Acurx Pharmaceuticals, Inc. (ACXP) on Q4 2021 Results - Earnings Call Transcript
Operator: Greetings, and welcome to the Acurx Pharmaceuticals reports Fiscal Year 2021 Financial Results and provides Business Update Conference Call. At this time, all participants are in a listen-only mode. As a reminder, this conference is being recorded. I would now like to turn the call over to Rob Shawah, Chief Financial Officer. Thank you. You may begin.
Rob Shawah: Thank you. Good morning, and welcome to the Acurx Pharmaceuticals fourth quarter and full year 2021 financial results conference call. This morning, we issued a press release providing financial results and company highlights for the fourth quarter and full calendar year, 2021. This press release is available on our website at acurxpharmaceuticals.com. Joining me on the call today is Dave Luci, President and Chief Executive Officer of Acurx, who will provide a corporate update and outlook for 2022. Following his comments, I'll provide an overview of the financial highlights from the quarter, and year ended December 31st, 2021, before turning the call back over to Dave for closing remarks. As a reminder, during todays' call, we will 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 yesterday, Wednesday, March 16, 2022. 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. In addition, this conference call contains time-sensitive information that is accurate only as of the date of this live broadcast, March 17th. 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 David Luci.
David Luci: Thank you, Rob. Good morning, everyone. Happy St. Patrick's Day. Thank you for joining us on this morning's conference call, to review Acurx's financial results. During today's call we will review our financial results for the fourth quarter and year ended December 31, 2021, as well as some key corporate highlights, and then we'd be pleased to take any questions. In the fourth quarter, we commenced enrollment in our Phase 2b clinical trial of our lead antibiotic candidate, ibezapolstat in patients with C. difficile infection. The Phase 2b clinical trial is a one-to-one randomized, not inferiority, double-blind trial of oral ibezapolstat compared to oral vancomycin, the standard of care to treat C. difficile infection, in a total of 64 patients. The primary endpoint of the Phase 2b trial is clinical cure of the C. difficile infection at day 12 end of treatment, and the secondary endpoint is sustained clinical cure measured at the day 38 follow-up visit. In addition, we have an exploratory endpoint comparing the impact on the microbiome, between the ibezapolstat arm and the vancomycin arm of the trial. Additionally, in the event non-inferiority of ibezapolstat of vancomycin is demonstrated further analysis will be conducted to test for superiority. The Phase 2b clinical trial will include up to 16 U.S. trial sites with enrollment expected to be completed in the second half of 2022. We reiterate that with the closing of our IPO in June 21, we have more than enough cash to complete the Phase 2b trial as well as to allocate resources to continue the development of ACX-375 C, our second DNA polymerase 3C inhibitor that is at the lead optimization stage of preclinical development. Other key highlights from the yearend December 2021 include the following. In November 21, we initiated a laboratory study entitled effective ibezapolstat versus comparators on the microbiome in vitro and ex vivo analysis. We're doing this through our collaboration with Dr. Kevin Garey, Professor and Chair, University of Houston, College of Pharmacy, and the principal investigator from microbiome aspects of the ibezapolstat clinical trial program. The objective of this study is to expand upon our quite positive Phase 1 and Phase 2a microbiome data by comparing microbiome changes associated with ibezapolstat to other antibiotics used to treat C, difficile infection, including fidaxomicin, vancomycin and metronidazole. This laboratory study is being conducted using an in vitro gut model that mimics human gastrointestinal physiology. Additional data on the favorable effect of ibezapolstat on the gut microbiome was developed and presented at three prominent international scientific conferences during 2021, first in June 21 at the World Microbe Forum, we presented an eye poster and abstract with data from the Phase 1 healthy volunteer trial, using a novel analysis technique showing beneficial anti recurrence changes in the gut microbiome when compared to vancomycin. Our scientific advisors suggest that these data may be predictive of lower risk of C. diff recurrence or reinfection. These results were presented by Dr. Kevin Garey, who we already mentioned, and who is the principal investigator for microbiome