Acurx Pharmaceuticals - Q4 2022

Transcript

Operator (participant)

Greetings, and welcome to the Acurx Pharmaceuticals fourth quarter and full year 2022 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 zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Robert G. Shawah, Chief Financial Officer. Thank you, Robert. You may begin.

Robert G. Shawah (CFO)

Good morning. Thank you, and welcome to our call. This morning, we issued a press release providing financial results and company highlights for the fourth quarter and fiscal year 2022. This press release is available on our website at acurxpharma.com. Joining me today is Dave 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 from the quarter and the year ended December 31, 2022, 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 involves 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 annual report on Form 10-K, which we filed on Wednesday, March 15, 2023. 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, March 16, 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 Dave Luci. Dave.

David P. Luci (President and CEO)

Thanks, Rob. Good morning, everyone, thanks for joining us on this conference call to review our financial results for the fourth quarter and year ended December 31, 2022, also cover some recent updates, then we'd be pleased to take any questions. In the fourth quarter of 2022, we continued to enroll more patients in our phase IIB clinical trial of ibezapolstat, our lead antibiotic candidate for the treatment of patients with C. difficile infection or CDI as we call it. The phase IIB clinical trial is a randomized 1-to-1 non-inferiority double blind trial of oral ibezapolstat compared to oral vancomycin, a standard of care to treat CDI. The primary endpoint is clinical cure at the end of treatment, a secondary endpoint is sustained clinical cure measured at day 38 follow-up visit.

Since this is a double blind trial, results won't be known until the end of the trial. 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 ibezapolstat and the standard of care vancomycin. In the event non-inferiority of ibezapolstat to vanco is demonstrated, further analysis will be conducted to test for superiority. As we previously discussed, due to slower than expected enrollment during and possible resurgence of COVID-19 infections, we expanded the number of clinical trial sites participating in the phase IIB trial from the initial 12 sites to a total of 28 trial sites. This project was commenced in July 2022 and completed in the fourth quarter.

We remain particularly excited about the dual impact of using ibezapolstat to treat acute CDI 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 ID Week in October 2022 and are available on our website. Most importantly, based on the blinded observed data from the ongoing phase IIB clinical trial to date, in January 2023, the company filed a protocol amendment to its investigational new drug application or IND with the FDA to allow for an independent data monitoring committee or IDMC to review interim clinical data. If acceptable to the FDA, the IDMC will review the clinical data upon enrollment of 36 patients. I repeat, 36 patients, not 64 patients in the phase IIB clinical trial.

The company currently has enrolled 25 patients in the trial to date. The IDMC will determine and recommend to the company whether the most appropriate course of action forward is to early terminate the 2B trial, as we did previously with our phase IIA clinical trial, or to continue patient enrollment. The company intends to report available data promptly after the IDMC conducts this interim review. The company assembled its IDMC, independent medical committee, in the first quarter of 2023, solely for this purpose.

Other key highlights from the fourth quarter of 2022, or in some cases shortly thereafter, include the following. The company has continued its R&D collaboration with Leiden University Medical Center in Holland to further evaluate the mechanism of action of Acurx's in-inhibitors against the DNA pol IIIC enzyme, which is the bacterial target of our antibiotic product pipeline for the systemic treatment of other Gram-positive bacterial infections. Data generated from this program was critical to include in a recent non-dilutive grant application, which I will describe in more details in a minute. This grant application was submitted by the company in the fourth quarter of 2022. Based on this successful co-collaboration with LUMC, has proposed a second stage two-year project to further analyze chemical structure relationships of new Acurx compounds with a propensity for reduced antimicrobial resistance.

At this point, this new project proposal is subject to review approval and funding by the Dutch government, but the grant is expected to be for about $500 thousand in total, similar to the original grant amount that was provided by the Dutch government for an initial project. The company completed certain portions of its laboratory study at the University of Houston comparing the killing effect of ibezapolstat to vancomycin, fidaxomicin, and metronidazole using both in vitro and ex vivo analyses. Certain results were presented at the Anaerobe Society of the Americas Annual Scientific Conference. Results demonstrated that ibezapolstat has favorable killing kinetics compared to vancomycin to treat C. difficile infection at standard and high bacterial concentrations, supporting continued development of this first in class antibiotic to treat C. diff infection. Comparisons of the killing effect of ibezapolstat to fidaxomicin and metronidazole are ongoing.

