Acurx Pharmaceuticals, Inc. (ACXP) on Q3 2024 Results - Earnings Call Transcript
Operator: Greetings, and welcome to the Acurx Pharmaceuticals, Inc. Third Quarter 2024 Results and Business Update Conference Call. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Robert Shawah, Chief Financial Officer. Thank you. You may begin.
Robert Shawah: Thank you. 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 2024, 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. After that, I'll provide some highlights of the financials for the quarter ended September 30, 2024, 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 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 on Tuesday, November 12, 2024. We request 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 13, 2024. I'll now turn the call over to Dave. Dave?
David Luci: Thanks, Rob. Good morning, everyone, and thanks for joining us to review our financial results for the third quarter of 2024, 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 third quarter of '24 or in some cases, shortly thereafter. In July, results from the ibezapolstat Phase II clinical trial in patients with C. diff infection were presented at the 17th Biennial Congress of the Anaerobe Society of the Americas by Taryn Eubank, PharmD, Research Assistant Professor at the University of Houston College of Pharmacy. Taryn delivered an oral presentation entitled: "clinical efficacy of ibezapolstat in CDI: results from Phase II trials." Also in July, the USPTO granted Acurx, a new patent for the ibezapolstat, which specifically encompasses the treatment of C. difficile infection, while reducing recurrence of infection and improving the health of the gut microbiome. This patent expires in June 2042, subject to extension, if any, and we think will provide an important downstream competitive advantage. We also filed other patent applications with the USPTO in the third quarter, but we'll discuss those down the road if and when these patents are issued. In August, following our successful [indiscernible] Phase II clinical meeting with the FDA, which confirms our Phase III clinical trial program readiness. And per FDA requirements, we submitted a manufacturing request to the FDA for a meeting to review our manufacturing processes and specifications for drug substance and final product packaging. This would allow us to move forward to Phase III clinical trials. FDA granted a meeting date in late October, which we did not need because of our successful premeeting correspondence with the FDA. So from a regulatory perspective, we're delighted to announce CMC readiness for Phase III in addition to FDA agreement on our clinical plan forward for Phase III. In September, a presentation was given by Acurx Executive Chairman, Bob DeLuccia, at the World Antimicrobial Resistance Scientific Congress held in Philadelphia. As many of you may know, Bob has over 50 years industry experience and new antibiotic development and commercialization and is responsible for our clinical development programs, including for ibezapolstat. In his presentation at the innovation showcase session, Bob highlighted that we have a complete road map not only for the required components of our Phase III clinical program, but also what's required for ultimate filing of an NDA, which is to be followed by submissions for marketing authorizations in other countries around the world. Bob also presented an update on the company's preclinical Gram-positive Selective Spectrum program for systemic oral and IV treatment of other gram-positive infections, including MRSA, VRE and DRSP. Bob summarized our progress stating that we have made substantial progress to our lead compound selection of our gram-positive IV and oral compounds. Our current focus is to prioritize the oral form for acute bacterial skin and skin structure staff infections, including MRSA, to speed, lead product selection and advancement to clinical trials. We also participated at the 8th AnnualC. Difficile Symposium, or ICDS, in Bled, Slovenia, which is the premier global venue for the review of C. difficile research. At the ICDS meeting, 2 presentations were made on our behalf. First, Dr. Kevin Garey, Professor and Chair University of Houston College of Pharmacy, made a presentation on our behalf regarding ibezapolstat's Phase IIb results and its preservation of key bacterial species, which was an unexpected finding of a unique microbiome signature in 2 vancomycin-treated patients in the Phase IIb trial, who experienced recurrence of CDI. Since these changes were evident and observed early during treatment and then consistently until the end of therapy, they may be predictive of pending CDI recurrence and suggest the need to modify therapy. Accordingly, as we move ahead to our planned international Phase III clinical trials, we will continue to evaluate what we call our predictive model to determine if there may be a pathway forward towards commercialization as a new diagnostic tool or test kit, if you will. Second, in Bled, Slovenia, Dr. Wiep Klaas Smits, Associate Professor, Leiden University Medical Center in Holland, delivered a presentation on the mechanism of action of pol IIIC inhibitors. These definitive data result from our multiyear partnership with LUMC and the Dutch government to perform