Acurx Pharmaceuticals Q2 2024 Earnings Call Transcript

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Provided by Quartr
August 9, 2024

There are 7 speakers on the call.

Operator

Greetings. Welcome to

Speaker 1

the Acurix Pharmaceuticals Second Quarter 20 24 Financial Results. At this time, all participants are in a listen only mode. A question and answer session will follow the formal presentation. Please note this conference is being recorded. At this time, I'll now turn the conference over to Rob Gawa, Chief Financial Officer.

Speaker 1

Rob, you may begin.

Speaker 2

Thank you, Rob. Good morning, and welcome to our call. This morning, we issued a press release providing financial results and company highlights for the Q2 2024, which is available on our website at acurexpharma.com. Joining me today is Dave Lucci, President and CEO, who will give a corporate update and outlook. After that, I'll provide some highlights of the financials from the quarter ended June 30, 2024, and then turn the call back over to Dave for his closing remarks.

Speaker 2

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, August 8, 2024. You're cautioned not to place any undue reliance on these forward looking statements and Actorex 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, August 9, 2024.

Speaker 2

I'll now turn the call over to Dave. Dave?

Speaker 3

Thanks, Rob. Good morning, everyone, and thanks for joining us to review our financial results for the Q2 of 2024 and also to hear some very exciting recent updates. Then we'll be pleased to take any questions. First, I'll summarize some of our key activities for the Q2 or in some cases shortly thereafter. In April, we completed a successful end of Phase 2 meeting with the FDA confirming Phase 3 readiness for Ibezopolostat, our lead antibiotic candidate to enter Phase 3 clinical trials for the treatment of C.

Speaker 3

Difficile infection. Agreement with FDA was reached on key elements to move forward with our international Phase 3 clinical trial program. Agreement was also reached with FDA on a complete non clinical and clinical development plan for filing of a new drug application or NDA for marketing approval. We've since continued activities to advance Ibezopolostat into international Phase 3 clinical trials for the treatment of C. Difficile infection.

Speaker 3

In parallel, we're also preparing to submit requests for regulatory guidance to initiate clinical trials in the European Union, United Kingdom, Japan and Canada. Also in April, we attended the European Society of Microbiology and Infectious Disease or ESMID Scientific Conference. Doctor. Kevin Gary provided an oral presentation of our Phase 2 data entitled A Phase 2 Randomized Double Blind Study of Ibezoprolstat Compared with Vancomycin for the treatment of C. Difficile infection.

Speaker 3

Doctor. Gary is Professor and Chair, University of Houston College of Pharmacy and the Principal Investigator for Microbiology and microbiome aspects of the Ibezopolostat clinical trial program, and he's a scientific advisory board member for AccurEx. The oral presentation included additional analyses of clinical and microbiological data and is available on our website atacorexpharma.com. The complete Phase 2 results are being prepared for submission to a prominent scientific journal for publication. Also in July, results from the identical Phase 2 clinical trial in patients with C.

Speaker 3

Difficile infection were presented at the 17th Biennial Congress of the Antelope Society of the Americas by Taryn Eubag, PharmD Research Assistant Professor, University of Houston College of Pharmacy. And her Terrence's oral presentation was entitled Clinical Efficacy of Ibezoprostat in CDI c. Difficile infection, results from Phase II trials. Also in July, and very timely given our late stage development progress, the United States Patent and Trademark Office or USPTO granted us a new patent for Ibezopolstat, which specifically encompasses the treatment of C. Difficile infection, while reducing recurrence of infection and improving the health of the gut microbiome.

Speaker 3

This patent expires in June 2042 and we think will provide an important downstream competitive advantage. And finally, some late breaking news today. Following our successful end of Phase 2 clinical meeting with the FDA, which confirmed our Phase III clinical trial readiness and according to FDA regulatory requirements, we submitted our request to FDA for a meeting to review our manufacturing processes and specifications for drug substance and final product and packaging, typically referred to as CMC or Chemistry Manufacturing and Controls for our Phase 3 clinical trials. We anticipate FDA to grant the meeting in the Q4. So now we have further momentum as we continue to seek 1 or more strategic transactions for the further development and potential commercialization of our lead antibiotic candidate, abezepolstat, territory or globally in parallel with ongoing preparation for Phase 3 clinical trials.

