Acurx Pharmaceuticals Q2 2023 Earnings Call Transcript

Quartr
Provided by Quartr
August 14, 2023

There are 7 speakers on the call.

Operator

Greetings, and welcome to the Acurex Pharmaceuticals to discuss Second Quarter 2023 Financial Results and Business Update. At this time, all participants are in a listen only mode. A brief question and answer session will follow the formal presentation. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Mr.

Operator

Rob Shawa, Chief Financial Officer. Thank you, sir. You may begin.

Speaker 1

Thank you. Good morning, and welcome to our call. This morning, we issued a press release providing financial results and company highlights for the Q2 of 2023, which is available on our website at acarexpharmaceuticals.com. Joining me today is Dave Lucci, President and CEO of Acarex, We'll give a corporate update and outlook for 2023. After that, I'll provide some highlights Joining me as a reminder, during today's call, we'll be making certain forward looking statements.

Speaker 1

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 10Q, which we filed on Friday, August 11, 2023. You are cautioned not to place undue reliance This conference call contains time sensitive information that's accurate only as of the date of this live broadcast, today, August 14, 2023. AcuraX 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 Lucci.

Speaker 1

Dave?

Speaker 2

Thanks, Rob. Good morning, everyone, and thanks for joining us to review our financial results for the Q2 of 2023 And also to cover some recent updates, then we'd be pleased to take any questions. In the Q2 of 2023, we continued to enroll more patients In the Phase 2b clinical trial of our lead antibiotic candidate, Ibezopolostat, for the treatment of patients with C. Difficile infection, or CDI. We're pleased to report we now have enrolled 31 patients in the Phase 2b trial.

Speaker 2

So only 5 more patients need to be enrolled to trigger Interim data review by an independent data monitoring committee that we appointed in the Q1 of 2023 for this purpose. The IDMC will review the data upon the 36 patients being evaluated for the primary endpoint of clinical cure at the end of treatment and promptly provide its recommendation either to early terminate the IIb trial as we had done with the Phase IIa trial or alternatively to continue enrolling. We'll report the IDMC recommendation after the interim review of the data. If the IDMC recommends early termination of the 2b trial, We'll promptly report the top line data on the primary endpoint and safety data when the 36 patient Enrolled patient completes treatment. We anticipate completing enrollment of the 36 patients for the interim review in the coming month or 2.

Speaker 2

Operationally, we're pleased to report that the blinded observed data from the Phase 2b trial has been exceptional and the trial is proceeding as expected With no safety signals reported to date, the Phase 2b trial protocol includes an exploratory endpoint comparing the impact On the microbiome between Ibezopolostat and standard of care oral vancomycin, in the event non inferiority of Ibezopolostat to vancomycin is demonstrated, Further analysis will be conducted to test for superiority. Due to slower than expected enrollment during the COVID-nineteen Pandemic and its aftermath, we did expand the number of trial sites participating in the 2b trial from the initial 12 sites up to 28 sites as we now have and have increased support to higher enrolling sites resulting in increased screening in the past couple of months. In March 2023, the FDA accepted our protocol amendment to our IND, which will allow an independent data Committee to review the interim data that's been pre cleared with the FDA. We remain particularly excited about the dual impact Libesoprostat at the same time to treat the acute infection, the C. Diff infection, while appropriately managing the long term care of each patient's Microbiome, which we believe is exceptional for antibiotic therapy.

Speaker 2

Other key highlights from the Q2 of 2023 or in some cases shortly thereafter include the following. In April of this year, 2 presentations were made at the 33 Annual European Congress of Clinical Microbiology and Infectious Disease, for ECCMID in Copenhagen. First, the scientific poster entitled Novel Pharmacology Was presented by Doctor. Kevin Gehry, Professor and Chair at University of Houston College of Pharmacy and the principal investigator for microbiome aspects of our Ibezopolostat clinical program. Doctor.

Speaker 2

Gary's work demonstrated that Ibezopolostat's capability to cause disease. Doctor. Gary also noted that C. Diff strains with reduced susceptibility Any of the other antibiotics used to treat C. Diff metronidazole, vancomycin or finasamycin, those C.

