Acurx Pharmaceuticals - Q1 2023

Transcript

Operator (participant)

Greetings and welcome to the Acurx Pharmaceuticals first quarter 2023 financial results and business update. At this time, all participants are in a listen-only mode. A brief question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star 0 on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Rob Shawah, Chief Financial Officer. Thank you, sir. You may begin.

Rob Shawah (CFO)

Thank you. Good morning, and welcome to our call. This morning, we issued a press release providing financial results and company highlights for the first quarter of 2023, which is available on our website at acurxpharma.com. Joining me today is David Luci, President and CEO of Acurx, who will give a corporate update and outlook for 2023. After that, I'll provide some highlights of the financials for the quarter ended March 31st, and then turn the call back to Dave for his closing remarks. As a reminder, during today's call, we'll be making certain forward-looking statements. These forward-looking statements are based on current information, assumptions, estimates, and projections about future events that are subject to change and involve a number of risks and uncertainties that may cause actual results to differ materially from those contained in the forward-looking statements.

Investors should consider these risks and other information described in our filings made with the Securities and Exchange Commission, including our quarterly report on Form 10-Q, which we filed today, Friday, May 25th,2023. You are cautioned not to place undue reliance on these forward-looking statements, Acurx disclaims any obligation to update such statements at any time in the future. This conference call contains time-sensitive information that's accurate only as of the date of this live broadcast today, May 25th,2023. Acurx undertakes no obligation to revise or update any forward-looking statements to reflect events or circumstances after the date and time of this conference call. I'll now turn the call over to David Luci. Dave.

David Luci (President and CEO)

Thanks, Rob. Good morning, everyone, and thanks for joining us to review our financial results for the 1st quarter of 2023 and to cover some recent updates. We'd be pleased to take any questions. In the 1st quarter, we continued to enroll more patients in our phase IIb clinical trial of our oral ibezapolstat, our lead antibiotic candidate for the treatment of patients with C. difficile infection. The phase IIb trial is a randomized one-to-one non-inferiority double blind trial of oral ibezapolstat compared to oral vancomycin, the standard of care to treat C. difficile infection. The primary endpoint is clinical cure at the end of treatment, and a secondary endpoint is sustained clinical cure measured at the day 38 follow-up visit. Since this is a double-blind trial, results won't be known until the end of the trial.

However, operationally, the trial is proceeding as expected with no safety signals reported to date, and the blinded observed data has been exceptional. The phase IIb trial protocol includes an exploratory endpoint comparing the impact on the microbiome between our ibezapolstat and vanco. In the event non-inferiority of ibezapolstat to vanco is demonstrated, further analysis will be conducted to test for superiority. Due to slower enrollment than expected during COVID-19 and its aftermath, we expanded the number of clinical trial sites participating in the phase IIb trial from the initial 12 sites to now we have a total of 28 trial sites.

Most importantly, in March 2023, the FDA accepted our protocol amendment to our IND, which will allow an Independent Data Monitoring Committee, which we've assembled, to review interim clinical data upon reaching 36 patients enrolled, and then to provide its recommendation either to early terminate the phase IIb trial, as we had done with the phase IIa trial, you may recall, or alternatively, continue enrolling. We anticipate completing enrollment of the 36 patients in the second half of 2023. The company remains particularly excited about the dual impact of ibezapolstat to treat C. difficile infection while appropriately managing the long-term care of each patient's microbiome, which we believe is exceptional for antibiotic therapy.

Other key highlights from the first quarter of 2023 or in some cases shortly thereafter include the following. In April 2023, two presentations were made at the 33rd annual ECCMID conference in Copenhagen, Denmark. First, a scientific poster entitled Novel Pharmacology and Susceptibility of Ibezapolstat against C. difficile Isolates with Reduced Susceptibility to C. difficile-Directed Antibiotics was presented by Dr. Kevin Garey, Professor and Chair, University of Houston College of Pharmacy, and principal investigator for microbiome aspects of our ibezapolstat clinical trial program. Dr. Garey's work demonstrated that ibezapolstat's mechanism of action is not only bactericidal to C. diff, but also inhibits some of its virulence mechanisms, meaning its capability to cause disease. Dr. Garey also noted that C. difficile strains with reduced susceptibility to metronidazole, vanco, and fidaxomicin were in fact susceptible to ibezapolstat. Ibezapolstat's anti-virulence effect, namely reduced flagellar movement of the C.

