Acurx Pharmaceuticals, Inc. (ACXP) on Q3 2021 Results - Earnings Call Transcript
Operator:
David Luci: Thank you, Rob and good morning to everyone and thank you for joining us on this morning's conference call to discuss Acurx's Financial Results. During today's call, we'll review our financial results for the quarter and nine months ended September 30, 2021 as well as some key corporate highlights, and then we'd be pleased to take any questions. In the third quarter, we continued on our critical path forward initiating our Phase 2b be clinical trial of our lead antibiotic candidate, ibezapolstat in patients with C. difficile infection. In total, we have activated 12 clinical trial sites and we anticipate enrollment to begin this month. Our clinical development team is now working on the administrative aspects of getting additional clinical -- backup clinical trial sites through the onboarding process to be added, if necessary, to ensure completion of enrollment as quickly as possible. We reiterate that with the closing of our IPO in late June 2021, we have more than enough cash to complete the Phase 2b trial as well as to allocate resources to continue to advance our development pipeline of polymerase IIIC inhibitors. In parallel, we presented additional data from the Phase 2a trial of ibezapolstat in patients with C. difficile infection at the IDWeek Scientific Conference shortly after the close of the third quarter. Specifically, Dr. Kevin Garey, Professor and Chair, University of Houston College of Pharmacy and Principal Investigator for microbiome aspects of our ibezapolstat clinical program, presented newly available data from our completed Phase 2a clinical trial in a scientific poster presentation in early October 2021. Dr. Garey noted that favorable microbiome changes including overgrowth of Actinobacteria and Firmicutes phyla species were observed in patients during therapy with ibezapolstat and that the results begin to confirm the microbiome effects seen in Phase 1 healthy volunteers, indicating that microbiome effects may be predictive of beneficial patient outcomes, including anticipated low recurrence rates. Additional microbiome data from the completed Phase 2a trial was reported by Dr. Garey at the 9th Annual International C. Diff Conference on November 5th after the end of the third quarter. Our Phase 2a data demonstrated complete eradication of colonic C. difficile by day three of treatment in a 10 -ay treatment regimen with ibezapolstat as well as the observed overgrowth of healthy gut microbiota, Actinobacteria and Firmicutes phyla species, both during and after treatment with ibezapolstat. Very importantly, emerging data show an increased concentration of secondary bile acids, which is known to correlate with a low risk of reinfection. Moreover, a decrease in primary bile acids in these patients with C. diff were measured and the favorable increase in the ratio of secondary to primary bile acids, provides more scientific evidence suggesting recurrences may be very low in future trials. We remain particularly excited about the dual impact of using 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. We also commenced the previously announced R&D program in collaboration with Leiden University Medical Center in Holland, which received a grant from Health Holland to further evaluate the mechanism of action of Acurx's pol IIIC inhibitors against the DNA Pol IIIC enzyme, which is the bacterial target of our antibiotic product pipeline including ibezapolstat. In addition, we joined the Antimicrobial Working Group in August 2021 to participate in the effort to heighten awareness of the next pandemic, which many see as antimicrobial resistance, and to promote critical policy changes to support the cause. From a finance perspective in the third quarter, Acurx joined the Russell Microcap Index in September, and participated in a number of health care and investor conferences, including the H.C. Wainwright 23rd Annual Global Investment Conference and the Emerging Growth Conference in August and September of 2021. I will now turn the call back over to Rob Shawah, our Chief Financial Officer to guide you through the highlights of our financial results for the third quarter 2021. Rob?
