PolyPid Ltd. (PYPD) Q2 2026 Earnings Call Transcript

Thank you, Operator, and thank you all for joining Polypid's second quarter 2026 earnings conference call. Joining me on the call today will be Diklar Tchatchkis-Aksalbad, Chief Executive Officer of Polypid, Johnny Misalawin, Polypid's Chief Financial Officer, and Ori Warshawski, Chief Operating Officer, U.S., of Polypid. Earlier today, Polypid released its financial results for the three and six months ended June 30, 2026. A copy of the press release is available on the Investors section of the company's website at www.polypid.com. I'd like to remind you all 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's discussing the company's exclusive commercialization partnership with Zordi Pharmaceuticals for the United States and Canada. These forward-looking statements include the partnership's economic structure, including the potential milestone payments, tiered royalties, and transfer price, the joint development activities and label expansion program contemplated under the agreement, the expected timing and progress towards potential U.S. Food and Drug Administration, or FDA, approval of D-Plex 100, including the assigned Prescription Drug User Fee Act, or PDUFA, gull date, and the FDA's grant of priority review. Additional forward-looking statements include the company's engagements with the European Medicine Agency, including meetings with the repertoire and co-repertoire regarding the Planned Marketing Authorization Application, or MAA, and the anticipated timing thereof, the expected commercial launch of D-Plex 100 by authority in the United States in early 2027. Further forward-looking statements include the company's manufacturing readiness and preparation for the FDA pre-approval inspection, the potential clinical and economic value of D-Plex 100, the company's kinetrics technology and additional pipeline opportunities, growth drivers, and the expectation that the company's existing cash resources will be sufficient to fund operations into 2028 and through several significant upcoming potential milestones. Forward-looking statements are subject to numerous risks and uncertainties, many of which are beyond the company's control, including the risks described from time to time in the company's Securities and Exchange Commission filings. Accordingly, you should not place undue reliance on these statements. I encourage you to review the company's filings with the SEC, including the company's annual report on Form 20-S filed on February 25, 2026. Polypid disclaims any intention or obligation except as required by law to update or revise any forward-looking statements. This conference call contains time-sensitive information and speaks only as of the live broadcast today, August 12, 2026. With that, it's my pleasure to turn the call over to Dikla Czachkis-Aksebwad, the CEO of Polyped. Dikla?

