Prepared remarks
Greetings, and welcome to PolyPid's Second Quarter 2026 Conference Call. As a reminder, this call is recorded. And I would now like to introduce your host for today's conference, Yehuda Leibler, from Arx Investor Relations. Mr. Leibler, you may begin.
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 Dikla Czaczkes Akselbrad, Chief Executive Officer of PolyPid; Jonny Missulawin, PolyPid's Chief Financial Officer; and Ori Warshavsky, Chief Operating Officer, U.S., of PolyPid. Earlier today, PolyPid released its financial results for the 3 and 6 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 Azurity 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-PLEX100, including the assigned Prescription Drug User Fee Act or PDUFA goal date and the FDA's grant of Priority Review. Additional forward-looking statements include the company's engagements with the European Medicines Agency, including meetings with the Rapporteur and Co-Rapporteur regarding the planned Marketing Authorization Application, or MAA, and the anticipated timing thereof, the expected commercial launch of D-PLEX100 by Azurity 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-PLEX100, the company's Kynatrix 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-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. 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 Czaczkes Akselbrad, the CEO of PolyPid. Dikla?
Thank you, Yehuda. And thank you all for joining us today. The second quarter of 2026 was a defining quarter for PolyPid. 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 D-PLEX100 with Priority Review; and second, the signing of an exclusive commercialization partnership with Azurity Pharmaceuticals for the United States and Canada. Starting with regulatory progress. During the second quarter, we completed the NDA submission for D-PLEX100 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 D-PLEX100 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 our PDUFA 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 D-PLEX100 over the last several years. Turning to our commercial partnership. On July 17, 2026, we entered into an exclusive commercialization agreement with Azurity Pharmaceuticals for D-PLEX100 in the United States and Canada. We are very pleased with this partnership. The selection of Azurity 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 Azurity 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 a total 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 D-PLEX100 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, PolyPid is entitled to tiered royalties on Azurity sales in the U.S. and Canada, ranging from mid-teens to mid-20s percentages. PolyPid will manufacture and supply the product, generating an additional agreed transfer price on every unit supplied to Azurity. 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 positions 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 Azurity-funded label expansion pathway, represent unusually strong economics for a company at our stage in a commercialization partnership of this kind. Jonny 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 have 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 the first time. Turning to Europe. During the second quarter, we held meetings with the Rapporteur and Co-Rapporteur, the European regulatory authorities designated to lead the assessment of our planned MAA for D-PLEX100. These meetings were productive and positive, and we currently plan to submit the MAA to the European Medicines 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 planned MAA submission to the European Medicines Agency in the third quarter of this year; and fourth, the expected commercial launch of D-PLEX100 by Azurity in the United States in early 2027. With that, I will now turn the call over to Ori.
Thank you, Dikla. I would like to spend a few minutes on Azurity and the joint launch preparation now underway, on the progress we have made around D-PLEX100 this quarter, and finally, on our broader Kynatrix technology opportunities beyond the Azurity partnership. Beginning with Azurity. 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 D-PLEX100 a successful commercial trial. 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, Azurity emerged as the partner best positioned to lead the U.S. and Canada launch of D-PLEX100. Azurity is an established specialty pharmaceutical company with a first-in-class commercial model and a portfolio of over 50 medicines spanning 10 therapeutic areas. Azurity is backed by QHP Capital, a health care-focused private equity investor. Beyond capital, we believe several elements of Azurity's track record position them uniquely well to commercialize D-PLEX100. Azurity has an antibiotic on the market which gives them established credibility with infectious disease specialists, the core audience for D-PLEX100. Azurity also markets bowel prep products in the exact same colorectal surgery call point that D-PLEX100 initially targets, giving them existing relationships with the same prescribers. And with more than 10 additional hospital-administered products already on the market, Azurity brings the GPO infrastructure, hospital contracting expertise and institutional relationships that reach over 1,700 leading hospitals and academic institutions in the U.S., a footprint 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 Azurity is uniquely positioned to reach the surgeons, infection specialists, hospital pharmacy directors and value analysis committees who will drive D-PLEX100 adoption. Their dedicated hospital-facing and surgical-facing sales capabilities align directly with the way D-PLEX100 will be prescribed and administered in a way that few counterparties in our process could match. In short, Azurity brings the scale, focus and execution capability that we believe D-PLEX100 needs at launch. Beyond the initial license territories, Azurity has established commercial operations and partnerships spanning more than 50 countries. While the current agreement is focused on the U.S. and Canada, Azurity's international infrastructure and experience launching specialty medicines creates strategic optionality when additional geographic opportunities are pursued in the future. The joint work between our teams to prepare for launch is now well underway. We have established joint forums to align on medical, regulatory and commercial preparation. Azurity is leading on-the-ground commercial activities, including sales force build-out, national account planning, medical affairs and pharmacy channel work, while PolyPid retains responsibility for global manufacturing and global regulatory strategy. This division of labor plays to each party's strengths. The partnership also includes a joint development framework funded by Azurity to pursue label expansion opportunities of D-PLEX100 in additional indications beyond the abdominal indication. D-PLEX100's mechanism and platform supports broader use across other SSI-relevant surgical settings and Azurity'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 PolyPid's growth drivers in the near and midterm. The first growth driver is D-PLEX100 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 label expansion will be funded by Azurity through the joint development framework. The second growth driver is expanding D-PLEX100 to other territories outside the U.S. and Canada, which are under Azurity partnership. And finally, the third growth driver is the expansion of the pipeline under our Kynatrix technology, over which PolyPid 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 D-PLEX100. In many of these cases, we believe that the mechanistic and CMC platform we built around D-PLEX100 can materially compress the path to meaningful clinical stages for programs that would otherwise require years of de novo formulation and preclinical work. We look forward to sharing more on specific pipeline products as those plans evolve. With that, I will now turn the call over to Jonny to review our financial performance for the quarter.
