Q1 2024 Acurx Pharmaceuticals Inc Earnings Call

Participants

David P. Luci; Co-Founder, President, CEO, Corporate Secretary & Director; Acurx Pharmaceuticals, Inc.

Robert G. Shawah; Co-Founder & CFO; Acurx Pharmaceuticals, Inc.

Robert J. DeLuccia; Co-Founder & Executive Chairman; Acurx Pharmaceuticals, Inc.

Antonio Eduardo Arce; MD of Equity Research & Senior Healthcare Analyst; H.C. Wainwright & Co, LLC, Research Division

James Francis Molloy; MD of Equity Research and Biotechnology & Specialty Pharmaceuticals Equity Research Analyst; Alliance Global Partners, Research Division

Unidentified Participant

Presentation

Operator

Hello, and welcome to the Acurx Pharmaceuticals First Quarter 2024 Financial Results Conference Call. (Operator Instructions) As a reminder, this conference is being recorded. It's now my pleasure to turn the conference over to CFO, Robert Shawah. Please go ahead.

Robert G. Shawah

Thank you, Kevin. 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 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; as well as our Executive Chairman, Bob DeLuccia. After that, I'll provide some highlights of the financials from the quarter ended March 31, 2024, then turn the call back over to Dave and Bob for their 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, May 14, 2024.
You're cautioned not to place undue reliance on these forward-looking statements, and Acurx disclaims any obligation to update such statements anytime in the future. This conference call contains time-sensitive information that's accurate only as of the date of this live broadcast today, May 15, 2024.
I'll now turn the call over to Dave Luci. Dave?

David P. Luci

Thanks, Rob. Good morning, everyone, and thanks for joining us to review our financial results for the first quarter and also to hear some exciting recent updates. Then we'd be pleased to take any questions. First, I'll summarize some of our key activities for the first quarter of 2024, or in some cases, shortly thereafter. In January, we announced positive comparative microbiology and microbiome data for ibezapolstat, our lead antibiotic candidate in C. diff patients from the Phase IIb clinical trial segment.
Ibezapolstat outperformed vancomycin, a standard of care, showing eradication of fecal C. difficile at day 3 of treatment in 15 of 16 treated patients, 94%, versus vancomycin, which had eradication of C. difficile in 10 of 14 treated patients or 71%. Additional data from the Phase IIb clinical trial showed ibezapolstat, but not vancomycin, consistently preserved and allowed regrowth of key gut bacteria species believed to confer health benefits, including preventing recurrent C. diff infection.
Additional data from exploratory endpoints will provide further favorable separation between these 2 therapeutic options in our Phase III clinical trial program and ultimately in the marketplace, if approved. We remain particularly excited about the dual impact of ibezapolstat to treat acute C. difficile on the one hand, while appropriately managing the long-term care of each patient's microbiome, which we believe is truly exceptional for antibiotic therapy.
Having robust preclinical, clinical and manufacturing data to date, we submitted, in January, a formidable information package to the FDA, along with a request for an end of Phase II meeting, which was granted on February 26, and the meeting was convened on April 17. At the FDA meeting, we reached agreement on key elements of our Phase III program. including, importantly, agreement with the FDA regarding readiness to proceed to Phase III, as well as agreement on the regulatory pathway for a new drug application filing for marketing approval in the U.S. We will press release further details on the FDA meeting premarket this morning.
In February, we announced that the European Medicines Agency approved our application to be designated as a small to medium-sized enterprise or SME in Europe, which provides for certain benefits, including fee reductions and other support from the agency for seeking a marketing authorization in Europe. We attended the European Society of Microbiology and Infectious Disease or ESCMID Scientific Congress in April 2024, where Dr. Kevin Garey, Professor and Chair, University of Houston, College of Pharmacy, and the Principal Investigator for Microbiology and Microbiome aspects of our clinical trial program, and our Scientific Advisory Board member, provided an oral presentation of Phase II data entitled, "A Phase II Randomized, Double-Blind Study of Ibezapolstat Compared with Vancomycin for the Treatment of C. difficile Infection". The presentation included additional analyses of clinical and microbiological data and is available on our website at www.acurxpharma.com. The complete Phase II results are being prepared for submission to a prominent scientific journal for publication this year.
Throughout the rest of this year, we'll continue to roll out our Phase II results in either oral presentations or scientific posters, or in some cases both, which will include results from new analyses as data become available at various prominent scientific conferences, including the Houston C. diff & Microbiome Conference later this month, the Anaerobe Society of the Americas Annual Conference in July, the World Antimicrobial Resistance Conference in September. Also in September is the International C. diff Symposium, and of course, the Annual Meeting of the Infectious Disease Society of America, or ID Week, in October.
Throughout the first quarter, we continued preparations for Phase III trials, including advances in micro and manufacturing, CRO selection and clinical site screening, and building a team of international drug development experts to support our Phase III mandate. To ensure Phase III clinical trial enrollment as quickly as possible, we're adding substantially more clinical trial sites, way above the number used to conduct the U.S.-only Phase II trials.
We're now finalizing costs and time lines and our plan is to conduct the required 2 Phase III registration trials consecutively, not concurrently, given the size of our company, and need to use our financial resources most efficiently. The time line to conduct our Phase III trials is not a concern since ibezapolstat will have a rolling 10 years of regulatory exclusivity in the U.S. from the date of the FDA approval, with similar exclusivity available in Europe, the U.K., Japan, and Canada.
We will continue to seek a strategic transaction for the company, including a potential partnership for the further development and potential commercialization of ibezapolstat, alongside preparation for Phase III and our build-out strategy. At this time, we have no commitments to our potential partners or others to report. But now having FDA confirmation of the registration plan, this has become an active initiative.
As we've consistently reported, ibezapolstat clinical results continue to outperform in a series of potentially life-threatening infection. The CDC categorizes C. difficile as an urgent threat and calls for new classes of antibiotics for initial treatment that also have a low incidence of recurrence. Ibezapolstat is also FDA fast track designated for the treatment of C. difficile infection.
Initially, we believe ibezapolstat, if approved, could make a favorable impact by reducing the cost burden of recurrent C. diff infection on the U.S. health care system, which is estimated at $4.7 billion annually. 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 first quarter. Rob?

