Acurx Pharmaceuticals - Q4 2023

Transcript

Operator (participant)

Greetings, and welcome to the Acurx Pharmaceuticals Report's Fourth Quarter and Full Year 2023 Earnings Results and Business Update Call. At this time, all participants are in a listen-only mode. A 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. I would now like to turn the call over to your host, Robert Shawah, Chief Financial Officer for Acurx Pharmaceuticals. Thank you. You may begin.

Robert Shawah (CFO)

Thank you, Melissa. Good morning, and welcome to our call. This morning, we issued a press release providing financial results and company highlights for the fourth quarter and full year 2023, which is available on our website at acurxpharma.com. Joining me today is David Luci, President and CEO of Acurx, as well as Robert DeLuccia, Executive Chairman. David will give a corporate update and outlook. After that, I'll provide some highlights of the financials from the quarter and year ended December 31, 2023, and then turn the call back over to David 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 annual report on Form 10-K, which we filed on Friday, March 15th, 2024. 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 18th, 2024. I'll now turn the call over to Dave Luci. Dave?

David Luci (CEO)

Thanks, Rob. Good morning, everyone, and thanks for joining us to review our financial results for the fourth quarter of 2023, and also to hear some very exciting recent updates. Then we'd be pleased to take any questions. First, I'll summarize some of our key activities for the fourth quarter of 2023, or in some cases, shortly thereafter. On October 2nd, 2023, we ended enrollment in our phase II-B clinical trial of ibezapolstat, or ibez, our lead antibiotic candidate for the treatment of patients with C. difficile infection, or CDI.

On November 2, 2023, we reported top-line data from the phase II-B clinical trial, including overall results from the full phase II study, demonstrating an ibezapolstat clinical cure rate at end of 10 days oral treatment, or EOT, of 96%, 25 of 26 patients, which included 100% cure in phase IIa and 94% cure in phase II-B, compared with vancomycin control arm, the standard of care, which was 14 for 14 or 100% at end of treatment and 94% was sustained cures. No safety concerns were reported in either arm of the phase II-B clinical trial, and ibezapolstat was well tolerated in all patients in both the phase II-A open label trial and the phase II-B vancomycin controlled segment.

In consultation with our scientific advisors, the company determined that based on review of aggregate blinded data, the phase II-B vancomycin control trial segment was terminated early due to success showing high observed clinical cure rates with no emerging safety concerns. Clinical comparability was established. We also stated at that further that further data would be provided as it becomes available on secondary and exploratory endpoints for the phase II-B trial segment, including sustained clinical cure data at 30 days after EOT and extended clinical cure data 94 days after EOT, as well as comparative data on the impact on the patient's microbiome. On December 11th, 2023, we announced the sustained clinical cure data.

These data showed that in the phase II-B trial segment, 100% or 15 of 15 of our ibezapolstat patients who were cured at EOT remained cured, with no reinfection 30 days later, while vancomycin experienced a reinfection rate of 14.3%. Two of 14 patients were reinfected. On January 17th, 2024, we announced positive comparative microbiology and microbiome data for ibezapolstat in CDI patients from the phase II-B clinical trial segment. Ibezapolstat outperformed vancomycin, showing eradication of fecal C. difficile at day 3 of treatment in 15 of 16 treated patients, versus vancomycin, which had eradication of C. difficile in just 10 of 14 treated patients.

Additional data from the phase II-B clinical trial showed ibezapolstat, but not vancomycin, consistently preserved and allowed regrowth of the gut bacterial species, believed to confer health benefits, including prevention of recurrent C. difficile infection. We anticipate that additional data from these secondary and exploratory endpoints will provide further favorable separation between these two therapeutic options in phase III clinical trial program and ultimately in the marketplace, if approved. Additional analyses regarding our secondary and exploratory endpoints will be forthcoming as data become available. We remain particularly excited about the dual impact of ibezapolstat to treat acute C. difficile infection, while appropriately managing the long-term care of each patient's microbiome, which we believe is exceptional for antibiotic therapy.

