PolyPid Announces Private Placement for Up to $14 Million in Gross Proceeds

Rhea-AI Summary

PolyPid (Nasdaq: PYPD) has announced a private placement financing (PIPE) for $8.1 million in gross proceeds, priced at $3.61 per share. The deal includes the purchase of 2,235,457 ordinary shares and warrants to purchase up to 1,676,588 additional shares. If fully exercised, the warrants could bring in an extra $6.1 million. This funding extends PolyPid's cash runway into Q2 2025, beyond the anticipated timing for SHIELD II top-line results.

The ongoing SHIELD II Phase 3 trial of D-PLEX100 for preventing abdominal colorectal surgical site infections has enrolled over 300 patients. An unblinded interim analysis is planned for Q4 2024 when about 400 patients complete their 30-day follow-up. Top-line results are expected in Q1 2025. Additionally, PolyPid has restructured its loan agreement with Kreos Capital, deferring over $2 million in repayments to April 2025.

Positive

• Secured $8.1 million in gross proceeds through private placement financing
• Potential for additional $6.1 million if warrants are fully exercised
• Cash runway extended into Q2 2025, beyond anticipated SHIELD II top-line results
• Over 300 patients enrolled in SHIELD II Phase 3 trial
• Restructured loan agreement with Kreos Capital, deferring over $2 million in repayments

Negative

• Dilution of existing shareholders due to issuance of new shares and warrants
• Dependence on successful completion and positive results of SHIELD II trial for future prospects

Insights

Financial Analyst

PolyPid's recent $8.1 million private placement, with potential for an additional $6.1 million from warrant exercises, is a significant financial move that extends the company's cash runway. This funding strategy is important for a late-stage biopharma company, particularly one conducting expensive Phase 3 trials.

The pricing at $3.61 per share, with 75% warrant coverage, suggests investor confidence in PolyPid's potential. However, the warrants' short expiration timeline, tied to the SHIELD II trial's interim analysis, adds pressure for quick clinical progress.

The restructured loan agreement with Kreos Capital, deferring over $2 million in repayments until April 2025, aligns well with the expected timeline for SHIELD II results. This financial maneuvering demonstrates management's focus on conserving cash for the critical trial period.

While this funding extends the runway into Q2 2025, it's worth noting that biotech burn rates can be unpredictable. Investors should monitor enrollment progress and any potential delays that could impact the cash position.

Medical Research Analyst

The SHIELD II Phase 3 trial for D-PLEX100 in preventing abdominal colorectal surgical site infections is a pivotal moment for PolyPid. With over 300 patients enrolled and aiming for 400 by Q4 2024 for the interim analysis, the trial's progress seems on track. The planned unblinded interim analysis could be a major catalyst, potentially leading to early trial termination due to efficacy or continuation to full enrollment.

The trial design, targeting up to 630 subjects, suggests a robust study aiming for statistically significant results. The focus on surgical site infections in colorectal surgery addresses a significant medical need, as these infections can lead to serious complications and increased healthcare costs.

Investors should note that the warrant expiration is tied to the Data Safety Monitoring Board's recommendation following the interim analysis. This creates a critical juncture where clinical results could directly impact the company's financial position. A positive outcome could trigger warrant exercises, providing additional funding, while negative results could limit this potential cash infusion.

Market Research Analyst

PolyPid's focus on improving surgical outcomes positions it in a growing market segment. The global surgical site infection prevention market is expected to expand significantly in the coming years, driven by increasing surgical procedures and growing awareness of hospital-acquired infections.

The company's D-PLEX100 product, if successful, could capture a significant portion of this market, particularly in colorectal surgeries where infection rates tend to be higher. The potential for a novel, effective solution in this space could drive substantial value.

However, investors should consider the competitive landscape. Several large pharmaceutical companies and innovative startups are also targeting surgical site infections. PolyPid's success will depend not only on clinical efficacy but also on its ability to differentiate its product and navigate the complex healthcare market.

The private placement's investor mix, including both new and existing investors, suggests a balance of continued support and fresh interest. This could be interpreted as a positive signal about the company's prospects, but also highlights the need for ongoing investor relations efforts to maintain and expand this support base.