aspects of the ibezapolstat clinical trial program. Second in October 2021 we presented a scientific poster and abstract with additional data from the ibezapolstat Phase 2a trial in patients with C. diff infection at the Infectious Disease Society of America IDWeek 2021 scientific conference. Specifically, Dr. Garey presented newly available data from our completed Phase 2a clinical trial in a scientific poster. Dr. Garey noted that favorable microbiome changes in these patients with CDI including overgrowth of actinobacteria and firmicutes virus species were observed in patients during therapy with ibezapolstat and that the results begin to confirm the microbiome effects seen in the Phase 1 healthy volunteers. Accordingly in our scientific advisor's opinion, use of ibezapolstat may very well be beneficial to the microbiome and these results are predictive of beneficial patient outcomes in our late stage trials, including anticipated low recurrence rates. Third, in November 21, Dr. Garey presented additional microbiome data from the completed Phase 2a trial at the 9th Annual International C. diff conference. These data demonstrated complete eradication of colonic C. diff by day three of treatment with ibezapolstat as well as the observed overgrowth of healthy gut microbiome, actinobacteria and firmicutes virus species both during and after treatment. Very importantly, emerging data showed an increased concentration of secondary bio acids, which is known to correlate with a low risk of reinfection. Moreover, a decrease in primary bio acids in the favorable increase in the ratio of secondary to primary bio acids provides more scientific evidence, suggesting recurrences may be very low in future trials. These presentations are available on our website at acurxpharma.com. We remain particularly excited about the dual impact of using ibezapolstat to treat the C. diff infection, while appropriately managing the long-term care of each patient's microbiome, which we believe is exceptional for antibiotic therapy. Other recent publications from 2021 include an article published in Nature Biopharma on October '21 titled Advancing a promising Antibacterial against C. Difficile. In August 2021 Health Holland awarded a grant of approximately $0.5 million to Leiden University of Medical Center to further study the mechanism of action of pol IIIC inhibitors in a consortium partnership with Acurx. This innovative research entitled Bad bugs, new drugs, elucidation of the structure of DNA polymerase IIIC of multi-drug resistant bacteria in complex with novel classes of antimicrobials, and will study three-dimensional structures of DNA polymerases and their binding interaction with Acurx's product pipeline, including ibezapolstat and 375. The antibacterial molecular target of a Acurx's pipeline of DNA pol IIIC inhibitors has been clinically validated by ibezapolstat's recent completion of a Phase 2a trial in patients with C. difficile infection. The research outcome is intended to accelerate lead product candidate selection for our ACX-375 program for systemic treatment against a wide variety of problematic resistant bacteria, including MRSA, vancomycin-resistant enterococci and drug-resistant Strep Pneumoniae. These are bad bugs, which the WHO, CDC and FDA all include as high-priority drug resistant gram-positive pathogens, where new classes of antibiotics are sorely needed. This project was initiated by Leiden University of Medical Center in September 2021, and emerging data are expected to contribute to the 375 development program. In terms of finance matters, highlights from 2021, include the following. The company consummated its IPO in June '21, raising gross proceeds of $17.25 million. The closing of the IPO included full exercise of the underwriters over-allotment option on the closing date. We are pleased to report that in November '21 Maxim Group initiated independent research coverage on Acurx through its research analyst, Dr. Jason McCarthy. In terms of investor relations, we participated in a number of healthcare conferences in 2021, including the Wainwright 23rd Annual Global Investment Conference and the Emerging Growth Conference, and management continues on an aggressive investor relations strategy forward into 2022. We also joined the Russell Microcap Index in the third quarter of '21, raising the company's corporate profile on helping to develop our investor relations profile. So 2021 was a very active and productive year driven by our success in raising capital in a challenging financial environment for the biopharmaceutical sector. I'd now like to turn the call back over to our CFO, Rob Shawah, to guide you through the highlights of our financial results for the fourth quarter and full year 2021. Rob.