diff organism, was a positive, unexpected finding, reflecting the unique mode of action in inhibiting DNA Pol IIIC. The second of the two ECCMID presentations was by our chairman, our Executive Chairman, Bob DeLuccia, who presented an update regarding the company's preclinical systemic oral and IV program for treatment of other gram-positive infections caused by MRSA, VRE, and DRSP at the Pipeline Corner featured session at ECCMID, organized by Dr. Ulrike Seifert, a world-renowned microbiology expert in antibacterial research. Following the clinical validation of the Pol IIIC bacterial target in our phase IIa trial, showing 100% cures with no reinfections, we've made significant improvements in cytotoxicity, solubility, and protein binding in vitro and in vivo safety, and have demonstrated oral and IV efficacy in a number of mouse infection models. Both the poster and the presentation are available on our website.

Additionally, we wanted to mention Dutch sponsorship. The company is continuing its R&D collaboration with Leiden University Medical Center in Holland under a previously awarded grant from the Dutch government of approximately a half million dollars to further evaluate the mechanism of action of our inhibitors against the DNA Pol IIIC enzyme, which is the bacterial target of our antibiotic pipeline for the systemic treatment, IV and oral, of gram-positive bacterial ifections. Data generated from this program was critical to include in a recent non-dilutive grant application to CARB-X, which I'll describe in more detail in a moment.

Based on this successful collaboration, we're hoping to receive an additional two-year grant for more research in this regard, which if it comes through, we're expecting in the middle of the year, and it would be in the range of $800,000 for this second component. Let's now turn to CARB-X. We remain in the running for funding our second antibiotic candidate targeting the treatment of MRSA infections by CARB-X, and we expect the final decision no later than October of this year.

Just to reflect on how this came about, in October 2022, we applied to CARB-X for a non-dilutive grant of up to $11.3 million, which, if approved, would provide funding for our second antibiotic program, targeting MRSA infections for a period of five years up to the start of phase II clinical trials. CARB-X recently informed us that our application is in the active review pool, a final decision is to be rendered by CARB-X no later than October 2023. We believe that based on our recent development progress and the unique nature of having a new class of antibiotics, together with our understanding that CARB-X already made final decisions on most candidates, we remain under active review.

For these reasons, we believe we have a strong possibility to gain CARB-X approval for funding later in the year. If approved, CARB-X would fund the $11.3 million of a $16 million project, and that would cover oral and IV formulations of our second antibiotic candidate, ACX-375. Just looking ahead a bit, the AMR Congress later this year in September, the World Antimicrobial Resistance Congress will convene its annual meeting in Philadelphia, where experts in the field from both public and private sectors weigh in on the latest innovations to address AMR. Our Executive Chairman, Robert DeLuccia, was invited to and will speak at the innovative showcase section of the conference, and will present an update entitled, "Novel DNA Pol IIIC inhibitors for gram-positive bacterial infections: Preparing for the next pandemic." After the presentation, it will be available on our website.

Also looking ahead a bit, we'd like to mention the PASTEUR Act. Last month, U.S. Senators Michael Bennet from Colorado and Todd Young reintroduced the PASTEUR Act, Pioneering Antimicrobial Subscriptions to End Upsurging Resistance, to encourage innovative drug development targeting the most threatening infections, improve the appropriate use of antibiotics, and ensure domestic availability of antibiotics when needed. According to Senator Bennet, "The bipartisan PASTEUR Act is the strongest bill ever written to strengthen antibiotic development and use. It will fix our market failures, expand the pipeline for next-generation antibiotics, and save lives." If approved, PASTEUR has the potential to enhance the commercial prospects for our antibiotics by providing funding for our phase III clinical trials and stockpiling our antibiotic at public health facilities in the U.S. each year for five years -10 years.

As currently drafted, designation as a critical need antimicrobial under the PASTEUR Act, if approved, will apply to sponsors of antibiotic candidates which are a new class of antibiotics and that target the treatment of serious or life-threatening infections, as is the case with our lead antibiotic candidate, ibezapolstat. Accordingly, we're quite enthusiastic about the prospects of the PASTEUR Act being passed into law. Back to our CFO, Rob Shawah, to guide you through the highlights of our financial results for the quarter. Rob?