Funding Extends Company’s Cash Runway into Second Quarter 2025, which is beyond the Anticipated Timing for SHIELD II Top-line Results if Warrants are Fully Exercised

More than 300 Patients Enrolled in Ongoing SHIELD II Phase 3 Trial of D-PLEX₁₀₀ for the Prevention of Abdominal Colorectal Surgical Site Infections

Unblinded Interim Analysis to be Conducted Once Approximately 400 Patients Complete Their 30-Day Follow-up Expected in Fourth Quarter of 2024; Top-Line Results Anticipated in First Quarter of 2025

PETACH TIKVA, Israel, Aug. 02, 2024 (GLOBE NEWSWIRE) -- PolyPid Ltd. (Nasdaq: PYPD) (“PolyPid” or the “Company”), a late-stage biopharma company aiming to improve surgical outcomes, today announced that it has entered into a securities purchase agreement for a private placement financing (the “PIPE”) for $8.1 million in gross proceeds priced at $3.61 per share. The PIPE syndicate is comprised of both new and existing investors.

Under the securities purchase agreement, the investors have agreed to purchase 2,235,457 of the Company’s ordinary shares, no par value per share (the “Ordinary Shares”), or pre-funded warrants in lieu thereof, at a purchase price of $3.61 per share (or pre-funded warrant). The investors will also receive 75% warrant coverage, to purchase up to 1,676,588 Ordinary Shares at an exercise price of $3.61 per share. The warrants expire upon the earlier of two years from the date of issuance and 10 trading days following PolyPid’s announcement of the recommendation by Data Safety Monitoring Board regarding the Company’s unblinded interim analysis in its SHIELD II Phase 3 trial of D-PLEX₁₀₀ resulting in either the stopping of the trial due to positive efficacy, or continuation to planned patient recruitment (up to 630 subjects). Exercise of the warrants in full would result in an additional $6.1 million in gross proceeds to the Company.

The PIPE is expected to close on August 6, 2024, subject to the satisfaction of customary closing conditions. The Company intends to use the net proceeds from the sale of the securities for its ongoing SHIELD II phase 3 clinical trial for the prevention of surgical site infections in patients undergoing abdominal colorectal surgery, working capital and general corporate purposes. The gross proceeds from the financing extend the Company’s cash runway into first quarter of 2025, beyond expected completion of enrollment in SHIELD II. If all warrants issued in this financing are exercised, the Company would be funded beyond top-line results and into the second quarter of 2025.

To date, more than 300 patients have been enrolled in the ongoing SHIELD II Phase 3 trial. Unblinded interim analysis is planned to be conducted once approximately 400 patients complete their 30-day follow-up, which is expected to occur in the fourth quarter of 2024.

Citizens JMP is acting as exclusive placement agent in the offering.

The offer and sale of the foregoing securities are being made in a transaction not involving a public offering and the securities have not been registered under the Securities Act of 1933, as amended (the “Securities Act”), or applicable state securities laws. Accordingly, the securities may not be reoffered or resold in the United States except pursuant to an effective registration statement or an applicable exemption from the registration requirements of the Securities Act and such applicable state securities laws. Pursuant to a registration rights agreement with the PIPE investors, the Company has agreed to file within 30 calendar days of closing one or more registration statements with the Securities and Exchange Commission (the "SEC") covering the resale of the Ordinary Shares and Ordinary Shares issuable upon exercise of the warrants and pre-funded warrants.

This press release does not constitute an offer to sell or the solicitation of an offer to buy the securities, nor shall there be any sale of the securities in any state or jurisdiction in which such offer, solicitation or sale would be unlawful prior to the registration or qualification under the securities laws of such state or jurisdiction.

In addition, PolyPid announced that it has restructured its existing secured loan agreement with Kreos Capital VI (Expert Fund) LP with over $2 million of deferred repayments, which will be paid from April 2025 onwards, in line with the expected timing for the top-line results from the Company’s ongoing SHIELD II Phase 3 trial.

About D-PLEX₁₀₀

D-PLEX_100, PolyPid’s lead product candidate, is designed to provide local prolonged and controlled anti-bacterial activity directly at the surgical site to prevent surgical site infections (SSIs). Following the administration of D-PLEX₁₀₀ into the surgical site, the PLEX (Polymer-Lipid Encapsulation matriX) technology pairs with Active Pharmaceutical Ingredients, enabling a prolonged and continuous release of the broad-spectrum antibiotic doxycycline, resulting in a high local concentration of the drug for a period of 30 days for the prevention of SSIs, with additional potential to prevent SSIs caused by antibiotic-resistant bacteria at the surgical site. D-PLEX₁₀₀ received Breakthrough Therapy Designation from the U.S. Food and Drug Administration for the prevention of SSIs in patients undergoing elective colorectal surgery. D-PLEX₁₀₀ is currently in Phase 3 SHIELD II trial for the prevention of surgical site infections in patients undergoing open abdominal colorectal surgery with large incisions.

