Acurx Pharmaceuticals - Q3 2022

Transcript

Operator (participant)

Good day, and welcome to Acurx Pharmaceuticals, Inc. to discuss 2022 third quarter financial results on November 14, 2022. 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 call, please press star one 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. Please go ahead, sir.

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 third quarter of 2022. This press release is available on our website at acurxpharmaceuticals.com. Joining me today is David Luci, President and CEO of Acurx, who will give a corporate update and outlook for the remainder of 2022. After that, I'll provide some highlights of the financials from the quarter ended September 30th, and then turn the call back over 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.

They 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 on Thursday, November 10th, 2022. You are cautioned not to place undue reliance on these forward-looking statements, and 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, November 14th, 2022. 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 on this conference call to review our financial results. During today's call, we'll review our financial results for the third quarter ended September 30, 2022, and also cover some key corporate highlights, and then we'd be pleased to take any questions. In the third quarter, we continued to enroll more patients in the phase II-B clinical trial of ibezapolstat, our lead antibiotic candidate for the treatment of patients with C. difficile infection. The phase II-B clinical trial is a 64-patient randomized one-to-one non-inferiority double-blind trial of oral ibezapolstat compared to oral vancomycin, the standard of care to treat CDI.

The primary endpoint of the phase II-B clinical trial is clinical cure at the end of treatment, and the secondary endpoint is sustained cure measured at day 38 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. The protocol includes an exploratory endpoint comparing the impact on the microbiome between ibezapolstat and vancomycin. In the event non-inferiority of ibezapolstat to vancomycin is demonstrated, further analysis will be conducted to test for superiority. Additionally, due to slower than expected enrollment during the aftermath and possible resurgence of COVID-19 infections, we expanded the number of clinical trial sites participating in the phase II-B trial from the initial eight U.S. trial sites to up to 30 U.S. trial sites.

Currently, there are approximately 24 sites open for enrollment with additional six trial sites onboarding at this time. We remain particularly excited about the dual impact of using 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. Details of the impact on the microbiome were presented in oral and poster presentations at IDWeek in October in Washington, D.C., and are available on our website. Other key highlights from the third quarter of 2022, or in some cases shortly thereafter, include the following. The company continued its R&D collaboration with Leiden University Medical Center in Holland to further evaluate the mechanism of action of Acurx's inhibitors against the DNA pol IIIC enzyme, which is the bacterial target of our lead antibiotic candidate and of our product pipeline, both orally and systemically, for gram-positive bacterial infections.

Secondly, the company has completed certain portions of its laboratory study at the University of Houston comparing the killing effect of ibezapolstat to vancomycin, to vancomycin and metronidazole using both in vitro and ex vivo analyses. Certain results have been presented at the Anaerobe Society of the Americas Annual Scientific Conference, and results demonstrated that ibezapolstat has favorable killing kinetics compared to vancomycin, the standard of care to treat C. diff infection at standard and high bacterial concentrations, supporting continued development of this first-in-class antibiotic to treat patients with C. difficile infection. Comparisons of the killing effect of ACX-375C to vancomycin and metronidazole are ongoing. Presentations of various aspects of ACX-375C in our second antibiotic program, which is currently in preclinical development, to treat infections caused by MRSA, were presented at two recent prominent scientific conferences as follows.

The Antimicrobial Resistance Conference in September of 2022 and ID Week in October of 2022. Additionally, Acurx recognized the month of November as C. difficile Awareness Month, as designated by the U.S. Centers for Disease Control and Prevention, and supports the work of both the C. Diff Foundation and the Peggy Lillis Foundation in educating and advocating for the prevention, treatment, clinical trials, and environmental safety of C. difficile infections worldwide. Actually, in July of 2022, the company raised $4.23 million of gross proceeds by consummating a registered direct offering to one U.S. institutional investor and three executives of the company at $3.25 per share for the U.S. institutional investor and $3.80 per share for the company's three executives, who invested a total of $225,000.

In the transaction, we issued a total of 1,159,000 common shares and approximately 131,000 pre-funded warrants. Warrants to purchase common stock totaled approximately 2.6 million, with warrant coverage at an exercise price of $3.25 per share for the U.S. institutional investor and $3.55 per share for the company's executives. To reiterate, in July 2022, we increased the target number of clinical trial sites and continued to onboard new trial sites with an anticipated total of 30 active clinical trial sites before the end of the year.

In addition, in October 2022, the company filed for a non-dilutive grant of up to $60 million, which if approved, would provide funding for our second antibiotic program, ACX-375, targeting the treatment of MRSA infections for a period of five years, right up to the start of phase II clinical trials. The company's portion of this funding will be approximately $5 million and we expect a decision by the funding party in April 2023. Now back to our CFO, Rob Shawah, to guide you through the highlights of our financial results for the third quarter of 2022. Rob.

Rob Shawah (CFO)

Thanks, Dave. Our financial results for the third quarter ended September 30th, 2022 were included in our press release issued earlier this morning. The company ended the third quarter on September 30th with cash totaling $10.6 million, compared to $13 million as of December 31, 2021. Research and development expenses for the three months ended September 30th were $1.6 million, compared to $1.1 million for the three months ended September 30, 2021. The increase was due to an increase in phase II-B trial related costs and related consulting costs. For the nine months ended September 30, 2022, research and development expenses were $3.3 million versus $1.3 million for the nine months ended September 30, 2021.