Having robust preclinical, clinical, and manufacturing data to date, we submitted a formidable information package in early February to FDA, along with a request for an end of phase II meeting, which was granted by FDA on February 26, and is scheduled to occur in April. We anticipate discussing our phase III clinical trial mandate at this meeting, and would anticipate documented meeting minutes from FDA sometime in the second quarter this year. We also announced that the European Medicines Agency approved our application to be designated as a small to medium-sized enterprise, or SME, in Europe, which provides for certain benefits, including fee reductions and other support from the European Medicines Agency for seeking a marketing authorization in Europe.

In November 2023, we filed an amendment to our shelf registration statement with the Securities and Exchange Commission and put up a $17 million at-the-market, or ATM, facility, with Alliance Global Partners acting as sales agent to the company. Proceeds from the ATM will be used for general corporate purposes going forward, including our phase III clinical trial mandate. In October 2023, at IDWeek, Dr. Kevin Garey presented on our behalf with selective spectrum of activity data from our phase II-A clinical trial. Many of you may recall, Dr. Garey is Professor and Chair, University of Houston, College of Pharmacy, and the principal investigator for our microbiome aspects of the ibezapolstat clinical trial program.

Also at IDWeek, Bob DeLuccia, our Executive Chairman, presented our new class of novel DNA Pol IIIC inhibitors in our preclinical pipeline at the symposium entitled New Antimicrobials in the Pipeline. Now, that's a lot of activity to digest, so I'll summarize further as to where we are today. As we speak, we're preparing to advance ibezapolstat phase III clinical trials and anticipate a favorable outcome from our upcoming FDA meeting regarding readiness to proceed, and also to obtain agreement on the regulatory pathway for a new drug application filing for marketing approval in the U.S. phase III is completed. We've also officially started the regulatory process in Europe. We'll add other territories to the list later this year. phase III trials will include U.S. and international sites to enhance overall enrollment and to support international regulatory filings for marketing approval.

This will save us a lot of time and money and allow us to expand our ultimate commercial reach. To ensure phase III clinical trial enrollment as quickly as possible, we're adding substantially more clinical trial sites, way above the number we used to conduct our U.S.-only phase II trials. We're now getting our arms around the costs and timelines, but our plan is to conduct the required two phase III registration trials consecutively, not concurrently, given the size of our company and need to use our financial resources most efficiently. The timeline for conduct of our phase III trial is not a concern, since ibezapolstat will have a rolling ten years of regulatory exclusivity in the U.S. from the FDA approval date, with similar legislation in Europe, the U.K., and Japan.

We will continue to seek a strategic transaction for the company, including a potential partner, for the further development and potential commercialization of ibezapolstat, as well as a potential sale, merger, third-party ex-US territorial licensing arrangement, or other strategic transaction alongside and in parallel with our preparation phase III clinical trials. At this time, we have no commitments from potential partners or others to provide the company with capital, but we started this initiative only recently in February, after our phase II-B data was released. So basically, we have two formidable plans A going forward, and we're equally excited about partnering M&A phase III enrollment as next steps over the next 12 months. As we've consistently reported, ibezapolstat continues to outperform in a serious and potentially life-threatening infectious disease called C.

difficile, that the U.S. CDC categorizes as an urgent threat, and there's a need for new classes of antibiotics for initial treatment that also has a low incidence of recurrence. Ibezapolstat also has FDA Fast Track designation for treatment of C. difficile infection. Additionally, we believe ibezapolstat, if approved, could make a favorable impact by reducing the cost burden of current C. difficile infection on our U.S. healthcare system, which is estimated at $4.7 billion annually. We do believe the best is yet to come. And now back to our CFO, Robert Shawah, to guide you through the highlights of our financial results for the fourth quarter and full year 2023. Rob?

Robert DeLuccia (Executive Chairman)

Thanks, Dave. Our financial results for the fourth quarter and twelve months ended December 31, 2023, were included in our press release issued earlier this morning. The company ended the year with cash totaling $7.5 million, compared to $9.1 million as of December 31, 2022. Subsequent to year-end, the company sold an additional 1,121,793 shares under its ATM financing program, with gross proceeds of approximately $4.5 million. Research and development expenses for the three months ended December 31, 2023, were $1.9 million, compared to $1.4 million for the three months ended December 31, 2022. The increase was due to timing of phase II-B trial-related costs and an increase in consulting costs.