Rob Shawah: Thanks Dave. As mentioned earlier, our financial results for the fourth quarter and full year ended December 31 were included in our press release issued earlier this morning, Acurx ended the fiscal year on December 31, 2021 with cash totaling $13 million compared to $3.2 million as of December 31, 2020, which was an increase in cash of $17.3 million from our initial public offering offset by IPO related costs of 2.5 million and operating related expenditures for the year ended December 31, 2021 of approximately $5 million. Cash provided by financing activities for the year ended December 31 was approximately $14.8 million attributable to net proceeds from the initial public offering. Cash used in operating activities for the year ended December 31st, 2020 was 3.4 million, of which approximately 2.2 million was spent on research and development related activities. Cash provided by financing activities for the year ended December 31st, 2020 was approximately $4 million, which was attributable to the net proceeds from our private placement offerings, Research and development expenses for the year ended December 31 were $2 million compared to $2.2 million for the year ended December 31, 2020. The decrease is due to lower consulting expenses, partially offset by higher manufacturing costs associated with the commencement of the Phase 2b trial. For the three months ended December 31, 2021, research and development expenses were $0.7 million compared to $0.5 million for three months ended December 31, 2020. The increase is due to the Phase 2b trial related cost which commenced in the fourth quarter. General and administrative expenses for the year ended December 31 were $10.8 million compared to $2.4 million for the prior year. The increase was primarily due to non-cash stock based compensation as well as increases in professional fees, insurance and legal costs. For the three months ended December 31st, 2021 general and administrative expenses were $1.9 million compared to $0.6 million for the three months ended December 31, 2020. The increase in general and administrative expenses is primarily to attributable to increases in employee compensation costs as well as increases in professional fees, insurance and legal costs. The company reported a net loss of $2.6 million or $0.26 per diluted share for the three months ended December 31, 2021, compared to a net loss of $1.1 million or $0.16 per diluted share for the same period in the prior year. For the full year, the company reported a loss of $12.7 million or $1.49 per diluted share compared to a net loss of $4.6 million or $0.74 per diluted share for the year ended December 31st, 2020. The company had to 10,215,792 shares outstanding as of December 31, 2021. With that, I'll turn the call back over to Dave.
David Luci: Thanks, Rob. And thank you all for joining us today. We're very enthusiastic about the strong fundamentals of our company, and we are especially pleased to report Acurx's continuing progress in the fourth quarter and full year 2021. We look forward to building on this momentum in 2022, and to updating you in the coming months. I'll now open the call for questions, Operator?
Operator: Thank you. Our first questions come from the line of Jason McCarthy with Maxim Group. Please proceed with your questions.
Jason McCarthy: Good morning, David. Thanks for taking the questions, a couple of questions. First, a more broad question on the competitive landscape. Can you talk about some of the recent challenges in the space? In particular, we saw Summit fail a trial on the therapeutic side. We also saw Pfizer -- I think it was Pfizer, miss on a huge vaccination study on the preventative side, and kind of where does Acurx fit now in that competitive landscape?
David Luci: Good morning, Jason. And thank you for the question. So, we look at it like the parting of the seas. We see a direct line now to frontline therapy, driven by the fundamentals of our data and some of these recent failures. Pfizer's miss of its primary endpoint in the vaccine study was a big miss for them. They had targeted frontline therapy and $1 billion peak sales potential for the vaccine if it were used frontline, which is what we see for frontline therapy as well. Now, Pfizer importantly, has indicated that they're going to stay in the space and try to have a niche product for their vaccine kind of late -- for multi recurrent cases of C. difficile down the line from frontline therapy. So the fact that, Pfizer is staying in this space, we think that's a testament to how large the market is, and we think given they are staying in the space, it would be very complementary for them to have a line back on frontline $1 billion program potential and have the front and the back of the market covered at the same time. So, we see it as a business development opportunity. Summit Therapeutics, we see as no longer in the running for frontline therapy, given their recent failure of a primary endpoint in their Phase 3 program, as well as rejection by the FDA of some modified endpoint -- primary endpoint in their Phase 3, which they didn't have the FDA blessed before they made the change. But long and short of it is, we think Summit is also at best, going to be down the line from frontline therapy in some niche market with patients that have autoimmune disease or patients that have a history of COVID So that really parts the seas for us with those two being parts, you may recall Sanofi failed its vaccine for C. diff back in 2017 and more recently, just a couple of days ago we see that Finch Therapeutics is on clinical hold now with a microbiome program with claim to fame from their Phase 2 data against placebo. I think they cut the recurrence rate for C. diff by about 15% compared to placebo or nothing. Now, our recurrence rate currently from our 2a trial is 0%. So without any recurrence, it’s something like Finch’s therapy even if it gets off clinical hold would seemingly be just a niche program down the line from frontline therapy. So we really do feel enthused, not that we're looking for programs to fail. We want there to be more therapeutics out there for C. diff, but from our shareholders perspective, it's certainly good for our company.
