Greeting morning and welcome to the PolyPid Fourth Quarter and Full Year 2023 Conference Call. At this time, all participants are in a listen-only mode. As a reminder, this call is being recorded. And I would now like to introduce your host for today's conference, Brian Ritchie from LifeSci Advisors. Mr. Ritchie, you may begin.

Thank you all for participating in PolyPid's fourth quarter and full year 2023 earnings conference call. Joining me on the call today will be Frank Laukien, Chief Executive Officer of PolyPid; Gerald Herman, PolyPid's Chief Financial Officer; and Gerald Herman, Chief Operating Officer of PolyPid. Earlier today, PolyPid released financial results for the 3 and 12 months ended December 31, 2023. A copy of the press release is available in the Investors section on the company's website, www.polypid.com. I'd like to remind you that on this call, management will make forward-looking statements within the meaning of the federal securities laws. For example, management is making forward-looking statements when it discusses the expected timing for recruitment and top line results from the SHIELD II trial and of the unblinded interim analysis, the planned new drug application submission for D-PLEX100, the potential impacts and uses for OncoPLEX and the PLEX platform, the company's expected cash runway and the potential to receive additional funds if warrants are exercised. Forward-looking statements are subject to numerous risks and uncertainties and many of which are beyond our control, including the risks described from time to time in our SEC filings. Our results may differ materially from those projections. These statements involve material risks and uncertainties that could cause actual results or events to materially differ. Accordingly, you should not place undue reliance on these statements. I encourage you to review the company's filings with the Securities and Exchange Commission, including, without limitation, the company's Form 20-F, which identifies specific factors that may cause actual results or events to differ materially from those described in the forward-looking statements. PolyPid disclaims any intention or obligation, except as required by law, to update or revise any financial projections or forward-looking statements, whether because of new information, future events or otherwise. This conference call contains time-sensitive information and speaks only as of the live broadcast today, February 14, 2024. With the completion of these prepared remarks, it is my pleasure to turn the call over to Dikla Czaczkes Akselbrad, CEO of PolyPid. Dikla?

Thank you, Brian. On behalf of our team at PolyPid, I would like to welcome everyone, including our new shareholders to our fourth quarter and full year 2023 earnings call. We are thrilled with a significant progress recently achieved throughout our business. As we expected, enrollment in our ongoing SHIELD II pivotal trial for D-PLEX100 for the prevention of dominant colorectal surgical site infection has begun to ramp up. We have also generated some new highly compelling preclinical data with OncoPLEX that demonstrates its potential in oncology. Moreover, in order to support our robust clinical development efforts, we successfully completed a $16 million financing that included participation from multiple new U.S. life sciences-focused investors. I will discuss all of this in greater detail shortly but let's begin with the status of SHIELD II. The study has now enrolled more than 100 subjects and approximately 40 centers are currently open. As a reminder, we intend to conduct an unblinded interim analysis once approximately 400 patients of a planned total of 600 subjects complete the 30-day follow-up, which is expected to occur in mid-2024. Top line results are anticipated in the second half of this year. With respect to the expected recruitment rate, as we said on our last call, once the site is fully up and running, which takes several weeks following its being formally opened, we anticipate approximately 1.5 patients being recruited into the trial per center per month, and we expect to overall approximately 60 centers opened and recruiting patients. Moving on, to reiterate what we have said previously, we have a clear regulatory pathway for the potential NDA submission for D-PLEX100 in the U.S. Last year, the FDA acknowledged not only that the SHIELD I result may provide supportive evidence of the safety and efficacy of D-PLEX100 in…

Thank you, Dikla. As of December 31, 2023, the company had cash and short-term deposits of $5.3 million as compared to $12.6 million at the end of 2022. This does not include the net proceeds of approximately $15 million generated from the pipe financing closed in January 2024. As Dikla noted, we expect that our pro forma cash balance will be sufficient to fund operations into late third quarter of 2024. Now let's turn to our income statement. Research and development expenses for the 3 months ended December 31, 2023, were $4.6 million compared to $4.7 million in the same 3-month period of 2022. R&D expenses in the most recently completed fourth quarter were driven by the ramp-up of the ongoing SHIELD II Phase III trial. For the full year ended December 31, 2023 and 2022, R&D expenses were $16.1 million and $28 million, respectively. Marketing and business development expenses for the fourth quarter of 2023 were $193,000 compared to $350,000 during the prior year period. General and administrative expenses for the fourth quarter of 2023 were $1.2 million compared to $1.6 million recorded in the same 3-month period of 2022. For the fourth quarter of 2023, the company had a net loss of $6.4 million as compared to $6.6 million in the fourth quarter of 2022. For calendar year 2023, the company had a net loss of $23.9 million compared to a loss of $39.6 million in the full year 2022. Finally, we continue to execute well on our cost containment initiatives. As such, our net cash used in operating activities for full year 2023 decreased by $17 million as compared to calendar year 2022 from $34.3 million to $17.3 million. With that, we will now open the call to your questions. Operator?

