Acurx Pharmaceuticals, Inc. (NASDAQ:ACXP) Q3 2023 Earnings Call Transcript

Acurx Pharmaceuticals, Inc. (NASDAQ:ACXP) Q3 2023 Earnings Call Transcript November 14, 2023

Acurx Pharmaceuticals, Inc. beats earnings expectations. Reported EPS is $-0.23952, expectations were $-0.28.

Operator: Ladies and gentlemen, good morning, and welcome to the Acurx Pharmaceuticals Third Quarter 2023 Earnings Conference Call. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. [Operator Instructions] 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.

Robert Shawah: Thank you, Ryan. 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 2023, which 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; and Bob DeLuccia, our Executive Chairman, who will provide his perspective as the manager of our development programs, including the Phase II clinical trial. After Dave’s comments, I’ll provide some highlights of the financials for the quarter ended September 30, 2023, 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 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 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 yesterday, Monday, November 13, 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, November 14, 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 Luci: Thanks, Rob. Good morning, everyone and thanks for joining us to review our financial results for the third quarter and also to cover some exciting recent updates. Then we’d be pleased to take any questions. On October 2, 2023, we ended enrollment in our Phase IIb clinical trial of ibezapolstat, 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 clinical trial, including the ibezapolstat clinical cure rate at end of treatment or EOT of 96%, 25 out of 26 patients, including 100% in Phase IIa 10 for 10 and 94% in Phase IIb 15 for 16, as well as the cure rate for oral vancomycin at EOT of a 100% 14 of 14. No safety concerns were reported in either arm of the Phase IIb clinical trial or in the Phase IIb open-label trial.

Based on the Phase II data, in consultation with our scientific advisors, we determined that clear evidence of clinical cure has been established with ibezapolstat, and it is clinically comparable to vancomycin. Ibezapolstat will now move forward to Phase III clinical trials. Further data will be provided when available on all of the secondary and exploratory endpoints in the Phase IIb trial, including sustained clinical cure, extended clinical cure up to 94 days and the comparative impact on the microbiome. We anticipate that these secondary and exploratory endpoints will provide clear separation between these two therapeutic options and all of these endpoints will be disclosed when available over the next 90 days. The Phase IIb trial was originally designed to be a non-inferiority trial and later amended to include an interim efficacy analysis with review by an independent data monitoring committee or IDMC.

The decision to end the trial early based on the blinded clinical observations obviated the need for an interim analysis, the need for the IDMC review and the non-inferiority assessment. The company determined in consultation with its clinical and statistical experts that presenting clinical curates for the primary efficacy endpoint is the most appropriate representation for the clinical activity of ibezapolstat in treating C. diff infection. We remain particularly excited about the dual impact of ibezapolstat to treat the acute C. diff 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 third quarter or in some cases shortly thereafter, include the following.

The World Anti-Microbial Resistance Congress convened its annual meeting in Philadelphia in September 2023 where experts in the field from both the public and private sectors weighed in on the latest innovations to address antimicrobial resistance. Our Executive Chairman with us today, Bob DeLuccia, presented an update entitled, Novel DNA Pol IIIC Inhibitors for Gram-Positive Bacterial Infections: Preparing for the Next Pandemic. This presentation as well as the others that I’ll describe is available on our website acurxpharmaceuticals.com. At ID Week which convened in Boston, October 11 to 15, Acurx was featured at two scheduled events. First, an oral presentation was provided by Dr. Kevin Garey, Professor and Chair, University of Houston College of Pharmacy, and the Principal Investigator for microbiome aspects of our ibezapolstat trial program entitled: Elucidating the Gram-Positive Selective Spectrum Activity of Ibezapolstat; Secondary Analysis from the Phase IIa trial.

Secondly, at ID Week Acurx presented at the symposium entitled New Antimicrobials in the Pipeline. At the symposium, Acurx presentation was entitled Novel DNA Pol IIIC inhibitors for Gram-Positive Bacterial Infections. Next up was the ClostPath meeting, the International Conference on Molecular Biology and Pathogenesis of Clostridia, at which there were three scientific posters presented during the conference in Banff, Canada from September 19 to 23. We provided new information supporting ibezapolstat’s unique pharmacologic profile. The first of the three was entitled ibezapolstat modulates Clostridioides difficile virulence factors in vitro showed ibezapolstat reduces toxin production by C. diff bacteria. The second entitled C. difficile In Vitro Biofilm Studies of Ibezapolstat and Comparator Antibiotics showed ibezapolstat was as effective as the currently used anti C.

diff antibiotics, fidaxomicin, vancomycin and metronidazole, reducing biofilm embedded C. difficile. The third entitled Metagenomic Evaluation of Ibezapolstat Compared to Other Anti-C. diff Agents showed ibezapolstat and fidaxomicin both caused favorable proportional increases in bacteroidetes, but distinct from vancomycin and metronidazole, which caused unfavorable proportional increases in proteobacteria. All the presentations again are available on our website. And now back to our CFO, Rob Shawah to guide you through the highlights of our financial results for the third quarter of 2023. Rob?

