Acurx Pharmaceuticals, Inc. (ACXP) Q1 2022 Earnings Report, Transcript and Summary

Greetings and welcome to the Acurx Pharmaceuticals, Inc. First Quarter 2022 Results and Business Update. At this time, all participants are in a listen-only mode. [Operator Instructions] As a reminder, the conference is being recorded. I would now like to turn the conference over to your host, Rob Shawah, Chief Financial Officer. Please go ahead.

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 2022. This press release is available on our website at acurxpharmaceuticals.com. Joining me today is Dave Luci, President and Chief Executive Officer of Acurx, who will give a corporate update and outlook for the remainder of 2022. After that, I'll provide some highlights to the financials from the quarter-ended March 31, and then turn the call back over to Dave for his closing remarks. As a reminder, during todays' 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 yesterday, Tuesday, May 10. 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, May 11. 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?

Thank you, 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 first quarter ended March 31 and also cover some key corporate highlights and then we'd be pleased to take any questions. In the first quarter, more patients were enrolled in the Phase 2b clinical trial of ibezapolstat, our leading antibiotic candidate for the treatment of patients with C. difficile Infection or CDI. The Phase 2b clinical trial is a 64 patient 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 of the Phase 2b trial is clinical cure of C. difficile Infection at the end of treatment measured on day 12 and a secondary endpoint as sustained clinical cure measured at day 38 follow-up visits. Since this is a double-blind trial, results will not be known until the end of the trial. However, operationally the trial is proceeding as expected [Technical Difficulty] these signals reported today. Also included in the protocol is an exploratory endpoint comparing the impact on the microbiome between ibezapolstat and vancomycin. In the event non-inferiority of ibezapolstat and vancomycin is demonstrated in the Phase 2b trial, further analysis will be conducted to test for superiority. Additionally, based on the strength of our previously reported Phase 2a results, which demonstrated 100% clinical cure in patients after a 10-day treatment for CDI with no recurrence of infection at the day 38 eight follow visit, we've added a novel exploratory endpoint in the Phase 2b trial of extended clinical cure or ECC for study visits at day 56 and day 84 after the end of treatment for a selected group of subjects to evaluate the longer-term effect of ibezapolstat on the microbiome and on disease recurrence. To our knowledge, no other comparable long-term data such as this has been conducted or reported with currently used antibiotics to treat C. difficile Infection to date. The Phase 2b clinical trial will include up to 24 U.S. sites with enrollment expected to be completed late in the second half of this year. We remain particularly excited about the dual impact of using ibezapolstat to treat the acute infection of CDI, while appropriately managing the long-term care of each patient's microbiome, which we believe is exceptional for antibiotic therapy. We reiterate that with the closing of our IPO in June 2021, we have more than enough cash to complete the ibezapolstat’s Phase 2b trial and related R&D matters, as well as to allocate resource to advanced development of ACX-375C, our second DNA pol IIIC inhibitor, currently in lead optimization stage of preclinical development for the treatment of other gram-positive bacterial infections, including MRSA. Other key highlights from the first quarter of 2022 include the following. Our laboratory study at the University of Houston comparing microbiome changes of ibezapolstat to vancomycin, fidaxomicin, and metronidazole using both in vitro and ex vivo analysis is ongoing. The objective of this study is to expand our very positive Phase 1 and Phase 2a microbiome data using an in vitro gut model that mimics human gastrointestinal physiology. Shortly after the end of the first quarter, we submitted a grant application to the NIH, National Institute of Allergy and Infectious Disease for approximately $23 million of non-diluted funding to support the ongoing development of ACX-375C. If approved, these funds would cover the costs of ACX-375C all the way through Phase 1 clinical trials for our lead clinical indication, including reimbursement to the company for certain G&A costs. The company anticipates a final decision on this funding opportunity in the second half of this year and we will continue to monitor other potential funding opportunities and we do anticipate submitting at least one more application in this regard for external funding this year. We're continuing our scientific collaboration with Leiden University Medical Center to further study the mechanism-of-action of pol IIIC inhibitors and a consortium of partnership with our company. The innovative research project under a $500 million grant to the Leiden University Medical Center with Acurx as its consortium partner is studying three dimensional structures of DNA polymerases and they're binding interaction with Acurx inhibitors. The antibacterial molecular target of Acurx’ pipeline of Novel DNA pol IIIC inhibitors has been clinically validated by ibezapolstat’s recent completion of its Phase 2a trial in CDI. The research outcome at Leiden University Medical Center is intended to accelerate lead product candidate selection for our ACX-375C program for systemic treatment against multi-drug resistant Gram-positive bacteria, where new classes of antibiotics are urgently needed. This project was initiated by Leiden University Medical Center in September 2021 and emerging data are expected to facilitate the 375 program. Now, I'll turn the call back to our CFO, Rob Shawah to guide you to the highlights of our financial results for the first quarter of 2022. Rob?