Robert Shawah: Thanks Dave. As mentioned earlier, our financial results for the quarter and nine months ended September 30, 2021 were included in our press release issued on Friday. Acurx ended the quarter on September 30, 2021 with cash totaling $14.5 million compared to $3.2 million as of December 31, 2020, which represents an increase in cash of $17.3 million from our initial public offering offset by IPO-related cash expenditures of $2.5 million and operating expenses for the nine months ended -- nine-month period of $3.5 million. Cash provided by financing activities for the nine months ended September 30, 2021 was approximately $14.8 million, attributable to the net cash proceeds from initial public offering as previously mentioned. Cash used in operating activities for the nine months ended September 30, 2020 was $2.4 million, of which approximately $1.8 million was spent on research and development related activities. Cash provided by financing activities for the nine months ended September 30, 2020 was $3.3 million, which was primarily attributable to the net proceeds of one of the company's private placement offerings. Research and development expenses for the three months ended September 30, 2021 were $1.1 million compared to $0.7 million for the three months ended September 30, 2020. The increase is primarily due to Phase 2b trial related costs. For the nine months ended September 30, 2021, research and development expenses were $1.3 million compared to $1.7 million for the nine months ended September 30, 2020. The decrease is due to the Phase 2a trial related costs, which was completed in 2020. General and administrative expenses for the three months ended September 30, 2021 were $3.5 million compared to $0.7 million for three months ended September 30, 2020. The increase was primarily due to non-cash stock-based compensation and increases in professional fees, insurance, and legal costs. For the nine months ended September 30, 2021, general and administrative expenses were $8.9 million compared to $1.8 million for the nine months ended September 30, 2020. The increase in general and administrative expenses is primarily attributable to an increase in non-cash stock-based compensation, professional fees, stock-based director fees, insurance, and legal costs. The company reported a net loss of $4.6 million or $0.46 per diluted share for the three months ended September 30, 2021. This compared to a net loss of $1.3 million or $0.21 per diluted share for the three months ended September 30, 2020 and a net loss of $10.1 million per diluted share for the nine months ended September 30, 2021 compared to a net loss of $3.5 million or $0.58 per diluted share for the nine months ended September 30, 2020, all for the reasons previously mentioned. The company had 10,126,903 shares outstanding as of September 30,021. With that, I'll turn the call back over Dave.
David Luci: Thank you, Rob and thank you all for joining us for today's earnings conference call. We're very pleased to report Acurx's achievements and activities in the third quarter and we look forward to building on this momentum in the fourth quarter and going into 2022. I would now like to open up the call for questions. Donna?
Operator: Thank you. Ladies and gentlemen, the floor is now open for questions. Our first question is coming from Jason McCarthy of Maxim Group. Please go ahead.
Jason McCarthy: Hey, guys, thanks for taking the questions. David can you talk just a little bit about the FDA and their openness to looking at microbiome data as a part of the data package, and how that landscape has changed over the last couple of years since more microbiome know-how, particularly with you guys has emerged, you have a non-inferior drug, maybe it'll be superior, who knows. But that microbiome component type as a pulse that really matters. We think it does, can you talk a little bit about that?
David Luci: Sure Jason and thank you for the question. We agree with you, the microbiome has almost become a cottage industry with folks, different groups working on different therapies to help get the microbiome back to equilibrium with the healthy bacteria in the gut to avoid diseases of all types, including cancer, diabetes, and in our case, recurrence of C. Diff infection. We know that the FDA is in tune and up to speed with the modifications in clinical programs and protocols related to the microbiome. And in fact, in our Phase 2b program, we do have an endpoint -- a secondary endpoint regarding the microbiome, and it's a superiority endpoint, which provides for success if ibezapolstat shows that it is restoring the microbiome significantly better than vancomycin, the standard-of-care. That's an investigational endpoint in our Phase 2b. Based on the data that we have today, we're kind of highly confident that we're going to meet that superiority endpoint. And we look forward to meeting with the FDA after Phase 2b assuming a successful trial to build that in a more prominent position in the protocol for our Phase 3.
Operator: Jason, did you have any other questions?
Jason McCarthy: Sorry. I muted myself, I still can't figure it out. Can--
David Luci: If I may. I think it's an investigation. I think it's an exploratory endpoint as opposed to--
Jason McCarthy: Yes. Can you use something broad on the microbiome side, like alpha diversity, is that sufficient? Or do you need to get more granular beyond looking at just phyla analysis?
David Luci: We think that the alpha diversity in the phyla analysis will be sufficient for the FDA purposes, but we are looking at other aspects. And we'll be prepared to analyze other aspects of the microbiome changes in addition to that, should the FDA go in that direction.
Jason McCarthy: Okay. And just the last question, which is more of a long-term view question. Assuming that the Phase 2b tracks with what you saw in the Phase 2a, could that be based on its size and the quality of the data sufficient to serve potentially as one Phase 3 or would you need two Phase 3s? And the reason I'm asking is we've seen -- and I don't know if you could comment on activity in the space around another antibiotic that's out there, where there was some changes to their Phase 3s and blending of two Phase 3 trials, and we're not really sure where that's going.