Thank you, Ori. I will now walk through our financial results for the second quarter ended June 30, 2026, and highlight the material developments impacting our balance sheet. Starting with the Azurity partnership, as Dikla noted, we have already secured $30 million in aggregate upfront and near-term milestones from our partnership with Azurity 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 Azurity sales in the United States and Canada in the range from mid-teens to mid-20s percentages; and a transfer price on every unit we manufacture and supply to Azurity. The label expansion program under the joint development agreement is funded by Azurity and expands the addressable base for both revenue streams over time without requiring incremental PolyPid capital. Turning to our income statement for the quarter. Research and development expenses for the second quarter of 2026 were $6.1 million compared to $6.2 million 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 compared to $2.5 million in the prior year period. The decrease was primarily due to the decrease of noncash expenses related to performance-based options following the positive Phase III SHIELD II topline 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 $0.35 per share compared to a net loss of $10 million or $0.78 per share in the second quarter of 2025. For the first 6 months of 2026, net loss was $15.6 million compared to $18.2 million in the first 6 months of 2025. Turning to the balance sheet. As of June 30, 2026, PolyPid had $6.6 million in cash and cash equivalents compared to $12.9 million of cash, cash equivalents and short-term deposits at December 31, 2025. Subsequent to quarter end, our capital position has been further strengthened by $15 million upfront payment from Azurity at signing and the additional $15 million as a result of the FDA acceptance of the NDA filing. 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 D-PLEX100 development journey, while also providing a streamlined and healthier capital structure for PolyPid 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 agreement 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?
Questions and answers
Your first question comes from Chase Knickerbocker from Craig-Hallum.
Congrats on all the progress here. Maybe first for me on the upcoming expected inspection: Has the 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 Azurity, I'd love to hear the sort of work that went into them getting comfortable on the CMC side — did they do a fairly strenuous mock audit series as part of the due diligence?
So with regards to our communication with the FDA, since we submitted the NDA, we have had several back-and-forth communications on different aspects, including items related to the various audits that are expected as part of the NDA review. I don't think it makes sense to go into more detail on specific dates or requests, but I can 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. We are being fully cooperative with any request that comes from the FDA to meet the timeline. With regards to the CMC diligence, that's something we tried to highlight earlier by noting both the work we did with Azurity and with other potential partners. As Ori mentioned, we had on-site due diligence at our Israeli site by the Azurity team and by others who competed for this asset to see the facility, the CMC processes, the packaging and everything that could give a potential partner the comfort that this product will be approved and that we as a partner could manufacture on a commercial scale and support the launch of the product. From that perspective we are confident that we had several external validations, including regulatory inspections we completed, partner diligence by Azurity and others, as well as mock inspections performed with external advisers.
Got it. And maybe just last for me: I'd like to understand the level of overlap that existing Azurity reps have into the colorectal and general surgeon call points. How many reps are calling on those physicians today in their hospital-focused segment? And do you have any idea at this stage how many of those 200 customer-facing representatives will have D-PLEX100 in their portfolio at launch?
Yes, I can take some of that. We can't break down the Azurity sales team by exact call assignments, but as we said, they already call upon colorectal surgeons and other hospital specialists relevant to D-PLEX100. They are significantly scaling capabilities in preparation for launch, expanding market access and contracting efforts, and building out the medical team. They already have coverage in approximately 1,700 hospitals and academic centers, which is the footprint they are targeting. That coverage will not be instant on day one; there will be a gradual, hospital-by-hospital and IDN-by-IDN rollout, but it reflects the coverage they are trying to achieve.
Your next question comes from Jason Butler from Citizens.
A couple on the Azurity partnership. On the commercial side, obviously, it's only been a short period of time, but what are you already doing with Azurity 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 D-PLEX100 launch? And then second, on the development side, how are you thinking about the initial label expansion efforts? How quickly under this collaboration could additional trials begin for additional indications?