Thank you, Yuda, and thank you all for joining us today. The second quarter of 2026 was a defining quarter for Polyped. During and shortly after the quarter, we accomplished two transformative milestones that together fundamentally reshaped the profile of our company. First, the FDA's acceptance for filing of our new drug application, or NDA, for DIPLEX-100 with priority review. And second, the signing of an exclusive commercialization partnership with Azuriti Pharmaceuticals for the United States and Canada. Starting with regulatory progress. During the second quarter, we completed the NDA submission for DIPLEX-100 for the prevention of surgical site infection, or SSI, in patients undergoing abdominal colorectal surgery. Subsequent to quarter end, on July 27, 2026, the FDA formally accepted our NDA for filing. This acceptance came ahead of our own internal timeline, reflecting what we see as the strength of the underlying submission package and the collaborative interactions we had with the agency during and prior to filing. Importantly, in the acceptance itself, the FDA identified no filing review issues in our submission. We view this as a meaningful positive signal. In parallel with the acceptance, the FDA granted the NDA of DIPTEX 100 a priority review. This is a designation the agency reserves for drug candidates that in its judgment have the potential to represent a significant improvement in the safety or effectiveness of the treatment, diagnosis, or prevention of serious conditions. Practically, priority review shortens the standard review period from 10 months to 6 months, and it sets up the DUFA goal date to November 28, 2026. Taken together and ahead of schedule acceptance, no filing review issues, and the grant of priority review represent three outcomes that we believe form a robust starting point to the NDA review process. and reflect the strength of the clinical and regulatory foundations we have built with DIPLEX-100 over the last several years. Turning to our commercial partnership, on July 17, 2026, we entered into an exclusive commercialization agreement with Azuriti Pharmaceuticals for DIPLEX-100 in the United States and Canada. We are very pleased with this partnership. The selection of Azuriti reflects not only its proven commercial capabilities, but also its reputation as a long-term strategic partner capable of unlocking the full value of differentiated specialty pharmaceutical assets. Ori will provide some color in a moment on why we are so excited about having Azuriti as our commercial partner, including the competitive business development process behind our selection. At a high level, we view the economic structure of this partnership as exceptionally strong for a commercialization deal at this stage. We already secured an order of $30 million in upfront and near-term milestone payments. In addition, we are eligible to receive over $290 million in additional regulatory launch and sales milestones. I want to be clear that these milestones are structured around specific corporate, regulatory, and commercial events that align directly with the DIPLEX-100 operational and launch plans. We believe that these milestones are achievable during the term of the agreement and are not a stacked structure designed to inflate the headline number. In addition to this milestone payment, Polypede is entitled to tiered royalties on Azurety's sales in the U.S. and Canada, ranging from mid-teens to mid-twenties percentages. Polypede will manufacture and supply the product, generating an additional agreed transfer price on every unit supplied to Azurety. Unlike most licensing deals in our industry, where the licensor participates only through royalties, we made a strategic choice several years ago to retain manufacturing globally. That choice now positioned Polypid to potentially capture a meaningful share of the ultimate end product economics. I want to make one broader point about the deal economics. A partnership structure like this one with multiple components can be complex. and we recognize that some observers may focus on any single component in isolation. Taken as a whole, however, we believe the combination of secured upfront event-driven milestones, tiered royalties, agreed transfer price on every manufactured unit, and an authority-funded label expansion pathway represent unusually strong economics for a company at our stage in commercialization partnership of this kind. Joni will walk you through this architecture and its balance sheet implications in more detail shortly. In preparation for the upcoming launch, we continue to advance our manufacturing and inspection preparations. Our facility has already passed four consecutive successful good manufacturing practice or GMP inspections, including the most recent one by the Israeli Ministry of Health in September 2025. During the commercial evaluation process, prospective commercial partners conducted on-site diligence at our site in Israel, providing external validation of our manufacturing readiness posture. Our team continues to work closely with experienced external consultants and has conducted multiple mock inspections in preparation for the FDA pre-approval inspection that will follow. We are entering this process from a position of strength and are highly focused on getting it right at first time. Turning to Europe, during the second quarter, we held meetings with the repertoire and co-repertoire the European regulatory authorities designated to lead the assessment of our planned MEA for DIPLEX-100. These meetings were productive and positive, and we currently plan to submit the MEA to the European Medicine Agency in the third quarter of this year under the centralized procedure which, if approved, will enable the product to be marketed across all EU member states. Before I hand the call over to Ori, I want to briefly summarize the key upcoming milestones that investors should be tracking over the coming quarters. First, the FDA pre-approval inspection of our manufacturing facility following NDA acceptance. Second, our goal date under PDUFA of November 28, 2026. Third, our plan MAA submission to the European Medicine Agency in the third quarter of this year. And fourth, the expected commercial launch of DIPLEX-100 by Azure T in the United States in early 2027. with that I will now turn the call over to Ori. Ori?