Speaker 2

Diff strains were susceptible to Ibezopolostat. So just to say it again, Ibezopulstat is able to successfully kill C. Diff bacteria That in many cases is resistant to all the other antibiotics used to treat C. Diff currently. Ebezopulosat's antiviral effect, namely reduced flagellar movement of the C.

Speaker 2

Diff organism was a positive unexpected finding, reflecting the unique mode of action in inhibiting DNA Pol IIIc. In the second of two presentations at ActharX's Executive Chairman, Bob DeLucia, presented an update regarding the company's preclinical systemic oral and IV program for the treatment of Organized by Doctor. Ursula Ferretsbacher, a world renowned microbiology expert involved in antibacterial drug research, discovery and development strategies and policies for clinical and public health needs. Bob summarized the progress of the company's grant positive Spectrum program. Both posters are available on our website.

Speaker 2

Additionally, in the Q3, we were notified by Carvex We did not receive funding approval in the recently closed 23 omnibus funding round for our second antibiotic candidate, ACS-three seventy five C, which is in preclinical development. We did appeal this decision based on certain modifications to the scope of our program. However, Carvex governance structure did not allow for acceptance of an appeal process. Carvest noted that the 23 round of funding was very competitive and that their scientific advisory board was enthusiastic about IL-3C as the bacterial target of our molecules and that the sufficiently good PK and safety properties of the compounds that we have justified the proposed lead optimization plan. CarBets encourage us to reapply for future requests for proposals or RFPs that Carvettes will continue to promulgate from time to time for funding consideration.

Speaker 2

While this news was disappointing, we will continue to monitor and apply for grants from all funding sources as they become available. Now just now looking forward just a bit, the upcoming Antimicrobial Resistance Congress is next month. It will convene its annual meeting in Philadelphia where experts in the field from both the public and private sectors weigh in on the latest innovations to address antimicrobial resistance. This is the world's largest conference for all stakeholders combating antimicrobial resistance, Our Executive Chairman will speak at the Innovation Showcase section of the conference on September 7 and will present an update entitled Novel DNA PAL3C inhibitors for gram positive bacterial infections preparing for the next pandemic. After the presentation, it will be available on our website.

Speaker 2

In addition, we have ID Week coming up. The Infectious Disease Society of America will convene its annual meeting called ID League in Boston, October 11, 15. ACCAREx will be featured at 2 scheduled events. First, an oral presentation by Doctor. Kevin Gary will be given on October 14 entitled, Delucidating the Gram Positive Selective Spectrum Activity of Ibezopolstat Secondary analysis from the Phase 2a trial.

Speaker 2

And secondly, Ecorex will present at the symposium entitled New Antimicrobials in the pipeline on October 12. At the symposium, ACRAH's presentation will be entitled Novel DNA PAL3C inhibitors for gram positive bacterial infections. After this presentation, it too will be available on our Web Now to the Pasteur Act. As we've discussed in the past, the bipartisan Pasteur Act continues to generate news and enthusiasm in Washington, D. C.

Speaker 2

On April 27, U. S. Senators Michael Bennett and Todd Young reintroduced the Pasteur Act To encourage innovative drugs, drug development targeting the most threatening infections, improve the appropriate use of antibiotics and ensure Domestic availability of antibiotics when needed. On July 11, a Senate subcommittee hearing was convened and led by Senators Markey and Marshall, highlighting the need to address antimicrobial resistance to superbugs, including MRSA and C. Diff.

Speaker 2

Accordingly, we're quite enthusiastic about the prospects of the Pasteur Act being passed into law on the bipartisan support, Significant national spotlight and dire need for new classes of antibiotics to treat serious and life threatening infections. Now back to our CFO, Rob Shawa, to guide you through the highlights of our financial results for the Q2 of 2023. Rob?

Speaker 1

Thanks, Dave. Our financial results for the Q2 ended June 30, 2023 were included in our press release issued earlier this morning. The company ended the 2nd quarter with cash totaling $9,100,000 compared to $9,100,000 as of December 31, 2022. Research and development 3 months ended June 30, 2022. The increase was due to an increase in Phase 2b trial related costs.