Thanks, Dave. Our financial results for the first quarter ended March 31, 2022 were included in our press release issued earlier this morning. Acurx ended the first quarter on March 31, with cash totaling $11.1 million, compared to $13 million as of December 31, 2021. Cash used in operating activities for the quarter ended March 31, was $1.9 million of which approximately $0.5 million was spent on research and development related activities. Research and development expenses for the quarter ended March 31 were $0.8 million, compared to $0.1 million for the quarter ended March 31, 2021. The increase is due primarily to Phase 2b trial related costs, an increase in consulting costs. General and administrative expenses for the quarter ended March 31 were $1.9 million, compared to $1.4 million for the quarter ended March 31, 2021. The increase was primarily due to increases in professional fees, legal, and insurance costs. The company reported a net loss of $2.7 million or $0.26 per diluted share for the three-months ended March 31, 2022 compared to a net loss of $1.5 million or $0.21 per diluted share for the three-months ended March 31, 2021. The company had 10,263,202 shares outstanding as of March 31, 2022. With that, I'll turn the call back over to Dave.

Thanks, Rob. And thank you all for joining us today. We're very enthusiastic about the strong fundamentals of our company and we're especially pleased to report Acurx’ continuing progress in the first quarter of 2022. We look forward to building on this momentum this year and to updating you in the coming months. I'll now open up the call for questions. Operator?

Thank you, sir. [Operator Instructions] The first question we have is from Chad Yahn from Maxim Group. Please go ahead.

Hi guys. Congrats on the quarter. So, I was wondering other than ibezapolstat, are there any other competing antibiotics in the space as advanced, particularly given the setbacks summit has had?

Well, thank you for your question. Now there are no other antibiotics that are anywhere near as far along as we are in the R&A development phase to treat CDI. There is a product that's much earlier on than where we are in a private company called Crestone that we're aware of, but we understand they don't have any efficacy data yet. So, there's no – they're much earlier on that we are. And we do also note that Pfizer recently announced that their attempt at a vaccine failed the Phase 3 primary endpoint and their parsing the data and looking to be just a niche player toward the backend in a subgroup of C. diff patients, but no longer targeting frontline. So, really the C’s have kind of parted for us as summit’s program failed Phase 3 and the Pfizer vaccine failed. The primary endpoint is no longer considered online candidate. Sanofi back in 2017 also tried a vaccine to treat C. diff patients and that failed as well.

Great, great. Thanks there. And then also, any updates on the progress with the Pasteur Act,?

The Pasteur Act is very close and we understand through our affiliation with the antimicrobial working group and the bioindustry organization that it was part of an omnibus bill that was recently approved. I think back in March, and it got scratched in the [ninth inning] [ph], late in the game replaced by a national defense appropriation and instead, and that was back shortly after the war between Russia and Ukraine, kind of hit the news. So, most folks in the industry believe that the Pasteur Act will be approved as part of other legislation at some point later this year. And we do know in that regard that the bill has bipartisan support, including Nancy Pelosi and Patty Murray on the Democrat side along with several Republicans. Some of whom are sponsoring the bill. So, that's all we know for now, but certainly the passage of the Pasteur Act would kind of really be tremendously beneficial for any incubator company with a new class of antibiotics that's QIDP like ours treating serious and life threatening infections.