Rob Shawah (CFO)

Thanks, Dave. Our financial results for the first quarter ended March 31st, 2023 were included in our press release issued earlier this morning. The company ended the first quarter with cash totaling $7.2 million compared to $9.1 million as of December 31st, 2022. Research and development expenses for the three months ended March 31st, 2023 were $1 million compared to $800,000 for the three months ended March 31st, 2022. The increase was due to phase IIb trial-related costs. General and administrative expenses for the three months ended March 31st were $1.9 million compared to $1.9 million for three months ended March 31st, 2022.

The company reported a net loss of $2.9 million or $0.25 per diluted share for the three months ended March 31st, 2023, compared to a net loss of $2.7 million or $0.26 per diluted share for the three months ended March 31st, 2022. The company had 11,671,795 shares outstanding as of March 31st 2023. With that, I'll turn the call back to Dave.

David Luci (President and CEO)

Thanks, Rob, and to all of you joining us today. As you've heard, we've kicked off 2023 with advances in several areas that we believe will spur continued growth and momentum to build on our strong fundamentals. We look forward to sustaining this momentum even during these challenging times and sharing future updates in the coming months. I'll now open the call for questions. Operator?

Operator (participant)

Thank you. We will now be conducting a question-and-answer session. If you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate that your line is in the question queue. You may press star two if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment, please, while we poll for questions. Our first question comes from Ed Arce with H.C. Wainwright. Please proceed with your question.

Thomas Yip (Research Associate)

Hi, good morning, everyone. This is Thomas Yip asking a couple questions for Ed. Perhaps first question.

David Luci (President and CEO)

Good morning.

Thomas Yip (Research Associate)

Good morning. To see continual progress in the Phase IIb study. That is our first question. The interim analysis that will be triggered with the enrollment of the thirties expansion as you mentioned earlier. It was previously expected in mid-year, and now it's second half of 2023. Can you discuss what are some major factors behind this change?

David Luci (President and CEO)

Well, thanks, Thomas, I appreciate the question. You know, we're really, you know, putting our finger in the air, you know, if you will. As we sit here today, it's, you know, close to mid-year right now, right? It's, you know, May 25th. So, you know, are we gonna be done by the Fourth of July? You know, could very well happen. Our chairman would say, you know, it's definitely gonna be done in the third quarter, but he's the one that's in charge of R&D. I like to take it second half, and this way, we have a nice conservative cushion.

Thomas Yip (Research Associate)

Thank you. That makes sense. Can you talk about, other than the primary efficacy endpoint, what other efficacy can investors look for in this interim analysis?

David Luci (President and CEO)

Well, I mean, we'll know when we see the data, but we're fairly certain we're gonna see something between 90% and 100% efficacy out of our side of the study, given that we were 100% in the phase IIa. It's one-to-one randomized, based on 60 years of data, we're gonna expect to see something around 85% in that area for oral vancomycin on the primary endpoint, end of treatment. We expect it to slip, possibly significantly from there at the follow-up visit. What I can also say is for the first time that we've seen, we're testing a portion of the patients for all the way out to 90 days after the end of treatment.

We expect to see that our drug is not going to be having any reinfections, even that far out.

Thomas Yip (Research Associate)

Great. Thanks for the addition, the additional detail. That's something important considering the microbiome effects of these patients. Then perhaps one more question from us regarding the CARB-X grants. I recall previously a decision was expected in April and now it's October. Does that mean you've advanced to the next round? What type of announcement should we expect?

David Luci (President and CEO)

Well, we understand that their decision will be rendered no later than October, pending the outcome of their omnibus capital call that they referenced with basically their annual fundraising effort. So what we're told is that, you know, most of their decisions have been made already. And as you may expect, most of those decisions were rejections. And I'm sure a handful, I'm sure, got through. But we're, you know, still, you know, in the actively pending pool. So we're really excited by that. I mean, for folks that thought that perhaps it was, you know, a small possibility, you know, going into the last conference call. You know, I think our chances are a lot are a lot higher than maybe people originally thought.