Robert G. Shawah

Thanks, Dave. Our financial results for the first quarter ended March 31, 2024, were included in our press release issued earlier this morning. The company ended the quarter with cash totaling $8.9 million compared to $7.5 million as of December 31, 2023. During the first quarter, the company sold an additional 1,121,793 shares under its ATM financing program with gross proceeds of approximately $4.4 million.
Research and development expenses for the 3 months ended March 31, 2024, were $1.6 million compared to $1 million for the 3 months ended March 31, 2023. The increase was due primarily to an increase in manufacturing-related costs during the quarter. General and administrative expenses for the 3 months ended March 31, 2024, were $2.8 million compared to $1.9 million for the 3 months ended March 31, 2023. The increase was due primarily to a $0.7 million increase in professional fees and a $0.2 million increase in noncash share-based compensation.
The company reported a net loss of $4.4 million or $0.28 per diluted share for the 3 months ended March 31, 2024, compared to a net loss of $2.9 million or $0.25 per diluted share for the 3 months ended March 31, 2023, all for the reasons we previously mentioned. The company had 15,757,102 shares outstanding as of March 31, 2024.
With that, I'll turn the call back over to Dave. Dave?

David P. Luci

Thanks, Rob, and thanks to all of you for joining us today. I'll now ask Bob DeLuccia, our Executive Chairman, who managed the FDA post-Phase II meeting process, to provide his perspective on the FDA meeting in the company's Phase III mandate. Bob?

Robert J. DeLuccia

Yes. Thanks, Dave. So let me just add a few thoughts on top of Dave's comments about our end of Phase II meeting with the FDA. In general, it was a very thorough, productive, and successful meeting regarding 4 things.
First, we had overall agreement that was reached based upon the strength of our preclinical and Phase II clinical trial results, including the anticipated safety database, we're ready to move forward with plans for our Phase III program.
Second, with respect to the Phase III clinical trial design, as expected, it will be the same design as our Phase IIb trial, which is noninferiority to vancomycin, with the primary endpoint being clinical cure after 10 days of treatment, and a secondary endpoint of sustained clinical cure about 30 days after the end of treatment.
Third, we agreed on the statistical analysis patient population, which will be a modified intent to treat or what's called MITT population, with an estimated 450 subjects in that MITT group. And this is roughly what we had expected and will now be in sync with requirements for an EMA clinical trial authorization.
And lastly, agreement on the registration program for 2 noninferiority trials versus vancomycin, which would be required for marketing approval. Now I'd also add that we were very pleased with suggestions from the FDA, including ultimate labeling and overall supportive tone of the FDA from our submitted data to date and our plan going forward. So bottom line, we now have a complete regulatory road map to move forward with our Phase III program, which is the last clinical development step toward marketing registration of ibezapolstat globally. For a small entrepreneurial company like Acurx, this is a very significant milestone that we've reached.
And Dave, if you don't mind, I'd like to add one more thing just on top of what you said. Recall that ibezapolstat has FDA fast track designated status due to the urgent need classification by the U.S. CDC for new classes of antibiotics. And there are similar classifications like this available in other geographies, including Europe, the U.K., Japan and Canada. If approved, ibezapolstat will be the first new class of antibiotics brought to the market in over 3 decades. So we've got no time to waste to get this new product over the goal line. And with the continued support of all our shareholders, we have a clear vision and a strong passion to be successful for the ultimate benefit of patients who need better treatment for C. difficile infection and all our stakeholders and, in general, for better public health. Kevin?