For the year ended December 31, 2023, research and development expenses were $6 million, which is $4.8 million for the year ended December 31, 2022. The increase is due primarily to phase II-B costs and an increase in consulting costs. General administrative expenses for the three months ended December 31, 2023, were $3.2 million, compared to $1.8 million for the three months ended December 31, 2022. The increase was due primarily to $800,000 increase in professional fees, a $0.1 million dollar increase in share-based compensation, and a $0.3 million dollar increase in employee compensation costs.

For the year ended December 31, 2023, general administrative expenses were $8.5 million versus $7.3 million for the year ended December 31, 2022. The amounts reflect an increase in professional fees of $0.5 million, an increase of $0.3 million in share-based compensation, and an increase of $0.3 million in employee compensation costs. The company reported a net loss of $5.1 million, or $0.37 per diluted share, for the three months ended December 31, 2023, compared to a net loss of $3.3 million, or $0.28 per diluted share for the three months ended December 31, 2022.

a net loss of $14.6 million, or $1.15 per share for the year ended December 31, 2023, compared to a net loss of $12.1 million, or $1.12 per diluted share for the year ended December 31, 2022. The reasons previously mentioned. The company had 14,468,229 shares outstanding as of December 31, 2023. With that, I'll turn the call back over to Dave.

David Luci (CEO)

Thanks, Rob, and to all of you, for joining us today. I'll now ask Bob DeLuccia, our Executive Chairman, to provide his perspective, given Bob manages our R&D program. When Bob is finished, operator, please open the call for questions. Bob?

Robert DeLuccia (Executive Chairman)

Thanks, Dave and Rob, for updating our stakeholders, and thanks to all for the continuing support as we advance ibezapolstat phase III clinical trials. This is a very exciting time, and really, it's the final step to commercialize ibezapolstat for patients in need of a promising new antibiotic with a novel bactericidal mechanism of action to treat CDI. Many of you will remember that approximately 30,000 people die each year in the U.S. alone from CDI, and the annual incidence is more than about 500,000 per year in the United States. The bottom line here is that if the outcome of phase III trials are consistent with our phase IIexperience, we'll have an approvable new drug in our hands. The data are solid, the market is large, and our manufacturing cost is low.

We do have a robust preclinical, clinical microbiome, safety, and CMC evidence package that we've submitted to the FDA, and as Dave mentioned, they've determined it acceptable to grant us an end-of-phase IImeeting next month to discuss trial design, patient enrollment targets, and to confirm our readiness to go forward. So to complete our phase II, phase III trials, which will be done sequentially, as Dave mentioned, and as quickly as possible, we've already initiated steps to advance screen potential clinical trial sites. Which in addition to North America, will cover sites in about 17 other countries, including several in Eastern, Central, Northern, and Western Europe, totaling about 100 sites, which we believe will accelerate overall enrollment. We'll also be including several high-enrolling trial sites from the fast-enrolling phase III cdi trial, which was conducted during the height of COVID-19.

In addition to global scope of the program, compared to phase II and the strength of our phase II data, phase III protocol will allow more flexibility for inclusion and exclusion criteria as a standard for CDI pivotal registration trials, so we anticipate faster enrollment. Then, once we have results from our FDA meeting and documented meeting minutes from the FDA, our next priority will be to submit our plans to the European Medicines Agency, or EMA, for phase III clinical trials in Europe. So, if approved, we'll have the first new class of antibiotics approved by FDA in over 30 years, with only phase III trials between now and market introduction....

Ibezapolstat, as Dave mentioned, is fast-tracked by FDA, it's fully patented, and with regulatory exclusivity, 10 years post-market introduction in the U.S., and similar opportunities for regulatory exclusivity in other geographies to pursue at the appropriate time. And also with recent focus on minimizing effects on the microbiome to lower recurrence of infection, we stand out from other antibiotics since we've shown no reinfection in phase II patients who were initially cured of their infection. So in my over 50 years of experience in antibiotic development and marketing, I think I've got a great rearview mirror and a clear vision to say that we have a winner here for patients with CDI, and in general, for better public health, as well as for our shareholders. Thanks for letting me comment, Dave.

David Luci (CEO)

Thank you, Rob. Melissa, we're now ready to go to Q&A.