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

First, I had a couple on the SHIELD II interim. Just can you remind us the powering of the interim for a successful efficacy outcome, i.e., stopping the trial early for efficacy? And then what is the alpha spend for the interim?

The alpha depends on the on the overall number in general in order to get to an early stop, the powered the interim itself in order that the committee will tell us that we should stop the trial for bus data. The alpha should be 0.01. The overall -- the penalty of the alpha depends on the overall size of the trial. So if we have sent to 600 or whether we are sent to 800, the alpha will be different because it gives you an earlier sort of look into the data. I can tell you that at the end of the day, in SHIELD I, the alpha on the interim was very, very minimal. We had the interim of 750. If I recall, an overall 1,000 patients, and it was very minimal. And the powering is 90%.

And then just to be clear on the potential warrant exercise, again, for the interim success is considered to be a recommendation to continue the trial unchanged, correct? You don't need to stop early for efficacy to be considered a success?

So the 10-day period is only an effect if this -- the study stopped for positive data. The overall -- at the time, we will have around the year plus for the warrant is at the rest -- all other scenarios.

And then just on the pipeline, can you just discuss a bit the, I guess, partnering outlook or progress for the PLEX technology outside of D-PLEX100 and then just on other development activities you have planned for this year?

Sure. So we are continuing and also initiating some additional discussions around the platform part of the OncoPLEX new data that we published today or referred to today is part of input that we're getting from some of those discussions or understanding what should be the next step or what partners would want to see in terms of potential efficacy of the product helps our research and development to direct the internal development, obviously. And some of these animal data are part of our understanding from discussion, and we are continuing robastically to discuss both potential future collaboration of D-PLEX as well as platform-related collaboration. And within that, we conclude on complex. Obviously, the timing of -- the maturity of this discussion is something that we cannot predict and cannot discuss, but we are very pleased with the kind of companies that are discussing with us. The level of the company that are discussing and showing interest in our approach is encouraging.

We will take our next question. Your next question comes from the line of Balaji Prasad from Barclays.

This is Sean on for Balaji. I'm wondering if it is possible for you to provide an update on the number of patients who have completed their [indiscernible] follow-up at this time.

Sure. So first of all, thank you for your question. We recently announced that we recruited the 100 patients. And if you noticed in our -- in today's press release, we've already indicated that we have more than 100 patients, although only a few days of past, I think, 2 or 3 days. So things are progressing and we started to see -- we obviously had some slowdown around end of the year, beginning of the year due to the holidays and the winter break. But we do start to see the similar trend that we saw in SHIELD I of ramping up. Most of the patients that finish the follow-up -- most of the 100 patients finished the 31 days follow-up. We did not go into specific numbers, but I can tell you that we expect to see recruitment if we're looking at the next quarter, significantly ramping up both in terms of having sent additional centers open and some of the centers that were open but only recently started to recruit patients at most of the 100 of finalize the 30 days.

[Operator Instructions] We will take our next question. Your next question comes from the line of Boobalan Pachaiyappan from HC Wainwright.

So a couple of questions from our side. First, as we think about commercial batch production. So I'm curious how the expected COGS of D-PLEX100 compared to other platform technologies involving polymers or lipids attached to small molecules.

So as we see things now and for a long time because we've built our own manufacturer facility, and we have full control on the manufacturing. We actually just a few months ago, cast a GMP review by the Ministry -- Israel Ministry of Health that is also applicable for the European authority for the commercial stage. So our facility is now approved for GMP commercial stage. And we have all the indication that the COGS will be less than 5%. Again, it's a bit early to be very specific because we do not know exactly the final price of the product -- selling of the price of the product, but all indications shows that it should be -- the COGS should be less than 5% of this.

And then you mentioned about positive preclinical data in melanoma and colon carcinoma animal models. So I'm just curious, can you discuss the rationale behind choosing these tumor indications and also potential commercial opportunities associated with D-PLEX100?

So it's not that these are -- that we are pursuing for clinical, but the idea was to look at because this is an intratumoral approach. We are injecting our OncoPLEX directly into the tumor. And the chemotherapy is released within the tumor environment for 3 weeks. The idea was here to look at models that have fast-growing sales and look at the approach, the local approach, the prolonged local approach in the tumor and see the effect. And we were very pleased with the results as they repeated also the similar results that we saw as an adjuvant. This was a naroadjuvant approach. We saw similar effect as an adjuvant that is applied into the tumor bed post resection, also in an animal model. So the idea was here to expand our preclinical data into a naroadjuvant approach in a fast-growing sales model.

There seems to be no further questions. I would like to hand back for closing remarks.

Thank you for joining PolyPid's fourth quarter and year-end 2023 earnings conference call. We remain highly confident in our long-term prospects especially the potential of our promising late-stage product candidate, D-PLEX100. As always, we are grateful to our team members, existing and new shareholders in all our external partners for their commitment to our mission and their support in continuing to advance towards our goal of bringing D-PLEX100 to healthcare providers and patients as quickly as possible. We look forward to speaking with you again on our next conference call.

This concludes today's conference call. Thank you for participating. You may now disconnect.