Question and Answer Session

Operator

(Operator Instructions) Our first question today is coming from Ed Arce from H.C. Wainwright.

Antonio Eduardo Arce

Bob, I appreciate the comments at the end. Those were some of the questions I had regarding the specifics around the trial. A couple of follow-ups there. Firstly, the 450 patients or subjects that you mentioned, is that the total number for the trial? And also, the usual requirement from the FDA of 2 well-designed pivotal studies. I want to just confirm that the Phase Ib is being considered as one of those 2. And so this upcoming trial would be the final study?
Secondly, I wanted to ask about the costs and time lines. I know that you said that those are currently being finalized. But any preliminary or early commentary around those would be helpful for us. And then lastly, around the strategic partners and your efforts now that you characterized as being active, now that you have a pathway for a pivotal study. I'm wondering, although you don't have any current commitments, do you have any active discussions at this point? Thanks so much.

David P. Luci

Thank you for your questions, Ed. The last question being the easiest, I'll hit that 1 first. So we have several active discussions at the moment. Nothing to report. But for example, the company will be well represented at the BIO CEO conference in San Diego, and my schedule is chock full. So there's a lot of activity. We felt it most appropriate, before making outbound calls, to have the FDA piece to the puzzle in place, because we now are truly Phase III ready and that removes another piece of the puzzle in terms of things being set in stone. So that's all set.
On the first question, with regard to the 450 MITT patients, that's the total MITT patients for each of 2 Phase III registration trials. So the Phase IIb is not considered a registration trial. You may recall the small numbers of patients. And quite frankly, we needed a lot more patients to have satisfactory safety database for an NDA application thereafter. So it's 450 patients MITT for each of 2 trials, for a total of 900.
And to your question, we are still going through the cost things. So we don't know exactly how much it will cost. And in some cases, if we have a partnership, it may be that some of the work that we would have paid for would be internalized by a fully integrated pharma company that will be side-by-side with us with mutual interest to get the Phase III program done as quickly as possible, and using our Phase III data for filing in Europe, the U.K., Japan. So the MITT piece to the puzzle was a quick conversation with the FDA, because really, you need that to get to file for approval in Europe and the U.K. So by agreeing on that particular point, we were able to avoid further clinical trials beyond the 2 Phase IIIs. And quite literally, we have an equal pathway in the U.S., the U.K. and Europe. So we're kind of delighted with that piece to the puzzle. But I think that's -- is there another piece to your question that I may have missed?

Robert J. DeLuccia

Yes, Dave. Question on time line. I mean I can answer if you'd like to?

David P. Luci

Okay. Time line. Yes, we feel, based on what we spent out so far that would be 1.5 years to 2 years from first patient enrolled.

Robert J. DeLuccia

And Ed, this is Bob. Just to reiterate, too, the 2 Phase III trials are straightforward from the FDA guidelines, October 22, I think it was, guidelines. And that's a very clear path for what's needed for approval and an NDA.

Operator

(Operator Instructions) Your next question is coming from Mike Boyd, a private investor.

Unidentified Participant

Thank you for the update. It's very exciting, and I can't wait to see the next steps. I had a quick question, easy one I hope. Has the company considered a priority review voucher for this application?

David P. Luci

Thanks for the question, Mike. Bob, do you want to hit that one?

Robert J. DeLuccia

Yes. I mean we already have priority review because of our FDA fast track status. So we already have that.

Unidentified Participant

Yes. But the voucher itself is actually -- there's value to that. You could actually sell that if you chose. Current market value is about $100 million. So looking at that as a source of possible funding at some point.

Robert J. DeLuccia

We could certainly take a look.

Unidentified Participant

Okay. Cool. I mean the timing is right to begin thinking about it. It's associated with the NDA. So it's time to put it on the radar if it's something that the FDA would consider.

David P. Luci

Okay.

Operator

Your next question today is coming from James Molloy from Alliance Global Partners.