Speaker 1

For the 6 months ended June 30, 2023, research and development expenses were $2,800,000 versus $1,700,000 for the 6 months ended June 30, 2022. The increase is due primarily to Phase 2b trial related costs and an increase in consulting costs. General and administrative expenses for the 3 months ended June 30, 2023 were $1,700,000 compared to $1,700,000 for the 3 months ended June 30, 2022. The expenses reflect a slight decrease in professional fees of $100,000 offset by a slight increase of $100,000 in employee compensation related costs. For the 6 months ended June 30, 2023, General and administrative expenses were $3,600,000 versus $3,600,000 for the 6 months ended June 30, 2022.

Speaker 1

The amount reflects a decrease in professional fees of $200,000 offset by an increase of $200,000 in employee compensation related costs. The company reported a net loss of $3,400,000 were $0.28 per diluted share for the 3 months ended June 30, 2023 compared to a net loss of 2,600,000 or $0.26 per diluted share for the 3 months ended June 30, 2022 and a net loss of 6,300,000 or $0.53 per share for the 6 months ended June 30, 2023 compared to a net loss of $5,300,000 or $0.52 per diluted share for the 6 months ended June 30, 2022, all for the reasons previously mentioned. The company had 13,005,128 shares outstanding as of June 30, 2023. With that, I'll turn the call back over to Dave.

Speaker 2

Thanks, Rob, and to all of you joining us today. We outlined advances in several areas that we believe will spur continued momentum and growth, build on our strong fundamentals. We look forward to sustaining this momentum even during these challenging times and sharing future updates and results in the coming months. I will now open the call for any questions. Operator?

Operator

Thank you. We will now be conducting a question and answer session. One moment please while we poll for questions. Thank you. Our first question comes from the line of Ed Arce with H.

Operator

C. Wainwright. Please proceed with your question.

Speaker 3

Hi, good morning, everyone. This is Thomas Yip asking a couple of questions for Ed. Thank you for taking our questions. Good morning. Good to hear the update for Acurix.

Speaker 3

So back in March, the guidance for the Phase 2b interim review was anticipated mid year Can you outline some major factors that are behind this And a shift in timing and also what are some remedies that you are implementing to address it?

Speaker 2

Okay. Thomas, I mean, I think the question is about 180 degrees in the wrong direction, I'm sorry to say. If you check your notes, I think you'll find that on May 14 at the end of the first quarter, We guided folks that we would be done in the second half of twenty twenty three with the 2b trial. And if anything today, we've guided

Speaker 3

So the latest yes, I do remember the latest guidance was second half. So you mentioned in coming months, So is that sounds more like a 3rd quarter or early 4th quarter events?

Speaker 2

Yes. Yes. So when I say before that, I mean before the end of the second half. But yes, we do think that it will be In the coming as I mentioned, in the coming month or 2, we've had significantly better enrollment. We've plugged a new CRO into special situations and we're starting that's starting to bear fruit, Including a substantial increase in the number of patients that are screened.

Speaker 2

So maybe it's also in combination a bit with COVID being further and further behind us and maybe some of the behavioral patterns are changing back. In any event, whatever the cause is, we're screening more patients and we don't think we have far to go.

Speaker 3

Got it. And then you mentioned there for the Phase 2b interim analysis, there's a new IDMC. Can you give some details on members on this Board? And is it the same Core members as the IDMC for the Phase 2a study?

Speaker 2

Okay. Yes. No, we so we don't give out the names The members, but just to be clear, for the Phase 2a study, the 2a trial was early terminated on the recommendation Our Scientific Advisory Board, which is included in our slide deck and on our website. But the Phase 2b trial for it, We had to create a separate independent data monitoring committee and these are all independent scientific experts In infectious disease and in one case, statistician, none of which have shares in our company or get paid by our company And they're doing this as a public service. That's the constituency of the IDMC.

Speaker 2

It's different people in every case than those who served as Scientific Advisory Board members currently for the company and who opined on the 2a trial.

Speaker 3

Okay, understood. Thank you for the clarification. Perhaps one question regarding the CapEx Funding, sorry to hear that recent 5 months advancing to the next round. In order to be eligible for future grants, will you need a new program or do you continue decline to continue 375 will be eligible?