Great. Thanks. And then just one last one. Could you talk about the pipeline and the next, the pol IIIC inhibitor? And also, I guess what in your move would be the potential of having intravenous, as well as oral, and is that a strategy you could pursue? Thanks.

Yes. And in fact, we are pursuing that strategy with ACX-375C, which is the next drug in the pipeline. We are at the lead optimization stage of preclinical development with 375C. We can say that the lead optimization process is really picking up steam and we expect in the second half to be lead optimized and to be then going into IND enabling [indiscernible] work. And yes, we expect 375C to be oral and IV. We're working on both. And that's new because ACX-375C as we've discussed before is very close to [Cubicin] [ph] in terms of the bacteria it's able to kill. Very similar minimum inhibitory concentration data between the two programs. Now, [indiscernible] was blockbuster drug, but it was only IV. And we target the same bacteria, so we should be used for the same infections if the trials go well, but ours is oral and IV. So, if anything, it should be a bigger drug than [Cubicin] [ph] subject, of course to having to get through the [R&D gauntlet] [ph].

Great. Thank you so much.

Thank you.

[Operator Instructions] The next question we have is from Jason McCarthy from Maxim Group.

Hi. This is Joanne Lee on the call for Jason McCarthy. Thanks for taking the question. Regarding your ibezapolstat program, could you just shed some color on maybe what would be the size and scope of a Phase 3 program should the Phase 2b be successful?

Thank you, Joanne. Thank you for the question. So, it's a bit early to understand exactly what the size and scope of Phase 3 until we make that determination, we have to finish the 2b trial and assess the data and then meet with the FDA with our going in strategy, if possible as a qualified infectious disease products, and fast track designated products, and subject to what other programs are doing or have done like Summit. It's possible that we may be able to do just one Phase 3 trial or we may be able to do or we may have to do two Phase 3 trials. Overall, we would guess and this is very speculative, but the Phase 3 patient mandate, whether it's in one or two trials as a setting would be somewhere in the 400 to 500 patient range.

Great. That was helpful. Appreciate the details. So, with current guidelines for CDI management, could you just share your thoughts on, you know if the next drug is approved, will vancomycin be used anymore? And what does that mean for a drug like ibezapolstat moving into frontline therapy? Thanks.

Sure. No problem. As we understand it from those who draft the infectious disease society of America treatment guidelines to treat CDI, with the advent of the next antibiotic or other therapy that's FDA approved to treat CDI, vancomycin very likely will be removed from the IDSA Guidelines recommendation list. Much like metronidazole was removed a couple of years ago. And that's because it's an indication that vancomycin, even an oral vancomycin is a very vulnerable front therapy. And we think that's why folks like Pfizer and Sanofi and Summit selected CDI as a clinical target because they knew that if they were to get through and become frontline line therapy in a $1.7 billion market, they would have potentially a blockbuster.

Great. Thank you for that. And last one for me. Can you talk about big pharma interest in CDI, particularly Pfizer? I know you touched on this briefly earlier, but do you see them coming back to infectious disease more today than before? And how does Acurx think about potential partnering opportunities?

We think, I think of our potential partnering opportunities every day, and we don't know who will come out, when we have ongoing discussions. If you read the [first biotech] [ph] article after Pfizer announced that its bid for frontline therapy for CDI with the vaccine failed, Pfizer indicated that their intent to remain in the CDI space as a niche product in multiple recurrent cases. And obviously, they'll have to do additional work in order to get even that, but they fully acknowledged that they're bid for frontline therapy is over, but they want to stay in the space because they see the value of the space, given there's so little out there that's effective. So, yeah, we have active discussions ongoing with big pharma and we're not sure where that's all going to go. Whether that will lead to a deal. And if it leads to a deal, we're not sure if that would be a deal before the data or after the data.

Got it. Makes sense. Appreciate your insights, David. Thanks again for taking the questions.

No problem. We appreciate it.

[Operator Instructions] At this stage, there are no further questions. Ladies and gentlemen, that concludes today's question-and-answer session and the conference call. Thank you for your participation. You may now disconnect your lines.

Thank you.