About PolyPid

PolyPid Ltd. (Nasdaq: PYPD) is a late-stage biopharma company aiming to improve surgical outcomes. Through locally administered, controlled, prolonged-release therapeutics, PolyPid’s proprietary PLEX (Polymer-Lipid Encapsulation matriX) technology pairs with Active Pharmaceutical Ingredients (APIs), enabling precise delivery of drugs at optimal release rates over durations ranging from several days to months. PolyPid’s lead product candidate D-PLEX₁₀₀ is in Phase 3 clinical trial for the prevention of abdominal colorectal surgical site infections. In addition, the Company is currently in preclinical stages to test the efficacy of OncoPLEX for the treatment of solid tumors, beginning with glioblastoma.

For additional Company information, please visit http://www.polypid.com and follow us on Twitter and LinkedIn.

Forward-looking Statements

This press release contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act and other securities laws. Words such as “expects,” “anticipates,” “intends,” “plans,” “believes,” “seeks,” “estimates” and similar expressions or variations of such words are intended to identify forward-looking statements. For example, the Company is using forward-looking statements when it discusses the gross proceeds received from the PIPE, intended use of proceeds from the PIPE, the anticipated closing date for the PIPE, the anticipated gross proceeds from the exercise of warrants issued in the PIPE if such warrants are exercised in full, the unblinded interim analysis is planned to be conducted once approximately 400 patients complete their 30-day follow-up, which is expected to occur in the fourth quarter of 2024, the gross proceeds from the financing extend the Company’s cash runway into first quarter of 2025, which is beyond expected completion of enrollment in SHIELD II, and that if all warrants issued in this financing are exercised, the Company would be funded beyond top-line results and into the second quarter of 2025, and that the restructured secured loan agreement with over $2 million of deferred repayments, which will be paid from April 2025 onwards, is in line with the expected timing for the top-line results from the Company’s ongoing SHIELD II Phase 3 trial. Forward-looking statements are not historical facts, and are based upon management’s current expectations, beliefs and projections, many of which, by their nature, are inherently uncertain. Such expectations, beliefs and projections are expressed in good faith. However, there can be no assurance that management’s expectations, beliefs and projections will be achieved, and actual results may differ materially from what is expressed in or indicated by the forward-looking statements. Forward-looking statements are subject to risks and uncertainties that could cause actual performance or results to differ materially from those expressed in the forward-looking statements. For a more detailed description of the risks and uncertainties affecting the Company, reference is made to the Company’s reports filed from time to time with the SEC, including, but not limited to, the risks detailed in the Company’s Annual Report on Form 20-F filed on March 6, 2024. Forward-looking statements speak only as of the date the statements are made. The Company assumes no obligation to update forward-looking statements to reflect actual results, subsequent events or circumstances, changes in assumptions or changes in other factors affecting forward-looking information except to the extent required by applicable securities laws. If the Company does update one or more forward-looking statements, no inference should be drawn that the Company will make additional updates with respect thereto or with respect to other forward-looking statements.

References and links to websites have been provided as a convenience, and the information contained on such websites is not incorporated by reference into this press release. PolyPid is not responsible for the contents of third-party websites.

Contacts:
PolyPid Ltd.
Ori Warshavsky
COO – US
908-858-5995
IR@Polypid.com

Investors:
Brian Ritchie
LifeSci Advisors
212-915-2578
britchie@lifesciadvisors.com

FAQ

What is the amount of gross proceeds PolyPid (PYPD) raised in the private placement?

PolyPid (PYPD) raised $8.1 million in gross proceeds through the private placement financing.

When is the unblinded interim analysis for PolyPid's (PYPD) SHIELD II Phase 3 trial expected?

The unblinded interim analysis for PolyPid's (PYPD) SHIELD II Phase 3 trial is expected in the fourth quarter of 2024.

How many patients have been enrolled in PolyPid's (PYPD) SHIELD II Phase 3 trial as of August 2024?

As of August 2024, more than 300 patients have been enrolled in PolyPid's (PYPD) SHIELD II Phase 3 trial.

What is the expected timing for top-line results of PolyPid's (PYPD) SHIELD II Phase 3 trial?

The top-line results for PolyPid's (PYPD) SHIELD II Phase 3 trial are anticipated in the first quarter of 2025.

How long does the new funding extend PolyPid's (PYPD) cash runway?

The new funding extends PolyPid's (PYPD) cash runway into the second quarter of 2025 if warrants are fully exercised.