pioneering research on the pol IIIC mechanism of action of. Dr. Smits emphasized that his findings with ibezapolstat regarding the structural biology of DNA pol IIIC inhibitors have important implications for the development of a new family of antibiotics to treat high-priority, multidrug-resistant gram-positive infections. And that this novel class of DNA pol IIIC inhibitors could be an important new tool to address the pandemic of antimicrobial resistance. Also in the quarter, we announced that selected ACX-375C DNA pol IIIC analogs demonstrated in vitro activity against Anthrax, which is a bioterrorism category A pathogen, including activity against ciprofloxacin-resistant Anthrax. This work was performed at 2 independent qualified laboratories including the University of Florida. Planning is underway for an Anthrax bioterrorism development program. In October, we participated at ID Week in Los Angeles, the Annual Scientific Conference of the Infectious Disease Society of America. Dr. Kevin Garey and Taryn Eubank presented a scientific poster showing that in the Phase IIb clinical trial, ibezapolstat had comparable clinical cure and sustained cure rates and safety profile to vancomycin, the standard of care. Also, 505 ibezapolstat patients who were followed for a full 3 months after the end of treatment experienced no recurrence. Ibezapolstat treated patients showed decreased concentrations of fecal primary bile acids and higher ratios of secondary to primary bile acids than vancomycin-treated patients. According to Dr. Garey, these exciting results demonstrate 2 properties of ibezapolstat, which may contribute to its anti-recurrence effect. First, the preservation and restoration of beneficial bacterial classes in the gut, provide resistance to recolonization by C. difficile. Second, these data presented for the first time, indicate that these beneficial bacteria known to metabolite primary to secondary bile acids persist in ibezapolstat-treated patients providing another important mechanism to prevent recurrent CDI. So now we have even more momentum going into the fourth quarter. As we've continually reported ibezapolstat clinical results continue to outperform in a serious and potentially life-threatening infectious disease called C. difficile bacteria that the U.S. CDC categorizes as an urgent threat and calls for new classes of antibiotics for initial treatment that also have a low incidence of recurrence. Ibezapolstat also has FDA QIDP and Fast Track designation for the treatment of CDI. Additionally, we believe that ibezapolstat, if approved, could make a favorable economic impact by reducing the overall annual U.S. cost burden for C. difficile infection of approximately $5 billion per year, of which $2.8 billion is due to recurrent CDI infection. Given our continuing momentum, we do believe the best is yet to come. And now back to our CFO, Rob Shawah, to guide you through the highlights of our financial results for the third quarter. Rob?
Robert Shawah: Thanks, Dave. Our financial results for the third quarter ended September 30 were included in our press release issued earlier this morning. The company ended the quarter with cash totaling $5.8 million compared to $7.5 million as of December 31, 2023. During the third quarter, the company raised additional proceeds under its ATM financing program with gross proceeds of approximately $1.6 million. Research and development expenses for the 3 months ended September 30, 2024, were $1.2 million compared to $1.3 million for the 3 months ended September 30, 2023. The decrease was due primarily to an increase in manufacturing-related costs of $0.1 million, offset by a reduction in consulting fees of $0.2 million. For the 9 months ended September 30, research and development expenses were $4.6 million compared to $4.1 million for the 9 months ended September 30, 2023, an increase of $0.5 million, primarily due to a $0.9 million increase in manufacturing-related costs offset by a $0.4 million decrease in consulting. General and administrative expenses for the 3 months ended September 30, 2024, were $1.6 million compared to $1.8 million for the 3 months ended September 30, 2023, a decrease of $0.2 million. The decrease was due primarily to a $0.5 million decrease in noncash share-based compensation offset by a $0.2 million increase in professional fees and a $0.1 million increase in compensation-related costs. For the 9 months ended September 30, 2024, general and administrative expenses were $6.7 million compared to $5.4 million for the 9 months ended September 30, 2023, an increase of $1.3 million. The increase was primarily due to a $1.1 million increase in professional fees and a $0.2 million increase in legal costs. The company reported a net loss of $2.8 million or $0.17 per diluted share for the 3 months ended September 30, 2024, compared to a net loss of $3.1 million or $0.24 per diluted share for the 3 months ended September 30, 2023. And a net loss of $11.3 million or $0.71 per share for the 9 months ended September 30, 2024, compared to a net loss of $9.5 million or $0.77 per share for the 9 months ended September 30, 2023, all for the reasons previously mentioned. The company had 16,770,378 shares outstanding as of September 30, 2024. With that, I'll turn the call back over to Dave.