This increase was due primarily to phase II-B trial related costs in the current nine-month period and an increase in consulting costs related thereto. General and administrative expenses for the three months ended September 30th, 2022 were $2 million compared to $3.5 million for the three months ended September 30, 2021. The decrease was primarily due to a decrease in share-based compensation related to the company's initial public offering and a decrease in legal fees associated with the company's intellectual property estate. For the nine months ended September 30th, 2022, general and administrative expenses were $5.5 million versus $8.9 million for the nine months ended September 30, 2021.

The decrease was primarily attributable to a decrease in professional fees and stock-based compensation related to the company's initial offering, partially offset by an increase in insurance costs. The company reported a net loss of $3.5 million or $0.32 per diluted share for the three months ended September 30th, 2022, compared to a net loss of $4.6 million or $0.46 per diluted share for the three months ended September 30, 2021. A net loss of $8.8 million or $0.84 per diluted share for the nine months ended September 30, 2022, compared to a net loss of $10.1 million or $1.27 per diluted share for the nine months ended September 30, 2021, for the reasons previously mentioned.

The company had 11,592,609 shares outstanding as of September 30, 2022. With that, I'll turn the call back over to Dave.

David Luci (President and CEO)

Thanks, Rob. To all of you for joining us today, we're very enthusiastic about our continuing strong fundamentals, and we're especially pleased to report Acurx's progress in the third quarter of 2022. We look forward to building on this momentum in the coming months, even during these most challenging times, and to update you as we do so. I will now turn the call over 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 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 headset before pressing the key. One moment please while we wait for questions. Our first question comes from Jason McCarthy with Maxim Group. Please go ahead.

Jason McCarthy (Senior Managing Director and Head of Biotechnology Research)

Good morning, David. Thanks for taking the questions. Just on the phase II-B and the C. diff trial, you'd mentioned that you've added a lot more sites. Have you guys provided any update on where enrollment is in terms of numbers for the target 64, correct?

David Luci (President and CEO)

Yes. The target in the protocol is 64 patients, 1:1 randomized. As we've previously mentioned, we're planning to announce when we get to 50% enrollment. The only caveat that I would add is, you know, except that if our data is looking particularly good, like the phase I data and the phase II-A data, there may be an opportunity for us to early terminate the 2-B trial if and to the extent our Data Safety Monitoring Board makes that recommendation. The company is double-blind, so we have no ability or insight into whether or not they will be doing that. We are aware that there's some activity there, and it's a possibility.

Jason McCarthy (Senior Managing Director and Head of Biotechnology Research)

Okay. On the, just on the second program, you'd mentioned, targeting MRSA. There's some good preclinical data back in September, I think again in October. You know, what is the path forward there? What does it look like to get to IND, and a phase 1 study? What particular indication could you target?

David Luci (President and CEO)

The initial target indication would be ABSSSI, acute bacterial skin and skin structure infections caused by MRSA. That's one of the most abundant, if not the most abundant, area of MRSA infections in the U.S. We would be targeting and are working on both an oral and an IV formulation. The next steps on that program are to complete the lead optimization and then to conduct some manufacturing scale-up as well as a preclinical tox work in order to support the IND submission.

We would go into a phase one, and if we get the non-dilutive grant that we're looking for, it would pay five years of these costings, or I should say 70% or so of five years of these $60 million of costings, and we would have to pay the balance of about $5 million.

Jason McCarthy (Senior Managing Director and Head of Biotechnology Research)

Okay. You expect the outcome of that grant file or submission in April? Is that correct? Did I hear that right?

David Luci (President and CEO)

Yeah. April tenth is when we will hear if we've been approved. At that point, there's a negotiation period for contracts with the funding party. At the end of November, we'll find out if we get into the second round of consideration for that non-dilutive grant. We expect we will. We've had steady interaction with the funding party for the past three years, even before the RFP came out. We're particularly hopeful about our candidacy for this particular grant, and we feel that we fit right down the middle of the RFP.

Jason McCarthy (Senior Managing Director and Head of Biotechnology Research)

Got it. Just quickly, on the program that the government was working on in Congress, the PASTEUR Act?

David Luci (President and CEO)

The PASTEUR Act and the DISARM Act are still, like, right beneath the surface, as we understand it, through our interaction with the Antimicrobials Working Group. You know, for the past couple of months with the election and, you know, the volatility that we've seen in the stock market and the global markets, it hasn't bubbled its way back up just yet. The AWG and the Biotechnology Innovation Organization are both very confident that one or both will be approved in the new Congress. You know, as mentioned, the PASTEUR Act enjoys bipartisan support, and on the Democrat side is championed by Patty Murray, who for this purpose, thankfully, has made her way to being reelected last week.

We're particularly hopeful the PASTEUR Act will be passed, and that would really increase the valuations for all developers of R&D stage antibiotics that treat patients with life-threatening or serious infections, PADP infections, that are novel first in class. We feel that we'd be tailor-made for PASTEUR. It was scratched in favor of a defense spending bill about six months ago at the last minute, ninth inning. We're still hopeful that in the new Congress, it will pass.

Jason McCarthy (Senior Managing Director and Head of Biotechnology Research)

Got it. Thanks for taking the questions this morning.

David Luci (President and CEO)

No problem. Thank you. Thank you, Jason.

Operator (participant)

As a reminder, if you would like to ask a question, please press star one on your telephone keypad. There are no further questions at this time. This concludes today's teleconference call. You may disconnect your line and have a great day. Thank you for your participation.

David Luci (President and CEO)

Thank you, Victoria.

Operator (participant)

Thank you.