Speaker 2

So for each grant, whether by CARB X or other folks like NIH, To be eligible, you have to look at the RFP, the request for proposal. So with CARB X in particular, This was the first CARB X grant RFP in years that allowed folks who are developing Antibiotics that target treatment of gram positive bacteria infections, not just gram negative. So we were excited to see that the scope of the RFP had expanded to include folks with sponsors like us. We expect based on our conversations with Carvex that that will continue. And as we continue to develop our drug, Get through lead optimization.

Speaker 2

We think our candidacy will become more and more compelling in these challenging times for money.

Speaker 3

I see. Okay. Perhaps one last question from us. This one is Financial, it sounds like as you mentioned earlier, the interim analysis seems to be occurring really soon. So cash runway should expand beyond that, but can you give us perhaps a more specific timeframe for approximate Cash runway?

Speaker 2

Sure, Thomas. I think our cash runway is sufficient through Q3 of 2024 and kind of and then some. So we're burning $2,100,000 $2,200,000 per quarter And that's during the quite expensive to be trial times. So once the to be trial is over, we should Eliminate probably $1,000,000 of that $2,100,000 $2,200,000 quarterly burn. So If you take 2.2 and you flat line it for 4 quarters, that's 8.8.

Speaker 2

So even if the For some reason, got extended enormously long. We have money through Q3. And Given where we are, we probably have money all the way through 2024 because the 2b will be over.

Speaker 3

Okay, understood. Thank you again for taking our questions and looking forward to the interim analysis for the Phase 2b study.

Speaker 2

No problem, Thomas. If you have any other questions, just give me a call or shoot me an email and we'll connect.

Speaker 3

Definitely. Thank you.

Operator

Thank you. Our next question comes from the line of Jason McCarthy with Maxim Group. Please proceed with your question.

Speaker 4

Hey, guys. This is Mike Lopchunovich on the line for Jason. Thank you so much for taking my questions today.

Speaker 2

No problem. Thanks for calling, Mike.

Speaker 5

Yes. So I'd like

Speaker 2

to see if you could talk a

Speaker 4

little bit more about the specifics of the Pasteur Act. Obviously, just the validation of the problem and that Congress is paying attention to this. It's huge in itself. But what specifics have been suggested that could aid in Clinical development and uptake of new anti infectives and particularly as it relates to Acurex?

Speaker 2

Sure. No problem, Mike. This is the transitional piece of legislation that would Completely redefined. The antibiotics sector in the United States, just to be perfectly clear, This puts antibiotics back on par profit wise, revenue wise with cancer drugs And diabetes drugs, neurological drugs for ALS and other neurological disorders, it's a game changer. So what the Pasteur Act does generally and there is also a Pasteur Act that I'll get to.

Speaker 2

The Pasteur Act, If approved, there's a pull incentive, like the pull in similar to the pull incentive already approved and made law in the UK a few years back. And what the pull incentive does is, it says, hey, sponsors of new antibiotics and those who invest in them, If you invest in an antibiotic, if you take your time to develop an antibiotic for a life Saving or serious clinical indication, that is a new class of antibiotics, not just new generation of amoxicillin in an old class. If that's what you have, we'll pay for Phase 3, including all the manufacturing for Phase 3. And we'll give you between $750,000,000 And $3,000,000,000 over a 10 year period of time in order to stockpile your antibiotic at public health facilities Over a 10 year period of time under a license agreement with Health and Human Services. Pasteur Light would be basically half of that.

Speaker 2

So it would be $375,000,000 minimum up to $1,500,000,000 for each sponsor of QIDP, an antibiotic that treats curious or life threatening infections and is a new class of antibiotics. Each sponsor can only get one designation under the Pasteur Act. To get the designation, you get a letter from CHS after you apply and get accepted. And that's a critical need antimicrobial designation letter. It will include a dollar amount, which will be Under the current draft of the law of Pasteur Light, at least $375,000,000 over 10 years.