In October 2022, the company filed for a non-dilutive grant of up to $11.3 million, which if approved, would provide funding for ACX-375, our second antibiotic program targeting the treatment of MRSA infections, for a period of five years of drug development right to the start of phase II clinical trials. The company is now in the third and final round of consideration for this non-dilutive grant, and a decision is expected in April 2023, just a few weeks from now. If approved, the company would need to pay approximately $5 million of the total project cost of approximately $16 million in total over a 5-year period, and the grant would pay the other $11.3 million.

Next month, the European Congress of Clinical Microbiology and Infectious Disease, one of the most comprehensive and influential scientific conferences in clinical microbiology and infection, will hold its 33rd session in Copenhagen. An abstract entitled Novel Pharmacology and Susceptibility of Ibezapolstat against C. diff Isolates with Reduced Susceptibility to C. diff Directed Antibiotics, has been accepted. Dr. Kevin Garey, Professor and Chair, University of Houston College of Pharmacy, and the principal investigator for microbiome aspects of our ibezapolstat clinical trial program, will be presenting on our behalf.

Our Executive Chairman, Bob DeLuccia, has been invited to present at the company's pre-clinical systemic oral and IV program for treatment of other Gram-positive infections caused by MRSA, VRE, and DRSP in the quote/unquote "Pipeline Corner" featured session organized by Dr. Ursula Theuretzbacher, a world-renowned microbiology expert for antibacterial drug research discovery and development strategies and policies for clinical and public health needs. More details on these presentations will be announced prior to the meeting date. Now back to our CFO, Rob Shawah, to guide you through the highlights of our financial results for the fourth quarter and year-end 2022. Rob?

Robert G. Shawah (CFO)

Thanks, Dave. Our financial results for the fourth quarter and full year ended December 31, 2022, were included in our press release issued earlier this morning. The company ended the year with cash totaling $9.1 million compared to $13 million as of December 31, 2021. Research and development expenses for the three months ended December 31, 2022, were $1.4 million compared to $0.7 million for the three months ended December 31, 2021. The increase was due to an increase in phase IIB trial related costs. For the 12 months ended December 31, 2022, research and development expenses were $4.8 million versus $2 million for the 12 months ended December 31, 2021. The increase was due primarily to phase IIB trial related costs.

General administrative expenses for the three months ended December 31, 2022, were $1.8 million compared to $1.9 million for the three months ended December 31, 2021. The slight decrease was primarily due to a decrease in professional fees. For the 12 months ended December 31, 2022, general and administrative expenses were $7.3 million versus $10.8 million for the 12 months ended December 31, 2021. The decrease was primarily attributable to a decrease in professional fees and stock-based compensation expense, partially offset by an increase in insurance costs.

The company reported a net loss of $3.3 million or $0.28 per diluted share for the three months ended December 31, 2022, compared to a net loss of $2.6 million or $0.26 per diluted share for the three months ended December 31, 2021. A net loss of $12.1 million or $1.12 per share for the 12 months ended December 31, 2022, compared to a net loss of $12.7 million or $1.49 per diluted share for the 12 months ended December 31, 2021, all for the reasons previously mentioned. The company had 11,627,609 shares outstanding as of December 31, 2022. With that, I'll turn the call back to Dave.

David P. Luci (President and CEO)

Thanks, Rob, to all of you for joining us today. We're very enthusiastic about our continuing strong fundamentals, we're especially pleased to report Acurx's progress in the fourth quarter of 2022. We look forward to building on this momentum in coming months, even during these most challenging times, to update you as we do so. I'd now like to open up the call to 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'd 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 key. One moment please while we poll for questions. Thank you. Our first question is from Jason McCarthy with Maxim. Please proceed with your question.

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

Good morning, David. Thank you for taking the questions. When do you expect an outcome or a response from FDA on the IND for the IDMC?

David P. Luci (President and CEO)

Um, well-

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

Protocol amendment rather. Sorry.

David P. Luci (President and CEO)

No problem. Thanks for joining us today, Jason. We expect in the coming days or weeks, you know, certainly in the month of March, a response from the FDA on the amendment. You know, we're, you know, sure that there's going to be no issue with our, you know, taking the interim look at the data. This is a phase II, not a phase III registration trial. You know, there's plenty of precedent supporting it and no precedent we found that would suggest that we won't be able to take the look. We're confident we'll be able to take the look.

