preclinical work in terms of efficacy and the specific indication and specific dosing.

Great. And then Dr. Joseph, can you maybe dig in a little bit more on the profile of patients who could benefit most? Or is it the greatest medical need here? And when you think about a therapy like PD01B, how do you think about use expanding beyond the most severe cases treated by wound or infectious disease specialists to becoming more like a standard of compare? And could that ever compete with an oral for a mild infection?