Thank you, Dikla. I would like to spend a few minutes on Azureity on the joint launch preparation now underway, on the progress we have made around Deeplex 100 this quarter, and finally on our broader Kinetrix technology opportunities beyond Azureity partnership. Beginning with Azureity, the partnership process that we have discussed on prior quarterly calls many times was focused on identifying a partner with the capabilities, focus and infrastructure to make DPLEX-100 a successful commercial product. This was a rigorous process and importantly it was a highly competitive one. We engaged with multiple potential commercial partners all with robust hospital infrastructure and several of those discussions progressed to very advanced stages. In our judgment, Azuriti emerged as the partner best positioned to lead the U.S. and Canada launch of BizX100. Azuriti is an established specialty pharmaceutical company with a first-in-class commercial model and a portfolio of over 50 medicines spanning 10 therapeutic areas. Azuriti is backed by QHP Capital, a healthcare-focused private equity investors. Beyond capital, we believe several elements of Azuriti's track record position them uniquely well to commercialize DIPLEX-100. Azuriti has an antibiotic on the market, which gives them established credibility with infectious disease specialists. A core audience for DIPLEX-100, Azuriti also markets bowel prep products in the exact same colorectal surgery call point the diplex 100 initially target giving them existing relationship with the same prescribers and with more than 10 additional hospital administered products already on the market azureti brings the gpo infrastructure hospital contracting expertise and institutional relationships that reach over 1700 living hospitals and academic institutions in the U.S., a foot pit that takes years to build. With over 200 U.S. commercial-facing colleagues, just under 1,000 employees worldwide, and a specialty pharma orientation across hospital and surgical channels, we believe Azureity is uniquely positioned to reach the surgeons, infection specialists, hospital pharmacy directors, and value analysis committees who will drive DPLEX-100 adoption. Their dedicated hospital-facing and surgical-facing sales capabilities align directly with the way DIPLEX-100 would be prescribed and administered in a way that few counterparties in our process could match. In short, Azureity brings the scale, focus, and execution capability that we believe DIPLEX-100 needs at launch. Beyond the initial license territories, Azureity has established commercial operations and partnerships spanning more than 50 countries. While the current agreement is focused on the U.S. and Canada, Azureity's international infrastructure and experience launching specialty medicines create strategic optionality when additional geographic opportunities are pursued in the future. The joint work between our teams to prepare for launch is now well on the way. We have established joint forums to align on medical, regulatory, and commercial preparation. Azureity is leading on-the-ground commercial activities, including Salesforce build-out, national account planning, medical affairs, and pharmacy channel work, while PolyPage retains responsibility for global manufacturing and global regulatory strategy. This division of labor plays to each part's strength. The partnership also includes a joint development framework funded by Azureity to pursue labor expansion opportunities of DIPLEX-100 in additional indications beyond the abdominal indications. DIPLEX-100's mechanism and platform supports broader use across other SSI-relevant surgical settings, and Azureity's willingness to fund that expansion work is a strong signal of the commercial opportunity. Finally, I want to spend a moment on how we think about polypids growth drivers in the near and mid-term. The first growth driver is DPLEX-100 label expansion to additional surgical site infection indications beyond prevention of SSI in abdominal surgery, significantly expanding the total addressable market to other areas of unmet need such as C-section surgery and joint replacement. This level expansion will be funded by Azureity through the joint development framework. The second growth driver is expanding DPLEX-100 to other territories outside the US and Canada which are under Azureity's partnership. And finally, the third growth driver is the expansion of the pipeline under Archinetrix technology over which Polypig retains full ownership and which is where we see even broader significant long-term potential as we grow as a company. In terms of our pipeline, we are now exploring exciting areas that go beyond prevention and into treatment applications. Our long-acting metabolic program is one such area we have previously discussed. We are also exploring high-value areas where we believe we can advance programs relatively quickly to the clinic by leveraging the clinical manufacturing and safety foundation we have already built for DPLEX-100. In many of these cases we believe that the mechanistic and CMC platform we build around DPLEX-100 can materially compress the path to meaningful clinical stages for programs that will otherwise require years of the novel formulation and pre-clinical work.