Operator (participant)

Thank you. If you'd 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 keys. Our first question comes from the line of Jason McCarthy with Maxim Group. Please proceed with your question.

Michael Okunewitch (Senior Research Analyst)

Hey, guys. This is Michael Okunewitch on the line for Jason. Thank you for taking my questions today.

David Luci (CEO)

Hi, Michael. Thank you.

Michael Okunewitch (Senior Research Analyst)

Yeah, so, I guess just to start off, I'd like to see if you could give an idea of what sort of timelines you're expecting, between getting those meeting minutes back from the FDA and actually launching the first of phase III studies?

David Luci (CEO)

So we think that we will be ready to enroll first patient in for the phase III in the fourth quarter of this year.

Michael Okunewitch (Senior Research Analyst)

All right, thank you. And then I guess regarding the international component to the study, could you talk a little bit more about the path to actually getting those sites online? And then is this something that you would look to have in place ahead of the launch, or would you start with, you know, what you have when you're ready to actually enroll the study and then layer in these international sites as they're approved?

David Luci (CEO)

Well, it will be a little bit of both. So we have a number of the sites already, you know, kind of ready to go from the international list. There won't be any hold up from the international aspect of it. We actually have a consultant who is extremely familiar phase III-C. diff international trials, who's been guiding us in this regard. But yes, clearly, when our manufactured product is ready, we'll be ready to go with a large wedge, at the very least, of the 100 sites.

Michael Okunewitch (Senior Research Analyst)

All right. Thank you. And then one last one from me, and I'll hop back in the queue. With regards to securing international partnerships, do you think this is something with your existing body of data that is compelling enough that you could really progress those conversations now and get a partner, or would you expect it to be more after you get that first lot phase III data?

David Luci (CEO)

No, I would expect that the prime time for us to find, say, a European partner or a Japanese partner would be when we start enrolling the first of the phase III trials. Once we have phase III trial mandate completed and we're ready to file a New Drug Application, if we haven't had a partnership by then, I think it would probably not occur until a year after the market introduction, because folks will wanna see how well we do. So yeah, I think that the time is ripe right now.

Michael Okunewitch (Senior Research Analyst)

Thank you. Great to hear.

David Luci (CEO)

You know, I'll make one additional comment on the territorial partnerships, you know, to carry Michael's question, response a little bit further. You know, as we look at strategic alternatives, you know, there's M&A, full stop, and there's territorial licensing and co-development agreements that I've entered into in the past. And, you know, with our share price being where it is, it's. The territorial licensing is a bit easier to consummate because it's all about the intrinsic value of your drug as opposed to M&A, which, you know, you can't, in my view, wholly divorce yourself of your Nasdaq share price. So it may be a more attractive option for our board of directors and, you know. But we'll see, we'll see what term sheets present themselves.

Michael Okunewitch (Senior Research Analyst)

Thank you. Looking forward to any updates.

David Luci (CEO)

Thank you, Michael.

Operator (participant)

Thank you. Our next question comes from the line of James Molloy with Alliance Global Partners. Please proceed with your question.

David Luci (CEO)

Good day, Jim.

James Molloy (Managing Director and Senior Equity Research Analyst)

Thank you for taking my questions. Hey, how are you doing, David? Thank you very much for taking the questions.

David Luci (CEO)

Excellent.

James Molloy (Managing Director and Senior Equity Research Analyst)

Listen, phase III trials, I know that obviously, a lot, a lot to go here, but can you walk through, you know, expectation, which we should expect to see coming out of the end of phase II? And then, the trial design to sort of the length of time to run the 2 as well. 2 years, start to finish, so the phase II-B, I know we're dealing with COVID then as well. Does that seem reasonable to run these phase IIIs from, start to finish?

David Luci (CEO)

Yeah, you know, well, the two phase III, so we're gonna address one phase III, and then the idea would be to either do a strategic transaction after that first phase III or with positive data on the first phase III, you know, if it's the same or consistent with our phase II, get a share price rise and then raise capital for the second phase III. So we're targeting a year and a half from start to finish for the first phase III. And that would have us completing the first phase III in the second quarter of 2026.