Robert Shawah: Thanks, Dave. Our financial results for the third quarter ended September 30, 2023 were included in our press release issued earlier this morning. The company ended the third quarter with cash totaling $7.1 million compared to $9.1 million, as of December 31, 2022. I’ll also note that subsequent to the quarter to the September 30, we did receive $2.2 million in cash from warrant conversions in October of 2023. Research and development expenses for the three months ended September 30, 2023 were $1.3 million compared to $1.6 million for the three months ended September 30, 2022. The decrease was due to the timing of Phase IIb trial related costs. For the nine months ended September 30, 2023, research and development expenses were $4.1 million versus $3.3 million for the nine months ended September 30, 2022.

The increase is due primarily to Phase IIb trial related costs and an increase in consulting costs. General and administrative expenses for the three months ended September 30, 2023 were $1.8 million compared to $2 million for the three months ended September 30, 2022. The decrease was due primarily to a $0.2 million decrease in professional fees. For the nine months ended September 30, 2023, general and administrative expenses were $5.4 million versus $5.5 million for the nine months ended September 30, 2022. The amounts reflect a decrease in professional fees of $0.3 million, offset by an increase of $0.2 million in share-based compensation. The company reported a net loss of $3.1 million or $0.24 per diluted share for the three months ended September 30, 2023, compared to a net loss of $3.5 million or $0.32 per diluted share for the three months ended September 30, 2022, and a net loss of $9.5 million or $0.77 per share for the nine months ended September 30, 2023, compared to a net loss of $8.8 million or $0.84 per diluted share for the nine months ended September 30, 2022, all for the reasons previously mentioned.

The company had 13,005,128 shares outstanding as of September 30, 2023. With that, I’ll turn the call back over to Dave. Dave?

David Luci: Thanks, Rob and to all of you joining us today. We outlined advances in several areas that we believe will spur continued momentum and growth 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. Now in advance of our customary Q&A, I’ll ask my Co-Founder and Executive Chairman, Bob DeLuccia to provide his perspective given Bob manages our research and development programs, including the recently completed Phase II clinical trial. Bob?

Robert DeLuccia: Thanks, Dave and thanks for updating our stakeholders on our recent progress and thanks to all for your continuing support to reach this important clinical development milestone, which takes ibezapolstat one step closer to commercialization for CDI patients in need of a promising new antibiotic with a novel bactericidal mechanism of action. And this is especially important in this age of emerging antimicrobial resistance to the currently used antibiotics. So from my perspective, we now have robust scientific evidence to present a strong data package to FDA for an end of Phase II meeting. The outcome of this meeting will confirm our readiness to advance the Phase III clinical trials with specifics on trial design and patient enrollment targets.

At the same time, we’ll submit our plans to the European Medicines Agency for conducting Phase III clinical trials outside the United States and we expect to have their guidance around midyear next year. Bottom line is, I think we have a new antibiotic, which is first in a new class and fast tracked by the FDA. It’s fully patented. It has regulatory exclusivity 10 years post market introduction in the U.S. as well. It works extremely well. It’s clinically comparable to the standard of care after 10 days old treatment in a serious and potentially life-threatening infection that demands antibiotic treatment. From what we’ve seen so far, we expect to further demonstrate favorable effects on the microbiome and less recurrence of infection. It’s also very well-tolerated and efficient to manufacture, so we can be cost-competitive in the marketplace.

Now since we’ll be the only C. diff antibiotic beginning Phase III next year, assuming success, we’ll be next up at that for approval and market introduction in the U.S. and countries outside the United States. In my over 50 years’ experience in antibiotic development and marketing, I think I’ve got a good rearview mirror that gives me a clear vision and a pathway forward to deliver a winner here, not only for patients with C. diff infection, but in general, for better public health and of course, for our shareholders. In my opinion, simply put, ibezapolstat kills the bug and preserves the microbiome. And back to you, Dave.

David Luci: Thank you, Bob. I’ll now open the call for questions. Operator?

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Q&A Session

Operator: Thank you. Ladies and gentlemen, we will now be conducting a question-and-answer session. [Operator Instructions] Our first question is from Jason McCarthy with Maxim Group. Please go ahead.

Michael Okunewitch: Hey, guys. How is it going? This is Michael Okunewitch on the line for Jason. And first off, I’d like to congratulate you on the progress.

David Luci: Thank you, Michael.

Michael Okunewitch: So I guess to start off, I’d like to for you to give us a bit more of an idea of what you’re thinking ahead of the end of Phase II meeting in terms of what a Phase III program could look like in terms of size and scope, potential costs? And then also if you would still be targeting non-inferiority as a primary endpoint. Can you just give me your thoughts on that?