Speaker 3

We will provide a detailed update on our partnership transactions if and when we reach agreement with a 3rd party. Throughout the rest of this year, we'll continue to roll out our Phase 2 results in either oral presentations or scientific posters or in some cases both, which will include results from new analyses as data becomes available at various prominent scientific conferences, including the World Antimicrobial Resistance Conference in Philadelphia this September. Also in September is the 8th International C. Difficile symposium in Bled, Slovenia, which is the premier global venue for the review of C. Difficile research.

Speaker 3

And in October, we'll be presenting at the annual meeting of the Infectious Disease Society of America or ID Week in Los Angeles. As we continually reported, Ibezepulstat clinical results continue to outperform in a serious and potentially life threatening infectious disease caused by seed of the seal bacteria that the Center For Disease Control categorizes as an urgent threat and calls for new classes of antibiotics for initial treatment that also have a low incidence of recurrence. Abezipolstat also has FDA Fast Track designation for treatment of C. Difficile infection. Additionally, we believe Ibezipulosat if approved to make a favorable impact by reducing the cost burden of recurrent C.

Speaker 3

Difficile infection on our U. S. Healthcare system, which is estimated at $4,700,000,000 annually. We do believe the best is yet to come. And now back to our CFO, Rob Schaller, to guide you through the highlights of our financial results for the Q2 of 2024.

Speaker 3

Rob?

Speaker 2

Thanks, Dave. Our financial results for the Q2 ended June 30 were included in our press release issued earlier this morning. The company ended the quarter with cash totaling $6,400,000 compared to $7,500,000 as of December 31, 2023. During the second quarter, the company sold an additional 133,066 shares under its ATM financing program with gross proceeds of approximately $300,000 Research and development expenses for the 3 months ended June 30, 2024 were $1,800,000 compared to $1,700,000 for the 3 months ended June 30, 2023. The increase was due primarily to an increase in manufacturing related costs during the quarter of $400,000 partially offset by a reduction in consulting fees of $300,000 For the 6 months ended June 30, 2024, research and development expenses were $3,400,000 compared to $2,800,000 for the 6 months ended June 30, 2023, an increase of $600,000 primarily due to $800,000 increase in manufacturing related costs, offset by $200,000 decrease in consulting related fees.

Speaker 2

General and administrative expenses for the 3 months ended June 30, 2024 were $2,300,000 compared to $1,700,000 for the 3 months ended June 30, 2023, an increase of $600,000 The increase was primarily due to $300,000 increase in professional fees and a $200,000 increase in non cash share based compensation related costs. For the 6 months ended June 30, 2024, general and administrative expenses were $5,100,000 compared to $3,600,000 for the 6 months ended June 30, 2023, an increase of $1,500,000 The increase was primarily due to a $1,000,000 increase in professional fees, dollars 400,000 increase in non cash share based compensation costs and a $100,000 increase in legal costs. The company reported a net loss of $4,100,000 or $0.26 per diluted share for the 3 months ended June 30, 2024, compared to a net loss of $3,400,000 or $0.28 per diluted share for the 3 months ended June 30, 2023 and a net loss of $8,500,000 or $0.54 per share for the 6 months ended June 30, 2024 compared to a net loss of $6,300,000 or $0.53 per share, all for the reasons previously mentioned. The company had 15,996,168 shares outstanding as of June 30, 2024. With that, I'll turn the call back over to Dave.

Speaker 3

Thank you, Rob, and thanks to all of you for joining us today. I'll now turn the call over to Rob, our operator, to open the call for questions. Rob?

Speaker 1

Thank you. We'll now be conducting a question and answer Our first question today comes from the line of Jason McCarthy with Maxim Group. Please proceed with your question.

Speaker 4

Hey, David. Good morning. Thank you for taking the questions. Have you provided any information on what the Phase III could look like in terms of its size and scope? And also, is the plan to try to seek a partnership and or grant funding for some non dilutive capital to advance that program?

Speaker 4

Or will the company look to fund that trial itself?

Speaker 3

Thank you for the question, Jason. Yes, we so we provided guidance on the Phase 3. There are 2 required Phase 3 registration studies. They are going to be set up as international trials, with 4.50 patients in an IPT population, a piece. And they would be 1 to 1 randomized to either our ibezepolstat or oral vancomycin.