Now, I can tell you that, you know, we spent a lot of time looking at the Summit Therapeutics experience, and, you know, Summit enrolled in the teeth of COVID, 750 or so patients in about two years' time, largely in Eastern Europe, where, you know, the behavior patterns weren't dramatically changed apparently, like they were here in the U.S. So, you know, that's a public list on ClinicalTrials.gov. So we were able to see exactly, you know, the heat patterns from their enrollment. So that's gone a long way to helping us get comfortable with fixing the enrollment issues we had during COVID with our U.S.-only trial.

James Molloy (Managing Director and Senior Equity Research Analyst)

Okay, my apology. I thought I'd heard you say earlier in the call that you're gonna run the two trials at the same time. I, I misheard that. You're running back, back to back.

David Luci (CEO)

Oh, yeah, no, no. You know, our going-in plan is to do them consecutively instead of concurrently for the financial reasons that we discussed. But if we get a partnership, say, a European licensing agreement, you know, and that brings in enough money to call an audible along the way, and at that point, then we would certainly start the second phase III accordingly.

James Molloy (Managing Director and Senior Equity Research Analyst)

Understood. Thank you very much for taking the questions.

David Luci (CEO)

Thank you, Jim.

Operator (participant)

Thank you. Ladies and gentlemen, as a reminder, if you'd like to ask a question, please press star one on your telephone keypad. Our next question comes from the line of Ed Arce with H.C. Wainwright. Please proceed with your question.

Ed Arce (Managing Director and Senior Research Analyst)

Great. Thanks for taking my questions, Dave, Rob, and Bob. It's good to hear you on the phone, on the call.

David Luci (CEO)

Great. Nice to hear you, Ed.

Robert DeLuccia (Executive Chairman)

Thanks, Ed.

Ed Arce (Managing Director and Senior Research Analyst)

Likewise. So a couple from me. Firstly, on the end of phase II next month, and I apologize, I joined late, so maybe you went over this already, but wanted to make sure to review sort of the key objectives. In particular, what do you not have agreement with the agency yet on, that you would seek to get agreement on next month in that meeting? And then secondly, I think you made mention of a wider inclusion/exclusion criteria for the phase III, relative to the prior phase II. And so just wanted to get a little more clarity on that.

In particular, you know, with a view to concerns there might be around the risk that you know could change the sort of design of the trial, and there could be, you know, some disruption from a slightly different patient population. Thanks so much.

David Luci (CEO)

Thank you, Ed. I'll answer the first part of your question and then ask Bob to provide a response for the inclusion and exclusion criteria part of your question. So for the first part of your question, what we hope to agree on with the FDA is the overall protocol design for our phase III trial, including the number of patients to be enrolled, the notion that we're gonna have a vancomycin control arm like we had in our phase II-B. Largely, the trial design is, you know, 90+ percent of what the trial design was for our phase II-B. So we don't expect a real lot of drama, but it's a necessary step in order to, you know, kind of be allowed to go into phase III.

So we're looking forward to it as a value inflection point that we have to get through. Bob, did you wanna add some comments on the inclusion and exclusion criteria?

Robert DeLuccia (Executive Chairman)

Yeah. I think, really two things, which is standard, fare for going forward phase III, is that we'll have additional patients beyond mild and moderate that are included in the trial. So this is not severe, CDI, but a little bit, a little bit more than a moderate, according to the IDSA. Excuse me, according to the IDSA, criteria, for patient entry, into a trial in the study. So we've already submitted a framework to the FDA in the meeting package. It's very straightforward. I'd even say a higher percentage than Dave said at 90%. We're, we're pretty much there with the design.

It's the same design, basically, as phase II, and very standard according to the FDA guidance from October 2022, I believe it is, as to what needs to be included in the phase III clinical trials. So we'll be discussing, you know, final numbers of patients, as I said before, and statistical analysis plan will be finalized at that upcoming FDA meeting as well. Anything else, Ed? Does that answer your question?

Ed Arce (Managing Director and Senior Research Analyst)

Yeah, that's helpful. Thanks so much.

Operator (participant)

Thank you. Ladies and gentlemen, that concludes our question-and-answer session, and this concludes our call today. We thank you for your interest and participation. You may now disconnect your lines.