Of course, we were uniquely advantaged by knowing how much development had happened. We were particularly enthusiastic going into the process because, you know, we're real close with lead optimization now.

Thomas Yip (Research Associate)

All right.

David Luci (President and CEO)

That's a little of the color behind it, but...

Thomas Yip (Research Associate)

Okay. Thank you. Thank you so much for taking our questions, and looking forward to the interim analysis, and best of luck on the CARB-X position as well.

David Luci (President and CEO)

Thank you so much, Thomas.

Operator (participant)

Our next question comes from James Molloy with Alliance Global Partners. Please proceed with your question.

James Molloy (Managing Director and Equity Analyst)

Good morning. Thank you for taking my questions.

David Luci (President and CEO)

Good morning.

James Molloy (Managing Director and Equity Analyst)

Good morning, David. One of the comments you made, in your prepared remarks was, the blinded data is exceptional. Can you expand a little bit on that, the blinded data, how exceptional it can be and how you can know how exceptional it is?

David Luci (President and CEO)

Yeah. I mean, we have, you know, almost all cures that we see, it's blinded data, so, you know, we don't know which patients are in which baskets, you know. For people that are thinking that one of the possibilities at the interim review could be futility, you know, the answer to that is, if every last remaining patient, you know, is a negative outcome from here forward, I don't see futility, you know, having any possibility. It's all really good, and the patients that are cured are going out 90 days without reinfections. It's data that we haven't seen the likes of, you know, in the space, as we've reviewed over the past few years.

James Molloy (Managing Director and Equity Analyst)

I guess on the patients that ran to date, it's been one - one active versus vanco, and was it holding true to that, or do you know the ratio?

David Luci (President and CEO)

It's 1:1, Jim, but it's 1:1 randomized at the clinical trial site level. You know, as you kind of boil that all the way up to, you know, the, you know, the data center, it may be one or two patients different than that. You know, when we get to 36, it could be that we're 20 and 16 or 19 and 17. It just really depends on, you know, if we have, say, a trial site that enrolls five patients, you know, they're gonna have three in one and two in the other. If you have the same disproportion in one other site, maybe that's six and four. It could be a little off of the 18 and 18, but it'll be close.

James Molloy (Managing Director and Equity Analyst)

Okay. I just trying to get to the heart of your meaning when you're saying that it looks exceptional. As far as you guys can tell, everyone's getting cured. Assuming that the one-one randomization is pretty true or close enough to true, it would seem unlikely that you're not having an effect.

David Luci (President and CEO)

Oh, yeah. There's no chance. There's no chance that we're not having an effect. You know, there's a real lot of cures, I can tell you that.

James Molloy (Managing Director and Equity Analyst)

It seems like the vanco is doing pretty well as well. Is this traditional, cure rates for vanco?

David Luci (President and CEO)

There's about 60 years of clinical data on vanco. I've seen it as low as 79% and as high as 92%. You know, that's why we expect something in the mid-80s and, you know, I haven't seen anything to, you know, shake my confidence that it's gonna be in the mid-80s.

James Molloy (Managing Director and Equity Analyst)

Yeah. Then, can you speak to the unique challenges on the Phase IIb recruit? I think the Phase IIa, you started that in March 2020, the top line data at the end of the year. Maybe I have that timeline correct. What are the challenges in the phase IIb that, you know, you guys were able to avoid in the phase IIa for recruiting?

David Luci (President and CEO)

Well, you know, as time has gone by, you know, the culture of clinical trials has changed. So, you know, there's more telemedicine. There's less people that are, you know, deciding to go to the doctor at the trial sites. You, you know, you have, you know, varying degrees of physical presence in the at the site with the site administrator and the principal investigator on the same day. And, you know, you also have patients that uniquely with a C. difficile trial need to get to the trial site within 24 hours of being diagnosed with C. diff. If the patient is at a referring physician site in Fort Lauderdale, for example, Monday at noon, they're diagnosed with C.

diff, you know, they have to, you know, be willing to go to Miami, by noontime Tuesday, and then they have to agree to go back to Miami, you know, 10x over a two-month period. That's, you know, it's because of the trial design, you know, in part and largely due to COVID. Interestingly, Jim, I should say, you know, there have been a number of patients who could have gotten in, but at the last minute, you know, they qualified, but they had COVID and decided not to participate.