James Francis Molloy

Guys, I apologize if I missed it on the call. Did you guys state when you anticipate starting the first of the 2 Phase IIIs? And can you walk us through what the all-in cost on the Phase IIIs are anticipated?

David P. Luci

Thanks, Jim, and good morning. We hope to start -- we will be ready to start in the fourth quarter of this year with enrollment with our manufacturing update that we recently received. So we hope to be funded satisfactorily by then in order to start. So that's the gating factor. But yes, we hope to start in the fourth quarter, and then enrollment should take 18 to 24 months. And it's difficult for us to guesstimate exactly how much this is going to cost, because we have a lot of partnering discussions currently ongoing and they're all different. And they all have various internal capabilities that dramatically impact what the Phase III mandate will cost. It's certainly something in the $50 million to $60 million range if we were to do it all independently ourselves. So a partnership would be an appropriate course.

James Francis Molloy

How would you characterize the current partnership environment? And obviously, after Phase III, it's your best deal, you're obviously not there. But how do you characterize sort of going into Phase III, the partnership opportunities you're seeing?

David P. Luci

I would characterize it as pretty robust. I mean, probably my last 20 e-mails in my inbox are people wanting to meet me, and I haven't even looked at the e-mails yet. That's just from overnight. I mean, it's just a lot of interest, and we may not be enrolling in Phase III, but we're Phase III ready. And we know we have a drug from our Phase IIb data. So we have to be patient and we have to take the right deal.
And when things come along that are going to constitute 60% of the company being lost to a round of investment, then sometimes it's the deals that you don't do that make the most sense. So we're trying to be judicious about raising capital as nondilutively as possible, knowing that we have a drug, and we're Phase III ready. And there aren't a lot of Phase III antibiotics out there right now, especially not in a $1 billion-plus market, where you have a reasonable chance to be frontline therapy.

James Francis Molloy

Maybe last questions on my end. On the design, I know that, obviously, 1 year, 1.5 years to get to run the first of the Phase IIIs. Is there an opportunity for any interim looks and any thoughts on timing on that? And then any update on the PASTEUR Act? What's going on?

David P. Luci

Yes, I'll leave that -- the question on the PASTEUR Act, I'll leave to Bob. There's some new legislation -- actually old legislation that may be expanded to include antibiotics that treat life-threatening infections that Katie Britt in the Senate has gotten in touch with the Health and Human Services about, but I'll let Bob talk about that.
But the interim look thing, that's kind of like a head fake. I know it's NBA playoff time. So for you NBA fans, the interim look, that would go through an independent committee of scientists and doctors. And if you take an interim look, you necessarily statistically have to add patients to the trial. And the interim look doesn't give you any sense of, percentage-wise, how you're doing with the primary endpoint or secondary endpoints. All it does is this group of experts tell you to either keep going or to stop due to futility. So for the amount of information you get out of that, to me, is not worth adding millions of dollars in time to a trial.

Robert J. DeLuccia

Yes. I agree with you, Dave, on that, for sure. And I hope that answers the question. But remember, this is a blinded trial. So you really can't break the blind. You've got to continue to proceed. I think there was a second question here regarding...

David P. Luci

It was about PASTEUR Act.

Robert J. DeLuccia

What was the question?

David P. Luci

What's going on with the PASTEUR Act?

Robert J. DeLuccia

Yes, PASTEUR Act. There's a lot of effort to try to get that through. Really unlikely going to occur this year under the current political environment. However, there is some activity with a special program that requires a drug to be determined as a material threat in order to get some additional funding from a government organization called BARDA for new classes of antibiotics that are in late-stage clinical trials, namely Phase III.
So this is being circulated as pending legislation, trying to move it forward this year. I wouldn't put a high probability that it's going to get through this year. But if it does, we'll be able to tap into that for some partial funding for our Phase III program.

David P. Luci

Actually, just a slight nuance on that is that the legislation is actually old. It's been approved a long time ago. So what needs to happen is that the scope of the program would need to be expanded, which I understand can be done by HHS on their own. It would need to be expanded to include antimicrobials that treat life-threatening infections. So it doesn't rise to the level of needing a new law, the law is there, it's just the program needs to be expanded to include this new class of things that ultimately would be stockpiled by the Federal government through the Department of Defense.

Operator

We've reached the end of our question-and-answer session. I'd like to turn the floor back over for any further or closing comments.

David P. Luci

We'd just like to thank everyone for participating today, and thank you for your patience and the best is yet to come.

Operator

Thank you. That does conclude today's teleconference. You may disconnect your lines at this time, and have a wonderful day. We thank you for your participation today.