Speaker 2

And the amount between $375,000,000 $1,500,000,000 over 10 years under Pasteur Light will be determined by HHS based on a formula to be provided in the law. And basically that formula will try to get to The savings to the public health system in the United States by having your antibiotic approved To treat these serious and life threatening infections. So in the case of C. Difficile, the reinfection market And C. Difficile has a price tag of $4,700,000,000 to U.

Speaker 2

S. Public health every year. So patients that have recurrent C. Diff infection with the cost the total cost of treating those reinfections From the hospitalizations to the medicines that are being used is $4,700,000,000 a year. So in our case, if we come out with an antibiotic that's frontline capable, treating C.

Speaker 2

Diff patients with Anything close to 100% cure rate and anything close to 0% reinfections, I think that would have a significant Value savings to public health in the U. S. Now the full $4,700,000,000 that The cost of the reinfection market for C. Diff every year in the U. S, but it would be significant.

Speaker 2

But at the very least, it would be $375,000,000 to us, $37,500,000 a year for 10 years. So as a $30,000,000 market cap company, you can see if we were designated as a critical need antimicrobial Under the past, it would be an absolute game changer.

Speaker 4

Yes, no, certainly. There's a lot of potential there. Just a follow-up on the Phase 2b, I'd like to see if you could provide then a bit more color on the potential to possibly stop it early on efficacy, What would need to be demonstrated? And then expand a little bit on how you can use changes in the microbiome in addition to the primary endpoint to Order readout on that study.

Speaker 2

Okay, great. No problem. So the microbiome changes, That's the easier questions. I'll answer it first. We see the Rest of the full restoration of a fully healthy microbiome in RCDiff patients that we've treated by the end of the 3rd day of a 10 day treatment regimen on our drug.

Speaker 2

That's from the Phase 2a trial. We have no reason to expect that will change Because of the scientific underpinning of no reinfections. Why are there no reinfections? Because we're fully restoring the microbiome By day 3 of treatment and how are we restoring the microbiome? Well, we have a very narrow spectrum antibiotic That's only able to kill C.

Speaker 2

Diff leaving all of the other classes of healthy bacteria in the gut alone, Providing them an environment where they can kind of repair themselves, unlike the normal antibiotic like Vancomycin, the standard of care, Which decimates the healthy microbiome while it's curing the direct C. Diff infection, putting that patient at high risk for a reinception. So based on that, the microbiome, we believe is going to be a big part of the story because it's going to help us avoid reinfections. And although that's a secondary endpoint, it's a big part of the story. Now the primary endpoint of cures at end of treatment, 10 days of treatment measured plus or minus 2 days at day 12 or 11.

Speaker 2

Those Cures reflect the fact that we're getting over 100 times the concentration of our medicine For the site of the C. Diff infection in the colon that is needed to kill the C. Diff bacteria based on our MICs, mening inhibitor concentration studies. So that's why that's the underpinning for why we're so successful at killing the bacteria at end of treatment and that's the primary endpoint. We expect that to continue when we read out the 2b data.

Speaker 2

The 31 patients that are enrolled are evaluated. The blinded observed data is tremendous and our statisticians say if there are Up to 2 patients who are not cures out of the 36 patients evaluated at the interim look, Even if those two patients are on our side of the TUANCE trial, We would still be able to achieve statistical non inferiority. So on that basis and given we have 65 years Clinical trial data to look at for how Vanco is going to do in our trial. And you see It never gets higher than 92% and it's been as low as 70%. Over 65 years, it's going to be in the kind of low 80s.

Speaker 2

So we're feeling very bullish on our possibility that getting through this binary endpoint And then you have to ask yourselves, what's the intrinsic value of this drug in the C. Diff market to big pharma, A $1,700,000,000 market. And with a clear shot at frontline therapy, you'd have to ask what's that worth. And when you're asking yourself what's that worth, you could reasonably look at, for example, the Tillich Pharma Acquisition of the EU rights to Merx fidaxomicin last line in the U. S.

Speaker 2

For about 125,000,000 In 2022, that would seem that's just European rights and we have U. S, Europe and Japan. And you could also look at the March 23 Sabila Pharmaceuticals deal to buy Destiny Pharma for in a structured deal totaling 570,000,000 And that was a much earlier stage development program than we have. So The intrinsic value is quite high. We got to get through this binary Phase 2b trial readout And we're really excited about where we go from there.