David Luci: Sure. And yes, we would still be targeting non-inferiority to the control arm, which would be oral vancomycin, much like Summit did most recently in its effort to get an antibiotic approved to treat C. diff. What we’re looking at is we’re looking at two clinical trials in Phase III, two registration trials. And we’re considering, and all of this is preliminary, as you know, but we’re considering an imbalanced approach pursuant to which we would have fewer patients in the first trial and more patients in the second trial, so that we could potentially raise money to fund the smaller first trial. And with continued good data in hand, non-inferiority in this case for a Phase III registration trial, we would hope to see an uptick in our share price and use that uptick to raise money for the second trial.

Keeping in mind that this sequential approach is very possible for us because we have 10 years of market exclusivity with our new molecular entity status and QIDP. So I think that’s what we would do. I think the first trial I think we would ballpark figures, we would try to have a 2:1 randomization potentially and preliminarily. If that gets through our science team and the FDA, it might look something like 133 patients on ibezapolstat and 66 on oral vancomycin. So it would be a much more discrete trial that I think a lot of people are thinking. So to pay for it won’t, for a small company won’t be that challenging.

Michael Okunewitch: All right. Thank you for that. And then one more for me and I’ll hop in the queue. Just as we’re getting up to those secondary analysis, could you talk a little bit about what you’re looking for specifically in terms of clinically relevant separation from Banco? What kind of threshold do we need to reach in those secondary end points?

David Luci: So we think that the microbiome advantage is the key advantage because that’s the thing that most antibiotics don’t do. So if we can address the acute infection, while at the same time, fully restoring a healthy microbiome to baseline, that’s something which I don’t know of any other antibiotic that’s able to do that. We’re still studying the mechanism of action to see how that’s done. But I think that provides clear separation by itself. We’re also the only folks that have gone out formally 94 days for antibiotics and C. diff at least, to see that there are no reinfections that far out. So I’m particularly excited about that 94-day out data to see in a subset of patients how many patients of ours are reinfections 94 days out compared to vancomycin.

So those are two real exciting pieces. And what we’re going to do since all of the secondary and exploratory endpoints are so material from a corporate level perspective, and we don’t want to be holding material non-public information for any sort of period of time for the SEC purpose. So we’ll be getting the data out as it comes in, the sustained clinical cure, the extended clinical cure and of course the microbiome comparison. We won’t wait for it to be all together, and we’ll get it out as we receive it.

Michael Okunewitch: All right. Thank you very much.

David Luci: Thank you, Michael.

Operator: Thank you. Our next question is from Ed Arce with H.C. Wainwright. Please go ahead.

Thomas Yip: Hi. Good morning, everyone. This is Thomas Yip asking the [indiscernible] questions for Ed. Thank you for taking the questions. So perhaps first question, I believe you touched on it a little bit. When can we expect to see more Phase II data? Will this be in a purification — or will this be around major medical companies?

David Luci: I’m sorry, when can you expect to see the secondary endpoint information?

Thomas Yip: Yes. That’s right. This additional Phase II data additional analysis.

David Luci: I see. Okay. So we’ll have a first press — in terms — I’ll start out with the press release disclosure and then I’ll turn it over to Bob DeLuccia for the scientific conference disclosure. I think some of that is still a bit up in the air. But on the press releases, we’ll very likely come out with the first press release on sustained clinical cure in December. In either December or January, we’ll have the 94-day out data, the extended clinical cure data. And in January or February, we’ll have the data on the microbiome. Then, of course, in March, we’ll have the meeting with the FDA, and we’ll have a press release around that too after it’s completed. But Bob, did you want to mention the scientific presentations with the Phase IIb data?

Robert DeLuccia: Yeah. I think with some of the data we targeted in early next year as it becomes available, as Dave said. But concurrently, as we get the final study report, we’ll be preparing the data for publication as well.

Thomas Yip: Great. Thank you. We definitely look forward to that. Perhaps just one more question from us. This one is financial. You mentioned a little earlier Phase III is expected to be conducted in a sequential manner. Can you provide some preliminary thoughts, estimates on estimated costs for this first Phase III study? And what are some options to move forward this initial Phase III study?

David Luci: Yeah. I mean we have — we’re going to unveil our detailed plan in coming weeks. We think the first of the two trials, and again, this depends on the data and as you know, it is preliminary. But the first of the two trials will probably range between $20 million and $25 million. So right now, as we sit here with between $9 million and $9.5 million and we have about another $15 million in warrant exercises, which after more successful data is announced, we expect to see some of that coming in, in terms of cash for the warrant shares. But beyond that, we don’t have a very heavy lift and we have a detailed plan. And what I can tell you is it’s going to be as non-dilutive as humanly possible.