We look forward to sharing more on specific pipeline products as those plans develop with that i will now turn the call over to johnny to review our financial performance for the quarter johnny thank you ori i will now walk through our financial results for the second quarter ended june 30th 2026 and highlight the material developments impacting our balance sheets Starting with the Azureity partnership, as Dikla noted, we have already secured $30 million in aggregate, upfront, and near-term milestones from our partnership with Azureity, and are eligible for over $290 million in additional regulatory launch and sale milestones. On top of these payments, following commercial launch, we expect to generate two additional ongoing revenue streams, tiered royalties on Azureity sales in the United States and Canada in a range from mid-teen to mid-twenties percentages, and a transfer price on every unit we manufacture and supply to Azureity. The label expansion program under the Joint Development Agreement is funded by Azureity and expands the addressable base for both revenue streams over time. without requiring incremental polypeed capital turning to our income statement for the quarter research and development expenses for the second quarter of 2026 were 6.1 million dollars compared to 6.2 million dollars in the second quarter of 2025 R&D activity in the second quarter of 2026 primarily reflects ongoing NDA related activities and continued commercial readiness preparation. General and administrative expenses were 1.3 million dollars compared to 2.5 million dollars in the prior year period. The decrease was primarily due to the decrease of non-cash expenses related to performance based options following the positive Phase 3 Shield 2 top-line results which triggered the vesting of those options. Marketing and business development expenses were $0.5 million compared to $0.7 million in the prior year period. Net loss for the second quarter of 2026 was $7.8 million or 35 cents per share compared to a net loss of $10 million or 78 cents per share in the second quarter of 2025. For the first six months of 2026, net loss was $15.6 million, compared to $18.2 million in the first six months of 2025. Turning to the balance sheet, as of June 30, 2026, Polypeed had $6.6 million in cash and cash equivalents, compared to $12.9 million dollars of cash, cash equivalents, and short-term deposits at December 31st, 2025. Subsequent to quarter N, our capital position has been further strengthened by $15 million upfront payment from authority at signings and the additional $15 million as a result of the FDA acceptance of the NDA filings. Looking at our remaining warrant position, the only warrants outstanding are the warrants issued in June 2025, of which approximately 7.3 million remain outstanding, with an expiration date in June 2027. These warrants are by their terms stapled to the shares issued in June 2025, meaning that if a holder sells or transfers those shares prior to exercise of the new warrants, the corresponding new warrants are forfeited. We view this structure as a meaningful alignment mechanism with our long-term shareholder base. Taken together, we believe this puts the company in a materially stronger financial position today than at any prior point in the Deeplex 100 development journey. While also providing a streamlined and healthier capital structure for Polypede and our shareholders, based on our current plans and assumptions, we expect our existing cash resources together with the expected proceeds from our recently announced commercialization agreements as well as future potential proceeds will be sufficient to fund operations into 2028 and through several significant upcoming potential milestones and we do not have immediate financing needs in the near future with that we will now open the call for questions operator thank you we

will now begin the question and answer session if you wish to ask a question you will need to press star one one on your telephone and wait for your name to be announced. To withdraw your question, please press star 1, 1 again. We will take our first question. Your first question comes from Chase Knickerbocker from Craig Hellen. Please go ahead. Your line is open.

Good morning. Congrats on all the progress here, and thanks for taking the questions. Maybe just first for me on, you know, kind of upcoming expected inspection. Has FDA communicated anything to you as it relates to the potential timing of your pre-approval inspection? And then as a part of the deal with Azurety, would love to hear the sort of work that went into them getting comfortable on the CMC side. Were they, you know, did they do a fairly strenuous kind of mock audit, you know, kind of series as a part of the due diligence?

Hi, Chase. Thank you. And good morning. So, with regards to our communication with the FDA, we had, since we submitted the NDA, we had several back and forth communication in different aspects, including things that are relating to the different audits that are expected as part of the NDA review. I don't think it makes sense to go into more detail, but I could say that we see the process as very effective and efficient, as you would expect from a priority review, which leaves both the agency and the sponsor a relatively short time to review everything. So we are super cooperative with any request that is coming from the FDA to meet the timeline. And I wouldn't go into specific dates on specific requests, but as I said, we had several communications from the time that we submit, including communication relating to the different audits that are expected. With regards to the CMC, that's something we tried to highlight in the formal portion by highlighting both the work that we did with Azuriti but also with other potential partners that we had at the time. And as Ori mentioned, we had on-site due diligence in the Israeli site by the Azureity team and by others that were competing for this asset to see both the facility, the CMC processes, the package, everything that could give a potential partner the comfort that this product will. be approved, and we as a partner could manufacture on a commercial scale and support the launch of the product. So from that perspective, we're very confident that we had several, you could say, external validation, both from other regulatory inspection that we did, the potential partner, including partners, including Azuriti, as well as a mock inspection that we have performed with external advisors.

