Start Time: 08:30 January 1, 0000 8:49 AM ET
Acurx Pharmaceuticals, Inc. (NASDAQ:ACXP)
Q3 2022 Earnings Conference Call
November 14, 2022, 08:30 AM ET
David Luci - President and CEO
Robert Shawah - Co-Founder and CFO
Conference Call Participants
Jason McCarthy - Maxim Group
Greetings. Welcome to Acurx Pharmaceuticals, Inc. to Discuss 2022 Third Quarter Financial Results on November 14, 2022. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. [Operator Instructions]. As a reminder, this conference is being recorded.
It is now my pleasure to introduce your host, Rob Shawah, Chief Financial Officer. Please go ahead, sir.
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 2022. This press release is available on our Web site at acurxpharmaceuticals.com.
Joining me today is David Luci, President and CEO 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 September 30, 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 Thursday, November 10, 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. This conference call contains time-sensitive information that's accurate only as of the date of this live broadcast today, November 14, 2022. 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?
Thanks, Rob. Good morning, everyone. And thanks for joining us on this conference call to review our financial results. During today's call, we will review our financial results for the third quarter ended September 30, 2022 and also cover some key corporate highlights. And then we'd be pleased to take any questions.
In the third quarter, we continue to enroll more patients in the Phase 2b clinical trial ibezapolstat, our leading antibiotic candidate for the treatment of patients with C. difficile infection. The Phase 2b clinical trial is a 64-patient randomized one-to-one non-inferiority double blind trial of oral ibezapolstat compared to oral vancomycin, the standard of care to treat CDI.
The primary endpoint of the Phase 2b clinical trial is clinical cure at the end of treatment, and the secondary endpoint is sustained cure measured at the date 38 follow-up visit. Since this is a double-blind trial, results won't be known until the end of the trial. However, operationally the trial is proceeding as expected with no safety signals recorded to-date.
The protocol includes an exploratory endpoint comparing the impact on the microbiome between ibezapolstat and vancomycin. In the event non-inferiority of ibezapolstat to vancomycin is demonstrated, further analysis will be conducted to test for superiority.
Additionally, due to slower than expected enrollment during the aftermath and possible resurgence of COVID-19 infections, we expanded the number of clinical trial sites participating in the Phase 2b trial from the initial eight U.S. trial sites to up to 30 U.S. trial sites.
Currently, there are approximately 24 sites open for enrollment with additional six trial sites onboarding at this time. We remain particularly excited about the dual impact of using ibezapolstat to treat C. difficile infection, while appropriately managing the long-term care of each patient's microbiome, which we believe is exceptional for antibiotic therapy. Details of the impact on the microbiome were presented in oral and poster presentations at IDWeek in October in Washington D.C. and are available on our Web site.
Other key highlights from the third quarter of 2022, or in some cases shortly thereafter, include the following. The company has continued its R&D collaboration with Leiden University Medical Center in Holland to further evaluate the mechanism-of-action of Acurx's inhibitors against the DNA pol IIIC enzyme, which is the bacterial target of our lead antibiotic candidate and of our product pipeline, both orally and systemically for gram-positive bacterial infections.
Secondly, The company has completed certain portions of its laboratory study at the University of Houston comparing the killing effect of ibezapolstat to vancomycin, fidaxomicin and metronidazole using both in vitro and ex vivo analyses. Certain results have been presented at the Anaerobe Society of America annual scientific conference and results demonstrated that ibezapolstat has favorable killing kinetics compared to vancomycin, the standard of care to treat C. difficile infection at standard and high bacterial concentrations, supporting continued development of this first-in-class antibiotic to treat patients with C. difficile infection.
Comparisons of the killing effect of ibezapolstat to fidaxomicin and metronidazole are ongoing. Presentations of various aspects of ibezapolstat in our second antibiotic program, which is currently in preclinical development to treat infections caused by MRSA, were presented at two recent prominent scientific conferences as follows; the Antimicrobial Resistance Conference in September of '22 and IDWeek in October of '22.
Additionally, Acurx recognizes the month of November as C. difficile Awareness Month as designated by the U.S. Centers for Disease Control and Prevention, and supports the work of both the C. diff Foundation and the Peggy Lillis Foundation in educated and advocating for the prevention, treatment, clinical trials and environmental safety of C. difficile infections worldwide.
Financially, in July of '22, the company raised $4.23 million of gross proceeds by consummating a registered direct offering to one U.S. institutional investor and three executives of the company at $3.25 per share for the U.S. institutional investor and $3.80 per share for the company's three executives, who invested a total of $225,000.
In the transaction, we issued a total of 1,159,000 common shares and approximately 131,000 pre-funded warrants. Warrants to purchase common stock totaled approximately 2.6 million with warrant coverage at an exercise price of $3.25 per share for the U.S. institutional investor and $3.55 per share for the company's executives.
To reiterate, in July 2022, we increased the target number of clinical trial sites and continue to onboard new trial sites with an anticipated total of 30 active clinical trial sites before the end of the year. In addition, in October 2022, the company filed for a non-dilutive grant of up to $16 million, which, if approved, would provide funding for our second antibiotic program, ACX-375 targeting the treatment of MRSA infections for a period of five years, right up to the start of Phase 2 clinical trials. The company's portion of this funding would be approximately $5 million and the expected decision by the funding party in April 2023.
Now back to our CFO, Rob Shawah, to guide you through the highlights of our financial results for the third quarter of '22. Rob?