It is a protocol amendment, so it's a, as you know, a highly technical scientific document, so we're sure to get comments, whether they're substantive in nature or language, you know, linguistic type of comments. The overall theme of, you know, taking the interim look is something that, we're certain is, you know, we're highly confident it's gonna be just fine.

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

Do you think that, will the interim look be predicated on non-inferiority, or would you be looking for superiority, kinda like you saw in the phase IIA? Would you report that data, or would you just get a halt the trial for efficacy or just continue as planned outcome?

David P. Luci (President and CEO)

No. You know, we've always said that, when we get to the end of the trial, and the end may very well be 36 patients, well, after testing for non-inferiority, which is the primary endpoint, we do have an exploratory endpoint to go ahead and test for superiority as well. That process isn't changed by taking the interim look. I think what we'll probably do, is get out as soon as possible, the top-line data from the IDMC when we receive it, with the understanding that, you know, we'll get out another press release with a full data set, down the line when the database is locked and the data's scrubbed and we get the final study report.

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

Just last question. With the increase in the number of trial sites, have you seen enrollment start to tick up? If so, how long do you expect it to take to get to the 36 patients for the IDMC?

David P. Luci (President and CEO)

You know, it's, the enrollment's definitely ticked up a bit. You know, we can get the patients all the way through the pre-screening process, and then it's almost a question of physiology and patient consent. Just yesterday there was a patient that qualified out west, and they just didn't wanna consent to being in the trial. They changed their mind. You know, we can't control that. What we can control with all of the efforts we've done with adding all these trial sites is we're seeing an average of five to seven patients being pre-screened every week. The question that we ask is, how long does it take to have 5 to 7 pre-screened patients per week turn into 11 enrolled patients?

The answer to that question, you know, It's like a fingerprint. Everyone's gonna have a different opinion. You know, it could be a couple of months, it could be a few months, but it's certainly, you know, not a very long period of time.

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

Just quickly, can you just review your thoughts on what treatment guidelines could look like with ibezapolstat getting to approval? Would fidaxomicin, vancomycin kind of go in the rear view mirror, and they would move to whatever comes out next? 'Cause ridinilazole seems to be out, right? Ibezapolstat seems to be kind of the only game in town, new antibiotic that's out there.

David P. Luci (President and CEO)

Yes. You know, so it will subject to the data. You know, if the data holds the way the ibezapolstat data's been trending, you know, the people that write the guidelines, the IDSA treatment guidelines suggest the next approved drug to treat C. diff that comes out that makes the recommendation list is gonna kinda mean the twilighting of oral vancomycin, similar to how metronidazole was twilighted a couple of years ago and is no longer recommended. That-that's kinda where, you know, the intelligentsia is in the C. diff space. You're quite right. Ridinilazole, you know, didn't make it. There have been a number of things that haven't made it down the line, you know, fecal transplant, stuff like that. We think that we would be used frontline. fidaxomicin isn't a bad drug.

In my view, it's better than oral vancomycin in a lot of ways. It's so prohibitively expensive, and with the Medicare and Medicaid reimbursement rules, it's therefore used last line. We don't expect that to change. Remember that that's not a QIDP drug, fidaxomicin. It was approved before QIDP was a law. Therefore, you know, it wouldn't qualify for things like the DISARM Act, which would put branded antibiotics on equal footing with generics so that hospitals could use the best antibiotic frontline instead of the cheapest antibiotic frontline.

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

Okay. Thank you for taking the questions.

David P. Luci (President and CEO)

No problem. Thank you, Jason.

Operator (participant)

Thank you. Our next question is from Ed Arce with H.C. Wainwright. Please proceed with your question.

Thomas Yip (Equity Research Associate)

Hi. Good morning. Thank you for taking our questions. This is Thomas Yip, asking a couple of questions for Ed. First, regarding the phase IIB study, just wondering, will patient screening and enrollment continue while the interim review is ongoing?

David P. Luci (President and CEO)

No, I don't think it will. We'll put a pause. In other words, we won't terminate the trial. We'll put a pause on further enrollment while the evaluation is happening. We don't expect the evaluation to take a long period of time. You know, it should take a few days, not an extensive period of time.

Thomas Yip (Equity Research Associate)

Right. Got it. Okay. Thank you for clarifying. Another question on the phase IIB, specifically for the IDMC. Can you tell us how large is this group and just what are their backgrounds? Does it include anyone with regulatory experience?