Got it. And maybe just last for me, would just like to understand kind of the level of overlap that existing Azuriti reps have, you know, into that kind of colorectal and general surgeon call point. You know, how many reps are kind of calling on those physicians today in their kind of hospital-focused segment. And do you have any idea at this stage how many of those 200 customer-facing representatives that you mentioned will have D-Plex in the bag at launch?

Yeah, hi, Chase. I can take some of that. So we can't really break down the Azure IT sales team, but they do already call, as we said, they do already call all colorectal surgeons and in other areas in the hospital. That's kind of one part of it. The other part is they have a significant buildup to expand the capabilities that they have in preparation for the launch. I mean, they build up in the market access piece, in the contracting piece, and on the medical team. So they are putting a lot of effort ahead of this launch. Like I mentioned earlier, they are already in the 1,700 hospitals and academic centers. That's their target. Obviously, not all on day one. There will be gradual hospital by hospital and IDN by IDN, kind of a stepwise approach, but this is the coverage that they're going for.

Great. Thanks. And congrats again.

Thank you, Chase.

Thank you. We will take our next question. Your next question comes from Jason Butler from Citizens. Please go ahead. Your line is open.

Hi. Thanks for taking the questions. A couple on the Azzurri partnership. On the commercial side, obviously, it's only been a short period of time, but what are you already doing with Azurety to get them ready for the launch? You've obviously done a lot of pre-commercial work. What are they now doing to prepare for the DeepLex 100 launch? And then second, on the development side, how are you thinking about the initial label expansion efforts, and how quickly under this collaboration could additional trials begin for additional indications?

I'll take the first piece. So a few points here. First, Azureity has been planning. We've been in conversation with them for a period of time now, and they They haven't started just three weeks ago. They've been thinking about this for a while now. And so they're really hitting the ground running on taking ownership of a lot of these activities. So we've transferred a lot of the knowledge, studies that were done, market research, pricing, KOLs that were done, assessments of NTAP and so on. So this was handed over, and they have their own plans in place to take and expand. So we know NTAP is coming. That's one thing. We know we're building a network of KOL. The American College of Surgeons conference is this week. Authority is there. ID week is in a couple of months. Authority will be there trying to build this network. And, you know, some of the activities that can be done before approval, some of the prior approval, access conversations, and after approval, MSLs on the ground, reaching out to PIs and reaching out to KOLs and start kind of discussing and introducing the products. So all these plans are in place. The marketing team is in place. The contracting team is in place. And so that's That's really, like I said, we're not starting at step zero. We're starting at step four.

Hi, Jason. Good morning. With regards to the label expansion, the joint development framework is scoped around DIPLEX-100, an additional surgical site infection indication behind the initial abdominal indication, obviously. And we will first need to see with the FDA what will be the final indication. But what I can say is that the indication commonly identified as our top target is consistent with the way Azuriti sees it. So what we have discussed really publicly for years, Think about cardiac procedure, specifically CABG, orthopedic, including hip and knee, and breast mastectomy and reconstruction. Those are the top indication that we view and Azuriti view as few of the top that should be pursued.

Great. Thanks for taking the questions, and congrats again on all the progress. Thank you.

Thank you. We will take our next question. Your next question comes from the line of Boubalam Peishayapin from Roth Capital Partners. Please go ahead. Your line is open.

Hi, good morning. Thanks for taking your question. Maybe can you discuss the key KPIs you would use internally to track the DeepX100 launch sectors? Let's say, are you going to track, obviously, you're going to track formula events, but ultimately, you know, what are the key KPIs that you wanted to, you know, like target activation of hospitals, surge in users? Can you elaborate more on that? So there are a couple of things here that will be reviewed. Some of it is coming from looking at the collaboration and the partnership that we have and some of the authority commitments that is in the agreement that and the minimums that are part of the structure of the agreement. So this is obviously something that we will monitor. There will be also aspects relating to hospital, and specifically within the hospital P&T committees, a number of hospitals that are approving approving or adding to the pharmacy the drug. And you should also think about things that are part of a drug like this, things like NTAP and progress around the reimbursement and the conversation with payers. This is the third compound. Ori, would you want to add anything?