James Molloy (Managing Director and Equity Analyst)

Understood. All right. Maybe the last question on my end, or a couple of questions. What does active sort of review mean and what other things have Cardax funded? Do you know offhand already approved or agreed to fund?

David Luci (President and CEO)

Well, I look at the Cardax website, which, you know, folks can do, and I haven't noticed that they put anything up yet. I think that's probably because, once a company gets approved, we'll never, of course, know, you know, how many got rejected, but you can imagine it's, like, probably over 90% get rejected. Those that get approved, the approval is subject to negotiation and execution of definitive agreements, which usually, you know, will take a 30-day period. If you check that website, the Cardax website in about a month, I think you'll probably see.

James Molloy (Managing Director and Equity Analyst)

Perfect. What should we be looking for on the PASTEUR Act? I know it's in the Senate, and that can sort of be slow. What are you guys watching for as you try and see if this thing gets through?

David Luci (President and CEO)

You know, it's the government, and you know, you know how those things go. From our position in the Antimicrobials Working Group, the expectation is, at the end of the third quarter, they expect it to be included in a piece of legislation. My personal view.

James Molloy (Managing Director and Equity Analyst)

Thank you.

David Luci (President and CEO)

No problem. Just to, you know, clarify a little bit more. My personal view, because of, you know, the budget battles and stuff like that that are going on, even though this is bipartisan supported, in both houses of Congress, I think they're gonna come through with PASTEUR light, which would be instead of, you know, $750 million-$3 billion for the sponsor over 10 years, I think it'll be approved as more like $375 million-$1.5 billion over five years. That's just, that's just my educated guess.

James Molloy (Managing Director and Equity Analyst)

Certainly good numbers, either way.

David Luci (President and CEO)

From where we sit today, it's, you know, it's irrationally exceptional for us and great for public health.

James Molloy (Managing Director and Equity Analyst)

Indeed. Thank you again for taking the questions.

David Luci (President and CEO)

No problem, Jim. Thank you.

Operator (participant)

As a reminder, if you would like to ask a question, please press star 1 on your telephone keypad. Our next question comes from Nick Meyer. Please proceed with your question.

David Luci (President and CEO)

Good morning, Nick.

Speaker 5

Good morning. Hi, how you doing, David? Thanks for the clarification so far on the conference call. One question I do have is, have you started seeing enrollment kick up now that COVID has fully subsided and, you know, the COVID restrictions and the pandemic has officially quote-unquote, came to the end?

David Luci (President and CEO)

No, we haven't. I mean, what we've seen tick up is more pre-screening. We have more patients that we're able to get into the pre-screening process. It's probably about the same in terms of the patients that get through pre-screening successfully and choose to be in the study.

James Molloy (Managing Director and Equity Analyst)

Okay. It's the same included. Okay. One thing that I've wondered is the phase IIa rates seem to have been a lot faster than what we've seen in phase IIb. I just wanted to know, and that was during COVID, so I just wanna know what the disparity was. It seems like it's still just COVID-related.

David Luci (President and CEO)

Yeah, it's still COVID related. you know, as I mean, COVID, the aftermath of COVID, I guess we could call it, you know, is such that, you know, less people are still going to the doctor, to the hospital. People are more focused on things like bacteria and avoiding it. There's more telemedicine and, you know, a lot of the sites are operating remotely, you know, like the rest of the world, you know, operates remotely instead of, you know, kinda going into the office all the time. These are all challenges which are heightened by our trial design, which by necessity, the patient has to get into the study within 24 hours, because they have a life-threatening infection. It would be medically unethical, you know, to have them hanging out with C.

difficile that could kill them for a long period of time without being treated.

Speaker 5

Okay. Yeah. Thank you. That's all. That's the only question I have.

David Luci (President and CEO)

Excellent. Well, thanks for the question, Nick.

Operator (participant)

We have reached the end of our question and answer session. This concludes today's conference. Thank you for your participation. You may disconnect your lines at this time.

David Luci (President and CEO)

Thanks, Maria.

James Molloy (Managing Director and Equity Analyst)

Thank you.