Speaker 4

All right. Thank you. I really appreciate your additional insights here.

Speaker 2

No problem. Thank you, Mike.

Operator

Thank you. And our next question comes from the line of Jim Molloy with Alliance Global Partners. Please proceed with your question.

Speaker 5

Hi, good morning. Thank you for taking my questions. Had a question on the Carvex. Can you walk through sort of what next steps are for 375C? Is there Opportunity to move forward absent the Carvex funding.

Speaker 5

And when did Carvex notify you guys that they weren't going to proceed forward with 375?

Speaker 2

The Carvex folks notified us kind of probably a couple of weeks ago, late in July, And we followed up with questions and an appeal in that process. It took a couple of weeks to kind of meander through. So the time is perfect for this call. But the program never stopped. We continue to Evaluate and work on the lead optimization process, which is why I say that as that process continues and gets to completion, We're going to have a stronger and stronger chance at the next CARB X RFP that comes out that we get picked up Within the scope of that RFP, if it includes gram positive treating antibiotics, we'll apply again with a more compelling package.

Speaker 2

And we feel that because we weren't rejected back in April like others were, We feel we're like kind of on the bubble and we just have to kind of push forward, present a little bit more R and D and then we feel that we'll be successful.

Speaker 5

When do you anticipate the next opportunity to apply for CARB X funding will occur? It sounded like it was a bit up in the air. Well,

Speaker 2

they do an RFP every November. There may be other RFPs that they do, but Pretty much every November, they seem to come out with an RFP that we've noticed. So the only question will be whether that RFP continues to include Gram positive treating antibiotics. If it does, we'll reapply in the Q4 and hope for positive Reconsideration in April.

Speaker 5

Got it. Thank you. Then On the Phase 2b, how long from the for the 5th and final patient, 36 patient Coming in to final data or final notification by the IDMC on what next steps are? So,

Speaker 2

if you assume the 36 patient came in today, That 36 patients would be out of the study 10 days from today and they would be evaluated for the primary endpoint 2 days thereafter, So 12 days from today. After that, the IDMC will meet day 13, day 14 like that And come back with their recommendation. As soon as we have that so basically a couple of weeks. As we have that recommendation from the IDMC, We'll put out a press release. Well, first, we'll put out a press release that we got to the 36 patients.

Speaker 2

The second press release will be The IDMC recommendation and the company's decision to take or not take the recommendation, Of course, we'll probably take it. So that would be the 2nd press release. And then assuming the IDMC recommends that we early terminate, Then when that 36 patient is completely out of the trial and we have a final study report, we'll put out a press release With all of the data on the primary and secondary endpoints.

Speaker 5

And it certainly seems a positive signs for potential early termination given the historical data on Vanco and the data you guys have seen even though it's Still blinded. But assuming that you have to run the you get the 36, you're only halfway through, Assuming if we run to the 72nd patient, what's the thinking going forward on that and what's the ability Of Actrix sort of fund that second half of this trial, if it's needed?

Speaker 2

Yes. I mean, if we have to go to the 72, We'll be able to continue to fund the trial in the ordinary course. As I mentioned on, if we have to Keep paying $2,200,000 per quarter for our ongoing costs, that's fine. We could raise a tiny amount of money, $5,000,000 whatever the number might be, just to kind of pick up some international sites and pay for them, High enrolling Eastern European sites and Canadian sites. Just following up on how did Summit Therapeutics managed to enroll so quickly during COVID and that's In our estimation, that's kind of how they did it.

Speaker 2

They opened up to international sites in high enrolling areas that weren't terribly impacted by the pandemic. So that's what we would do if we had to do another 36. It would be adding new trial sites, international trial sites And kind of expanding in that way to make sure it didn't take as long.

Speaker 5

Understood. And then what on the Pasteuric, I know it's a bit out of your that was completely out of your control. But what should we be looking For the next catalyst, potentially give an idea of what might be coming out of this, if anything, on the Pasteur or Pasteur Light?