Speaker 3

So that's the structure of the trials. What we're attempting to do is to raise money, as you say, non dilutively to the extent possible to pay for all or as much of the Phase 3 program as we can, and then backfill with whatever else we need with an equity offering only if it's needed. So for example, if we were to get a among the deals that we're attempting to lock in, if we were to get a royalty finance partner, that may be a big number and may pay for an entire Phase 3 out of the 2 we need to do. We're also looking at territorial partnerships, including South America, Europe, Japan, and there are a couple that are considering kind of like the whole enchilada, in which case, of course, the Phase 3 would be conducted by whoever buys us. We're also planning to file for a couple of grants, non dilutive government grants or quasi government grants, if you will.

Speaker 3

And pardon me if I

Operator

don't mention the

Speaker 3

names. I just want to maximize our competitive position on the grants that we're thinking of. But those are all non dilutive ways to raise money that don't have anything to do with equity financing. And a recent vintage, we're even looking or we're going to start looking at some stuff that's a little bit more creative with these specs that have lost favor, but there are still a number of specs that are outstanding that may have an interest. So that's a new stream that we're going to start pulling.

Speaker 4

Okay. Are you also looking at the potential for new antibiotic that's just generally that the space as is accompanied, Interim Therapeutics, We actually happen to cover it, but they do have an AdCom in early September, probably right around when you're presenting on one of your presentations on ITZYNSO for a new antibiotic for UTIs. I don't know if it's something you guys are watching or paying attention to because we could see the antibiotic space getting a little bit active. Any thoughts on that?

Speaker 3

Atarum Therapeutics, I'd have to check with our team to see if we've reached out to them. I don't think we have, but certainly we'd be wide open to a conversation.

Speaker 4

Yes, yes. No, I was saying just in terms of not that's fine, but just in terms of activity in the space, just getting busy, maybe an opportunity for Acurix to benefit tangentially. Just last question, what is the cost you think of both trials combined, the 2 Phase 3s?

Speaker 3

So the 2 together, they should be $25,000,000 apiece. So together, they should be $50,000,000 But we're in this advantageous position that when you think about dilution, we can run the trials consecutively instead of concurrently. And then with positive data from the first Phase 3, as that's released, theoretically, our share price should see a significant rise. And then we could raise money at much higher prices to do the 2nd Phase 3. And the reason that's available to us almost uniquely is because we have 10 years of commercial exclusivity from the point of FDA approval with similar regulatory protection in Europe, the U.

Speaker 3

K, in Japan and Canada. So that would actually work for us. And we also have this new patent going out to 2,040 2, which is, if not unique, very unusual for an antibiotic to get a patent

Operator

on an antibiotic

Speaker 4

I'm sorry, that patent covers what again? One more time, I missed it. I see you mentioned it earlier.

Speaker 3

Yes, the treatment of C. Difficile infection and the reduction in reinfection and protection of the gut microbiome. But Jason, I'd like to address something that you mentioned at the end of your first question about antibiotics picking up some steam. It's true antibiotics are picking up steam. So we've seen a substantial uptick in cases of C.

Speaker 3

Difficile. We think it's a result of what's happened with the COVID experience worldwide. And at the World Antimicrobial Resistance Conference in September in Philly, where we'll be presenting, we expect even more scientific push for the government to pass regulations like the Pasteur Act, which would have a tremendous benefit at getting new classes of antibiotics to the market, because of the need. Now, I think what we have to do is find a way to satisfy that scientific need that's being enunciated at the Antimicrobial Resistance Conference and other conferences throughout the world like in Bled, because antimicrobial resistance has become a real hot topic. There's a scientific need, but we got to marry that up with the political tendencies not to want to do anything to benefit big pharma.

Speaker 3

So I think the government and the Congress needs to find a way to satisfy the scientific need without throwing a bone to the pharmaceutical companies.

Speaker 1

Our next question is from the line of Ed Arce with H. C. Wainwright. Please proceed with your questions.

Speaker 5

Hi, good morning, everyone. This is Thomas Yip asking a couple of questions for Ed. I appreciate picking up questions.

Speaker 3

Thank you.

Speaker 5

So, hi, good morning. So first question from us regarding Phase 3 study in the U. S, you mentioned CMC review schedule for the FDA in Q4. So just trying to figure out when should we expect the trial to start specifically the 1st patient dosing, would that be 4th quarter events?