Jason McCarthy: And you had mentioned in the beginning of that response about business development, can you talk in addition to something or group like a Pfizer, wanting to have the front and backend possibly in C. diff? How about other potential business develop -- excuse me, development activities even regional partnerships small and large in other countries?
David Luci: Yes, we have an aggressive business development program, which involves territorial licensing deals. ACX 375, the second product candidate, that's preclinical at the moment. And you know, everything is on the table, so we're quite delighted with how it's been going and we expect to continue to be aggressive with it while we're continuing to enroll the Phase 2b trial. But there are prospects there for sure, and we're active with it every week.
Jason McCarthy: And just a more long term question, I suppose because of the Phase 2a data, I know it's a small sample size and, you know, we're expecting to see very similar results in this upcoming trial hopefully. But from a labeling or a potential labeling perspective, is there an opportunity to get anything on the superiority side, even though you don't technically need it or even something related specifically to microbiome that would make ibezapolstat really, really stand out above any other therapeutic out there?
David Luci: Yes, there absolutely is. I mean, you know, -- it's funny, you know, this is a bit tongue in cheek, but as competitive therapies fall by the wayside, it seemingly would become less important, but we're doing that at just the same. Because we feel, and in conjunction with our scientific advisors that we have the goods, so we might as well put them out there. So we're starting with the -- in the Phase 2b, we have an exploratory endpoint comparing the microbiome impact of ibezapolstat to vancomycin. That's being done in the trial partially with our expectation being that when we meet with the FDA after Phase 2b, if successful, we will use that data to try and do a more broad endpoint on comparing the microbiome in Phase 3. And also as mentioned a few moments ago we, after we evaluate the non-inferiority for the primary and secondary endpoint of the 2b trial, assuming we get to non-inferiority, the statisticians will then, do an analysis which will be statistically powered for superiority, and that too will become data that we discuss when we design our Phase 3 in collaboration with the FDA.
Jason McCarthy: Got it. Just briefly last question. Any updates or insight that you have on any progress for the Pasteur Act, just given all the challenges with the conflict overseas and it seems maybe Congress is a little bit -- their priorities may have shifted a little. We haven't heard anything, I wanted to know if you had heard anything.
David Luci: Yes, there was an Antimicrobial Working Group Meeting, just a few days ago. And there was an omnibus bill that was passed very recently through Congress. And quite insightful as you mentioned, the Ukraine conflict, as we understand it, the Pasteur Act was kind of replaced with some defense spending that got inserted and took that allocation out of what would've been an omnibus bill that included the Pasteur Act. So it’s at the top of the list, as we understand it, but the Ukraine conflict did kind of changed the world a little bit in a lot of perspectives. So, it may take a little bit longer than we had hoped. But we have other things going on, like non-dilutive grants from the NIH and potential upfront payments and territorial licensing deals. So, we do have some other stuff that is kind of a priority of ours. And from our conversations, Jason, what we try to do is throw everything we have up against the wall and see what sticks, but we think it could be a few more months for the Pasteur to pass.
Jason McCarthy: I mean, one could argue that this is an example of, it's more important than ever to have control over antibiotics in this country, given what's happening overseas right now. Thank you so much, David, for taking the questions.
Operator: There are no further questions at this time. And with that, this does conclude today's teleconference. We do appreciate your participation. You may disconnect your lines at this time. Enjoy the rest of your day.
David Luci: Thank you, Joe.