David P. Luci (President and CEO)

Absolutely. It's folks in microbiology, statisticians, significant clinical development. It's quite a star-studded team. You know, if you'd like to find out more details about their CV information, we can certainly, you know, have an offline conversation about that, and I'm sure we can make you comfortable. It's a, it's a powerful group.

Thomas Yip (Equity Research Associate)

Okay. Sounds good. Perhaps one last question from us. You outlined the $11.3 million grant that was filed in October. Is this a CARB-X grant? If not, can you give us any other details where it's based?

David P. Luci (President and CEO)

Yes, it is a CARB-X grant.

Thomas Yip (Equity Research Associate)

Okay. Got it. Thank you so much for taking our questions, and looking forward to the phase IIB update.

David P. Luci (President and CEO)

Awesome. Well, thank you for participating this morning.

Operator (participant)

Thank you. Our next question is from James Molloy with Alliance Global Partners. Please proceed with your question.

James Molloy (Managing Director and Equity Research Analyst)

Hey, guys. Good morning. Thanks for taking my question. Post the interim look, I guess presuming, things go well in the interim look, and it's an early stoppage for success, what's the thinking on timing for, I guess, for going forward with the non-inferiority trial or, sort of the next steps, post that interim look?

David P. Luci (President and CEO)

After the interim look, you know, we would promptly release top-line data, then wait for the database to be locked, data scrubbed, final study report, and that will be then put into an FDA post-phase II meeting package. We would meet the FDA to kinda outline and kinda negotiate what phase III will look like. You know, that whole process from the time we get the final study report to the time we have the FDA's concurrence is probably a 90-day process. You know, during that time period, we'll also be going out to, you know, kinda recruit more clinical trial centers, you know, probably at least 50 or 75 trial centers to start with. Just to get us off the ground for phase III.

Phase III would formally start sometime in the first half of 2024.

James Molloy (Managing Director and Equity Research Analyst)

Excellent. Thank you. Then maybe for the bigger picture, has there been any updates on the PASTEUR Act and anything going on there you can talk about?

David P. Luci (President and CEO)

Well, we signed on to a letter from, you know, dozens of members of the Antimicrobials Working Group, who are in our space, to Congress, just about two weeks ago. As we, as we find out, through our affiliation with the Antimicrobials Working Group, there are 60 U.S. senators now that approve of the content of the PASTEUR Act. It having passed the House, one would think that it is extremely close. We know that Patty Murray, the Democrat that's been leading the charge, from the state of Washington, is very supportive.

I don't know where President Biden is on it conceptually. I do know that there's now a budget battle in Washington. I don't know exactly how that's gonna turn out generally or specifically with regard to whether PASTEUR will be included in some component of that massive piece of legislation. It's, it's percolating. It was days away from being approved twice in 2022. You just never know.

James Molloy (Managing Director and Equity Research Analyst)

I agree. Then I can't remember my last question. The looking at OpEx here, you guys are as always good stewards of shareholder capital. Are these the sort of levels that we should anticipate OpEx being in 2023 and then I guess, changing pending the phase III starting? What's your current sort of run rate with the $9 million in cash?

David P. Luci (President and CEO)

We are spending an average about $2.2 million per quarter currently. You know, it would certainly be nice for the CARB-X grant to be approved. And we'll find out in April if that is approved. That'll be a nice shot in the arm for us. You know, it's about a dollar a share in value non-dilutively. But, you know, clearly we have enough money to get through the end of the year. You know, phase III obviously is going to be an expensive endeavor. And, you know, our objective is, you know, let's get through the study. Let's see if we get the CARB-X grant, and we'll go from there. If we can opportunistically add a nip or a tuck here or there capital-wise. We will.

It wouldn't be anything tremendously large, but, at some point, you know, we'd probably do a little something. You know, keep in mind our original business plan, from day one is to get through the phase IIB clinical trial and, you know, explore strategic alternatives. We certainly love what we're doing, phase III would be, you know, quite exciting. You know, since our job is to deliver shareholder value, we'll give it an honest look.

James Molloy (Managing Director and Equity Research Analyst)

Awesome. Thank you for taking the questions.

David P. Luci (President and CEO)

Thank you, Jim.

Operator (participant)

Thank you. There are no further questions at this time. This concludes today's conference. You may disconnect your lines at this time. Thank you for your participation.

David P. Luci (President and CEO)

Thanks, Paul.

Robert G. Shawah (CFO)

Thank you, Paul.