David Luci: Thanks, Rob, and thanks to all of you for joining us today. I'll now turn the call over to the operator to open up the call for questions. Operator?
Operator: [Operator Instructions] The first question is from Ed Arce from H.C. Wainwright.
Thomas Yip: This is Thomas Yip asking a couple of questions for Ed. So first question -- perhaps well first, can you discuss more about the predicted model that you discussed earlier on the call, a potential diagnostic tool?
David Luci: Yes. So that's one of the items that we filed a patent for in the quarter. Basically, there are certain measurements kind of proprietary, but there are certain measurements of the stool samples that Dr. Garey and our Medical Director, Mike Silverman, we're able to focus in on and see by the end of the third day of treatment, if certain measurements were as they found, they would consistently be the same for the rest of the 10-day treatment period. And those measurements seem to be predictive as to whether a patient will reinfect. So basically, if they find certain ratios of different things in the stool samples, they can predict they believe, certainly, they need a lot more patients to prove it out, but they think they can predict by the end of 3 days of treatment, if any antibiotic is going to be a high risk of reinfection. So we're going to continue to monitor that in Phase III. But that by itself could be a diagnostic that could be quite useful to reduce the $2.8 billion per year cost burden for recurrent C. difficile infection because treating physicians could use this test kit as a way to swap out one treatment or one therapeutic for another to try to increase the likelihood that a patient will successfully remain uninfected.
Thomas Yip: That sounds interesting. That's definitely very interested to learn more about this in the near future. And then perhaps another question related to the press release, you mentioned that the international regulatory filing initiatives ongoing this quarter, can you discuss more details about these initiatives?
David Luci: Sure. So we're starting in Europe with the European Medicines Agency, and that process will probably lead to a meeting, either the tail end of the year or more likely first quarter of next year. And that would be a meeting with the European Medicines Agency to just set the regulatory pathway to approval on the basis of doing international Phase III trials, including in Europe. And we -- some may ask, why haven't we set up that meeting sooner. And the answer to that is we needed the results from the FDA clinical and manufacturing regulatory processes to be completed in order to go to the EMEA with -- or EMA, as it's now called, with a final package that FDA cleared. After Europe, we'll proceed with the U.K. Canada and eventually Japan.
Thomas Yip: Understood. And then I suppose as you mentioned, we're close to wrapping up the Phase III program in the U.S. Can you outline what are some top options that you will consider likely to be able to fund the pivotal trials and which one will you prefer?
David Luci: Well, we -- in all cases, we prefer anything that's non-dilutive, as I'm sure you understand. But we like partnering options, and I use the word partnering broadly to include the government along with territorial license and co-development partners, which we have active dialogue going with several companies now in Europe and Japan and South America. With the government, we did have a tech watch meeting back in October, and we've had a lot of follow-up from that meeting. I think there are about 50 government officials from different agencies of the government that could fund Phase III and also could fund ACX-375, the second program, which now has the new hook with the Anthrax. So the nondilutive sources of funding, obviously, are better for our shareholders. And don't forget the PASTEUR Act is still out there, and I understand that it's much more prominently possible to be passed in the near future, more than it's been in any of our prior calls.
Thomas Yip: Understood. And looking forward to the progress in the U.S. and in the Europe as well.
Operator: The next question is from James Molloy from Alliance Resource Partners.
Unidentified Analyst: This is Laura on for Jim Molloy.
David Luci: I'm sorry, was it Laura?
Unidentified Analyst: Yes, Laura. So for the upcoming Phase III program, maybe just have a bit more insight on the earliest potential site for this -- for the first Phase III trial as well as any proposed study design or data readout time lines that you have here for both of the Phase III trials?