You take the first — yes.
A few points here. First, we've been in conversations with Azurity for a period of time, and they have been planning for this opportunity well before signing. They are already hitting the ground running and taking ownership of many launch activities. We have transferred a substantial amount of knowledge to them, including clinical study materials, market research, pricing assessments, KOL contacts, and NTAP assessments. Azurity has plans to engage in key meetings and conferences to build the KOL network — for example, they're present at the American College of Surgeons Conference this week and will be at IDWeek in a couple of months. Activities that can be done before approval include prior authorization and access conversations; after approval, they will deploy MSLs on the ground to engage PIs and KOLs and introduce the product. Their marketing and contracting teams are being established and are working on these preparations. So we are not starting from zero — we are starting from a mature handoff and advancing rapidly.
With regards to label expansion, the joint development framework is scoped around D-PLEX100 and additional surgical site infection indications beyond the initial abdominal indication. We will first need to see the final approved indication from the FDA, but the top targets we have discussed publicly for years are consistent with Azurity's priorities. Those include cardiac procedures, specifically CABG, orthopedic procedures including hip and knee replacement, and breast mastectomy and reconstruction. These are the leading indications that we and Azurity view as priorities to pursue.
Your next question comes from the line of Boobalan Pachaiyappan from ROTH Capital Partners.
Maybe can you discuss the key KPIs you would use internally to track the D-PLEX100 launch success? Let's say, are you going to track — obviously, you're going to track formulary events, but ultimately, what are the key KPIs that you want to target: activation of hospitals, surgeon users? Can you elaborate more on that?
There are a couple of things we will monitor. Some of this is driven by the collaboration and the commitments Azurity has made in the agreement, including minimums and other commercial milestones, and we will monitor performance against those. We will also track hospital-level metrics, including P&T committee approvals and the number of hospitals adding the drug to their pharmacy formularies. Additionally, we will monitor reimbursement progression and discussions with payers, including NTAP progress. Ori, would you like to add anything?
In our view, the stepwise approach will be important — monitoring month-by-month how many hospitals add the product, how many P&T reviews occur, whether pilots are initiated, and actual physician usage. Those will be the initial benchmarks to assess success in the first 12 months after launch.
Let's say the drug is indeed launched in the first quarter of 2027. Can you discuss when this revenue would be recognized?
We have indicated that launch is expected in early 2027. We will recognize revenue immediately on product sales to Azurity because one component of the deal is a pre-negotiated transfer price per vial. Every vial we sell to Azurity will be recognized as revenue at that transfer price. The other revenue components are royalties and milestone payments, which will be recognized as they are earned and achieved.
Okay. Maybe one final question from me: You indicated that the EMA submission is targeted in the third quarter of 2026. Can you provide a sense of receptivity to the clinical package during your dialogue with them? Have they raised any concerns about clinical, statistical, or safety aspects?
Thank you for that question. We had two meetings during the quarter with the Rapporteur and the Co-Rapporteur, which are the equivalent of a pre-NDA meeting with the FDA. The purpose of those meetings was to align on requirements and timelines. They were productive. Each regulatory authority has its own areas of focus, and those discussions helped us align expectations. Importantly, given that we met them toward the end of June and plan to submit the package before the end of this quarter, nothing major was raised that would require additional data or changes that would delay the submission timeframe.
We will take our next question and your question comes from the line of Brandon Folkes from H.C. Wainwright.
Congrats on all the progress. Maybe just two from me. Can you talk about the earlier PDUFA date and what that does in terms of ability to supply the market or the launch date? Do you still expect a first quarter launch? And then similarly, with the November PDUFA date, any impact on the NTAP process in terms of when it could come online for D-PLEX100?
Since we anticipated the product could be eligible for Priority Review, we prepared for both scenarios — approval before the end of the year and approval in early 2027. We prepared for audits, including GCP and GMP, and for launch. So having the earlier PDUFA date does not change our launch readiness; we were prepared for both timelines. Regarding NTAP, Ori can cover that detail, but as a point of clarification: NTAP submission does not require the product to be approved; it requires the product to be under review with the FDA.
On NTAP, the product does not need approval to submit for NTAP; it needs to be under review with the FDA. From that perspective, we have no issue pursuing NTAP. Azurity is working to align the NTAP submission with the governmental financial year deadline in October, and that's what they are focused on.
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 PolyPid's second quarter 2026 earnings conference call. This has been a defining quarter for PolyPid, and we are highly confident in our long-term prospects, especially the potential of D-PLEX100 in the hands of Azurity as our commercial partner in the United States and Canada and the broader Kynatrix technology behind it. As we look ahead to the November 28 PDUFA goal date and the expected commercial launch of D-PLEX100 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 D-PLEX100 to health care 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.