Thanks, Dave. Our financial results for the third quarter ended September 30, 2022 were included in our press release issued earlier this morning. The company ended the third quarter on September 30 with cash totaling $10.6 million compared to $13 million as of December 31, 2021. Research and development expenses for the three months ended September 30 were $1.6 million compared to $1.1 million for the three months ended September 30, 2021. The increase was due to an increase in Phase 2b trial related costs and related consulting costs.
For the nine months ended September 30, 2022, research and development expenses were $3.3 million versus $1.3 million for the nine months ended September 30, 2021. This increase was due primarily to Phase 2b trial related costs in the current nine-month period and an increase in consulting costs related there too.
General and administrative expenses for the three months ended September 30, 2022 were $2 million compared to $3.5 million for the three months ended September 30, 2021. The decrease was primarily due to a decrease in share-based compensation related to the company's initial public offering and a decrease in legal fees associated with the company's intellectual property estate.
For the nine months ended September 30, 2022, general and administrative expenses were $5.5 million versus $8.9 million for the nine months ended September 30, 2021. The decrease was primarily attributable to a decrease in professional fees and stock-based compensation related to the company's initial offering, partially offset by an increase in insurance costs.
The company reported a net loss of $3.5 million or $0.32 per diluted share for the three months ended September 30, 2022 compared to a net loss of $4.6 million or $0.46 per diluted share for the three months ended September 30, 2021, and a net loss of $8.8 million or $0.84 per diluted share for the nine months ended September 30, 2022 compared to a net loss of $10.1 million or $1.27 per diluted share for the nine months ended September 30, 2021 for the reasons previously mentioned. The company had 11,592,609 shares outstanding as of September 30, 2022.
With that, I'll turn the call back over to Dave.
Thanks, Rob, and to all of you for joining us today. We're very enthusiastic about our continuing strong fundamentals and we're especially pleased to report Acurx's progress in the third quarter of '22. We look forward to building on this momentum in coming months, even during these most challenging times and to update you as we do so.
I will now turn the call over for questions. Operator?
Thank you. We will now be conducting a question-and-answer session. [Operator Instructions]. Our first question comes from Jason McCarthy with Maxim Group. Please go ahead.
Good morning, David. Thanks for taking the questions. Just on the Phase 2b in the C. diff trial, you had mentioned that you've added a lot more sites. Have you guys provided any update on where enrollment is in terms of numbers? I think the target's 64, correct?
Yes. The target in the protocol is 64 patients once randomized. As we've previously mentioned, we're planning to announce when we get to 50%, enrollment. And the only caveat that I would add is, except that -- if our data is looking particularly good, like the Phase 1 data and the Phase 2a data, there may be an opportunity for us to early terminate the 2b trial, if and to the extent Data Safety Monitoring Board makes that recommendation. The company is double blind, so we have no ability or insight into whether or not they will be doing that. But we are aware that there's an activity there, and it's a possibility.
Okay. So on the second program, you had mentioned targeting MRSA. There's some good preclinical data back in September, I think again in October. What is the path forward there? What does it look like to get to IND and a Phase 1 study? And what particular indication could you target?
So the initial target indication would be abscesses, a few bacterial skin and skin structure infections caused by MRSA. That's one of the most abundant, if not the most abundant area of MRSA infections in the U.S. And we would be targeting -- are working on both an oral and an IV formulation. So the next steps on that program are to complete the lead optimization, to conduct some manufacturing scale up as well as preplanned tox [ph] work in order to support the IND submission. Then we would go into a Phase 1. And if we get the non-dilutive grant that we're looking for, it would pay five years of these costings or I should say 70% or so of five years of these 16 million of costings. And we would have to pay the balance of about $5 million.
Okay. And you expect the outcome of that grant file or submission in April. Is that correct? Did I hear that right?
Yes. So April 10 is when we will hear if we've been approved. And then at that point, there's a negotiation period for contracts with the funding party. At the end of November, we'll find out if we get into the second round of consideration for that non-dilutive grant. We expect we will. We've had steady interaction with the funding party since even before -- for the past three years, even before the RFP came out. So we're particularly hopeful about our candidacy for this particular grant. And we feel that we fit right down the middle of the RFP.
Got it. And just quickly, any updates on the program that the government was working on in Congress, the PASTEUR Act?
The PASTEUR Act and the DISARM Act are still like right beneath the surface, as we understand it, through our interaction with the antimicrobial working group. For the past couple of months with the election and the volatility that we've seen in the stock market, in the global markets, it hasn't bubbled its way back up just yet. But the AWG and the bio industry organization are both very confident that one or both will be approved in the new Congress. As mentioned, the PASTEUR Act enjoys bipartisan support. And on the Democrat side is championed by Patty Murray, who for this purpose thankfully has made her way to being reelected last week. So we're particularly hopeful the PASTEUR Act will be passed. And that would really increase the valuations for all developers of R&D stage antibiotics that treat patients with life threatening or serious infections, QIDP infections that are novel first in class. So we feel that we've been tailor made for PASTEUR. It was scratched in favor of a defense spending bill about six months ago at the last minute, ninth inning. So we're still hopeful that in the new Congress, it will pass.
Got it. Thanks for taking the questions this morning.
No problem. Thank you, Jason.
[Operator Instructions]. There are no further questions at this time. This concludes today's teleconference call. You may disconnect your line and have a great day. Thank you for your participation.
Thank you, Victoria.