David Luci: So it's a little bit up in the air as we continue to source the resource that we need to fund the Phase III trials. But the trial design is 2 Phase III registration trials, international at about 150 trial sites. 450 patients per trial for a total of 900 patients. And both trials are the same 1:1 randomized against oral vancomycin for a 10-day treatment period. The primary and secondary endpoints are identical to the Phase IIb clinical trial endpoints that we worked with for Phase IIb. So that's really about it. We're in a great position in that we can do the Phase III program sequentially or instead of doing both trials at the same time. We have that kind of flexibility because we have 10 years of regulatory exclusivity from the time, we get FDA approval, and there are similar advantages available in Europe. I think it's 9 years in Europe. So really, we're not confined by the commercialization need of having patents that expire. So we really just need to raise the money for one Phase III, and then as the plan would go, if we can raise the money for one of the Phase IIIs and the data is good as we expect, then we can raise the money at a higher price for the second Phase III.
Unidentified Analyst: Got it. And then also for your ACX-375 candidate, you mentioned the research conducted and Anthrax at the University of Florida. So where are you currently in the development of the Anthrax bioterrorism program that you mentioned? And then also, what are some potential partnership opportunities currently looking like for this program specifically?
David Luci: While this program is preclinical, so we don't want to get over our skis on it. We have some laboratory studies that we have to do, some animal studies that we have to do -- to kind of dress it up right now. We have this independent research, MIC studies at a couple of independent labs. The data is really good and obviously, Anthrax get stockpiled by governments around the world because of bioterrorism. So there's not a lot of Anthrax patients out there, but -- so it wouldn't be the kind of thing that we would find a commercial partner to partner with and go out and sell Anthrax somewhere. It would be kind of like a -- if somebody bought it, they would be buying it to try to get government contracts around the world for stockpiling. But that -- this has just been discovered a couple of months ago. So we're just in the beginning phases.
Unidentified Analyst: Understood. And then just one more question from us. So you also mentioned the recent presentation done on the preclinical GPSS program, specifically in targeting MRSA. So what are other future clinical development plans that you have for this program as well?
David Luci: Well, it will start with the MRSA infections, and then it will go into VRE and DRSP infections. But [indiscernible] is probably the biggest incidence of MRSA infections. So we think that's the most attractive one for us to go after. So it's acute bacterial skin and skin structure infections that we start with. Those are ones caused by MRSA. And then we'll get into other areas of MRSA infections and VRE and DRSP.
Operator: [Operator Instructions] The next question is from John Stinson, a private investor.
John Stinson: I'm kind of surprised that we haven't heard from a big partner, a big pharma partner by now. Did you say you're trying to hold off on that because of the amount of dilution that they're demanding? Can you talk a little more about that possibility of partnership in the near future?
David Luci: Sure, John. Well, it reminds me of my first biotech company, we signed up a bank. I think it was Credit Suisse. And it took 3 or 4 years by the time we got a deal done, and these things are sometimes very time-consuming. Things that will happen overnight. I don't know if you've had experience in Japan. But just as an example, Japanese companies move very slowly. They watch, they learn, they look, they diligence. And you keep going until you find deal terms that your Board likes that they think it reflects the right value. So we have different parties looking at M&A, different parties looking at territorial deals. And we have the government, which is obviously the ultimate nondilutive partner. But we're not slowing any partnerships down. Partnerships with private companies won't dilute our shareholders at all. What we would do is in our financial modeling, if we were to say, do a Japanese territorial license and codevelopment agreement, our financial modeling and Wall Street's financial modeling on our company would become one based on upfront payments, clinical or commercial milestones and royalties as opposed to straight up operational advancements, R&D costs followed by commercialization revenues in the territory. So it wouldn't be a dilutive thing to have a private license, a codevelopment agreement in Japan or Europe or South America. It would be a positive thing for us, and it would raise us the money that we would need to kind of move towards Phase III. So what we look at, generally speaking, because we need to raise so much money for Phase III, we're taking a multistep approach. And we're basically using all the levers that we have available to us to raise the money that we need is nondilutively as possible. So that's kind of in a nutshell, that's what we're doing.
Operator: This concludes the question-and-answer session and today's teleconference. You may disconnect your lines at this time. Thank you for your participation.
David Luci: Thank you, operator.