David Luci: Yes, it's interesting -- it's an interesting point and we agree, we're not sure where that's going either. We understand that the endpoint was changed kind of mid-course or somewhere during the enrollment period, which we don't quite understand. But I understand we're going to find out more information on that in the first quarter. But we're looking at the 2b and the Phase 3 possibilities as it may be that we have to do two Phase 3 studies or -- and we'll find out when we meet the FDA after the Phase 2b is completed. But we do have FDA Fast-Track designation already and we are qualified infectious disease product designee. So, our hope is that the data is so differentiated from the cure rates in microbiome impact from vancomycin that we can make an argument to do one Phase 3 registration study instead of two. But in either events, the Phase 3 patient enrollment numbers are likely to be in the hundreds -- 400 patients, 500 patients, some significant number of patients and the question will be whether we are able to put that in just one trial or break it into two trials.
Jason McCarthy: Sorry. Just really briefly, and I'm sure there's other people. Outside of that program and your own, are those the two really most advanced programs that are out there? If you dig in the literature, there's a few other antibiotics but they seem to be or it's not clear where they are clinically. But they're certainly not at a Phase 2b stage, they seem to be much further behind. Is that a fair assessment?
David Luci: Yes, that's our understanding as well.
Jason McCarthy: Great. Thank you, David.
David Luci: Thank you, Jason.
Operator: Our next question is coming from Lucas Russell, a Private Investor. Please go ahead.
Unidentified Analyst: Hi David. Just a couple of questions and the last one answered a little bit, but I'm a little bit more of a of a Layman investor. Just when do you expect enrollment of the trials to kind of be complete? And then, again, in Layman's terms, could you kind of explain to me how important the microbiome and bile acid data is kind of to the company?
David Luci: Yes. Thank you for the question, Lucas and welcome back to this quarter's call. I can tell you that our objective is to complete enrollment in the Phase 2b trial in the second quarter of 2022. Now, we've activated 12 clinical trial sites already, including five known high enrolling centers and we're going to continue to evaluate the pace of the enrollment and we have four higher enrolling sites beyond the 12 that we will have the ability to plug in in the first quarter should we determine that the timing isn't up to where we want it to be. So that's -- we've kind of built a backup plan as an insurance policy to ensure that we can kind of complete enrollment in the second quarter. And in terms of the microbiome question, we do think that microbiome information and data is very important because when you look at the 10 patient data in the Phase 2a trial, it's easy for an investor, a generalist to look at 10 patients and say is this real 10 for 10, cures 100%? But it's only 10 patients, is that real or is that an aberration due to small numbers. And our response to that is the 2a a trial was scheduled to be 20 patients and was early terminated by the Scientific Advisory Board halfway through due to success -- on vital success, no safety or tolerability issues, impeccable cures at 100% with 100% sustained cures. And the microbiome data, what it tells us is in comparison to vancomycin, which was not part of the 2a trial, but has 60 years of clinical data available publicly to view. So, what we're seeing is that where we're restoring the microbiome, in large part after three days of treatment, while we're curing the C. diff infection in those three days, we're seeing that there's over 100 times depletion of the healthy bacteria in the gut for those who take vancomycin, which is a dramatic difference. And it's known to be among scientists, the primary reason why C. diff patients have recurrent infection and also supporting the sustained cures is the data on the bile acids. So, having an abundance of secondary bile acids correlates with a very low likelihood of recurrence. So, why are we 10 for 10 and cures 30 days after end of treatment? Well, because we're restoring the microbiome, so it's healthy enough to avoid colonic C. diff in the colon after treatment and the presence of a proliferation of secondary bile acids in a favorable ratio of secondary to primary bile acids is another piece of the puzzle for why you're not seeing recurrent C. diff infection even 30 days after. And again, those are data that are in contradistinction with the vancomycin experience, which we talked about the disruption of the microbiome. But vancomycin also has a proliferation of primary bile acids and the ratio of secondary to primary is the opposite of ours. So, when you ask yourself, why does vancomycin have a 20% to 40% recurrence rate over the past half century? Those are the scientific reasons for the vanco recurrences, and they're kind of opposite the scientific reasons for our lack of recurrences.
Unidentified Analyst: Thank you. That's exciting stuff. Thank you, David.
David Luci: Thank you, Lucas.
Operator: At this time, I'd like to turn the floor back over to Mr. Luci for closing comments.
David Luci: Well, thank you, Donna and thank you all for joining us for this quarter's conference call. It's an exciting time for Acurx Pharmaceuticals and we appreciate your involvement and your investment in the company. And we look forward to the next earnings call financial update, which will be in late March of 2022 and we're hoping for some exciting news at or around that time. Thank you very much.
Operator: Ladies and gentlemen, thank you for your participation. This concludes today's event. You may disconnect your lines at this time and enjoy the rest of your day.