Speaker 2

Yes. I mean, it's funny. I mean, as you know, as investors are aware, When you're dealing with the government and the kind of movements and activities of the government, When things get approved, it's just extremely difficult to benchmark and to handicap. The Antimicrobial Working Group meets every month and Continues, which we're a member, they continue to kind of go back and forth on when it would be that Pasteur would Pass and whether it would be Pasteur or Pasteur Light, the best we could say is it's looking very positive For Pasteur Light, not for Pasteur. Pasteur Light by itself is like a 6 run home run for us.

Speaker 2

And we think that public health needs it. And that's been made very clear by those in public health. It's already approved in the UK, which paves the way for us. So we can't speak at the timing, but Wouldn't it be ironic if this delay in the enrollment leads us to an M and A situation where Pasteur has passed and we can capitalize on it before we were able to do a Jim, do we still have you?

Operator

Sorry, excuse me. Our next question comes from the line of Nick Meyer, who is a private investor. Please proceed with your question.

Speaker 6

Good morning, David. Quick question on the IDMC and the data readout. So does the FDA have to approve the IDMC's Recommendation or are they left are they not involved?

Speaker 2

Hi, Nick. Good morning. Thanks for your question. No, the FDA is not involved any longer. They had to approve, well, they didn't have to approve.

Speaker 2

They had to accept our Amendment to our trial protocol and our related IND in order to provide for this IDMC mechanism, But that's it. The IDMC is free to make whatever recommendation that they feel is most appropriate. And the FDA Yes. We won't review any of it until we get to an application for FDA approval.

Speaker 6

Okay. And then the IDMC is only looking at the primary metric, which is clinical cure. They're not all looking at the secondary metrics At all for the recommendation?

Speaker 2

Well, they're only looking at End of treatment, but also the safety.

Speaker 6

Yes, that makes sense. And then the last question I have is, What is the value pivot between if you were to do an M and A before Phase 3 or going to the an interim look on the Trem look on the first leg of Phase 3, what is your consideration there?

Speaker 2

Well, I would take that question and reference the bio industry guide. What they have is like a blue book for personal injury lawyers, where they have a percentage likelihood of FDA approval When you're in preclinical Phase 1, Phase 2, Phase 3 for any disease indication, including infectious disease, right? So if you are able to get Halfway through the first of Phase 3 registration studies and show consistent data with everything before it, You have about a 30% likelihood of failure in Phase 3 for all antibiotics. When you 0 in on antibiotics that treat gram positive infections instead of gram negative, that's probably down to a 10% or 15% Failure rate. And you could probably chop that failure rate in half when you present interim data on the first half of the first of the 2 Phase 3s.

Speaker 2

So it would be a significant value enhancement and that might be offset by having an even worse stock market then than we have When we come out with the 2b data, it's hard to say. The biggest bogey will be if the Pasteur Act And we get designated as a critical need antimicrobial. That is an absolute game changer even under Pasteur Light That would have a dramatic impact on what we're able to sell for. Now we could sell before getting that designation. So hypothetically, if Pasteur has passed and we're not yet designated, even though it would seem that we would be one of The most qualifying of potential candidates, it could be a contingent value right in a deal that could be negotiated Prior to having the designation and we would just have to consider the various factors as we continue to talk to potential partners.

Speaker 6

Okay. But is there a specific market value that you're looking for? Or is that going to be duty determined?

Speaker 2

Yes, it's going to be it's all kind of just going to have to evaluate all that we may get and Consider the intrinsic value of the program and whether or not the offer is within a range that is acceptable. And of course, we'll have advice from the banking side, likely a fairness opinion would be involved to make sure that our bankers think that whatever terms Are being offered and the Board accepts are fair to go into that acceptance by the Board. So It's all going to be kind of deal related and it's and the Board doesn't if we're trading at a low valuation and someone's trying to Undercut real value, the Board can say no.

Speaker 6

Yes, that makes sense. All right, thank you for answering the questions. Appreciate it.

Speaker 2

No problem. Thank you, Ned. Thank

Operator

you. We have reached the end of our question and answer session. And with that, this will conclude today's teleconference. You may disconnect your lines at this time. Thank you for your participation.

Speaker 2

Thank you.

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