I think we will view, so obviously, as Dikla mentioned, the stepwise approach, seeing month by month how many hospitals are added, where PNT reviews are, review the product, and then if there's pilot studies that are done and a doctor's usage, yeah, I think those will be the initial ones to see really how successful let's say the first 12 months from launch this will be the main benchmark.

All right, thanks for that. Let's say the drug is indeed launched in first quarter 27.

Can you discuss when would the revenue be recognized?

So we indicated that it's early 2027, and we will be recognizing revenue quite immediately because, as you probably remember, one of the compound of the structure of the deal is the pre-negotiated transfer price per vial. So every vial that we will sell, we will, to Azureity, we will recognize revenues there. There will be the second compound on royalties and milestone, and those will be recognized as they come. Okay, maybe one final question from me. So you indicated that the EMA submission is targeted in third quarter 26. So can you maybe provide us a sense of the receptivity to the clinical package during your dialogue with them? Are there any concerns that they've raised about clinical statistics or safety and things like that? So it was very important. First, thank you for this question. I think it's very important also when, again, looking at the strength of our regulatory package. We had two meetings during the quarter with the repertoire and the co-repertoire. Those meetings are the equivalent to a pre-NDA meeting at the FDA. And the purpose of the meeting was similar to a pre-NDA meeting, to align the requirement, to align the timeline. For us, it was very productive. We heard, I wouldn't say changes, but more, you know, each regulatory arm has their own sensitive area where they want to see additional or where they put the focus. And this was very helpful for us to accommodate. date, but you could understand from the timeline of the fact that we met them towards the end of June and we are submitting the package before the end of this quarter that nothing there was major that required any additional data or changes to the package that will delay the submission time frame. Great. Congratulations on your progress. Thank you so much.

Thank you. Once again, if you wish to ask a question, please press star 1, 1 on your telephone. We will take our next question, and your question comes from the line of Brandon folks from H.C. Wainwright. Please go ahead. Your line is open.

Hi, thanks for taking my questions, and congrats on all the progress. Maybe just two from me. Can you just talk about the earlier PDUFA date and what that does in terms of ability to supply the markets? or launch date, you know, you still expect a 1Q launch. And then similarly, you know, with the November PDUFA date, any impact on the NTAP process there in terms of when it could come online for D-Plex 100?

So first, as you can imagine, since we knew that the product has a breakthrough therapy designation and could be eligible for a priority review, we prepared for both scenarios. We prepared for a before-end-of-the-year approval PDUFA date and early 2027 PDUFA date. So we prepared both in terms of NDA submission, getting ready for all the audits, whether it's the GCP or the GMP, as well as the launch. So, from our perspective, having the pedufidate earlier than anticipated doesn't change anything, and we were very happy with that. I think it's, again, showed the strength of the package and the potential that the product has to improve both the effectiveness and safety of the treatment. As for the QIDP, there are a couple of things, the ANTAP, sorry, I said.

Yeah, let me take that. So the ANTAP, first, the product does not need to be approved to submit the ANTAP. It just needs to be under review with the FDA. So from that point, we have no issue. and Azure IT is working to be on the next year's financial year, governmental financial year. The deadline is October, and this is what Azure IT is working towards.

Brendan, anything else? Brendan, folks, your line is open.

As there seems to be no response, this concludes today's question and answer session. I will now hand back for closing remarks.

Thank you for joining Polypede's second quarter 2026 earnings conference call. This has been a defining quarter for Polypede, and we are highly confident in our long-term prospect, especially the potential of DIPLEX-100 in the hands of Azureity as our commercial partner in the United States and Canada, and the broader kinetrics technology behind it. As we look ahead to the November 28 PDUFA goal date and the expected commercial launch of DPLEX 100 in early 2027, we are grateful for our team members, shareholders, and all external partners for their commitment to our mission and support in continuing to advance toward our goal of bringing DPLEX 100 to healthcare providers and patients as quickly as possible. We look forward to speaking with you again on our next conference call.