Speaker 3

From where we are today, I think it would be naive of me to be that aggressive. I think we'd be lucky with the CMC being cleared in the Q4, I think we'd be lucky to start in the Q1 of next year at the earliest. I would kind of calibrate myself in that direction. And keep in mind, before we enroll, these are international studies, right? So we want to get I mean, we've talked about the international kind of areas where we want to seek regulatory guidance.

Speaker 3

We want to make sure that we meet at least with the European Medicines Agency before we start enrolling patients in their territory. So we can't submit a regulatory package to the European Medicines Agency until we conclude the CMC review by FDA, because once that's done with FDA, then we can complete the process we've already started, which is the European Medicines Agency submission. It needs to include all of the CMC stuff and the FDA's position. And then we can submit it in Europe, which we would hope to do in probably in November or December of this year.

Speaker 5

Right. Got it. Thank you for the additional color. And then you touched on it earlier in the prepared remarks regarding partnership discussions. What form of partnership we consider to be the ideal situation for Accurix?

Speaker 3

Well, so our priority is to raise enough funding to keep Ivesapolstat on a roll into and through Phase 3 to get it to market as quickly possible. So that's our top priority. Now if that means behind that, we would take the lead of whoever we're talking to as their preference. That could be, say, a European license and co development agreement. It could be a Japanese license and co development agreement.

Speaker 3

The typical agreement would be an upfront payment, miles clinical and commercial milestones and a royalty. We would probably try to remove the clinical and commercial milestones altogether and replace them with some degree of funding for the Phase 3 program that fits our factual position most acutely. Or it could be an M and A transaction. South America is also a hot place right now. I mean, we're getting some play from a couple of companies there, But that would be a smaller deal.

Speaker 3

And a royalty deal would also be a wonderful thing, because those are quite chunky. So that could be $20,000,000 or $25,000,000 of non dilutive financing at the closing. And you give up for that a royalty based on the financial modeling that the Royalty Finance Group does. So it'd be a percentage royalty on the back end, whether it's 10%, 15%, whatever the number is that our Board agrees to.

Speaker 5

All right. Thanks for that. And then perhaps one last question from us, kind of following up on your thought, the priority is to start Phase 3 ASAP. Would it be possible and where is it possible to start the Phase 3 study both U. S.

Speaker 5

And next U. S. Sites? Where is it possible to start piecemeal starting with U. S.

Speaker 5

Sites first even with ex U. S. Agreement in hand such as with EMA? Would that be a possibility to roll out the Phase 3 study?

Speaker 3

Yes. I mean, we'd have to talk to our R and D team to make sure that we're not kind of stepping on any toes in Europe if we were to do that or to make sure that we're not by doing that, we don't want to be stopped from some benefit in Europe that we could have gotten if we had it pre agreed. So that is certainly something that we're interested in. If we had the financing to do one of the 2 Phase 3s today, I'd say we'd still be on target to start at least piecemeal in the Q4.

Speaker 5

Understood. Thank you so much again for taking my questions and looking forward to updates in coming months.

Speaker 3

Awesome. Well, thank you for your questions and participation.

Speaker 1

Our next question is from the line of James Molloy with Alliance Global Partners. Please proceed with your questions.

Speaker 3

Good morning, James.

Speaker 6

Hi, David. Thanks. Good morning, David. Good morning, Rob. Thank you for taking my questions this morning.

Speaker 6

I want to follow-up a little more on Jason's question about partnerships. It sounds like you're speaking a little more on this call, perhaps you have or maybe it's my faulty memory about outright acquisitions. Can you walk a little bit through how that environment may have changed over the quarter or how things may be looking? I know it's been a challenging space for biotech over the last year or so. But what do you see in the purchase levels?

Speaker 6

Are you able to disclose sort of number of people you may be talking to or relative sizes of the companies you're talking to?

Speaker 3

Yes. So the companies that we're talking to, they range in size, but they're all substantially larger than we are. And some of them are household names that we'd all recognize if we open our medicine cabinet. So, it's a great range. And you didn't miss anything, James.

Speaker 3

We started this process in earnest in the middle of May around the time of our last earnings call. And I announced it on that call that we were formally starting the process. Because at that point in time, we had what we considered all the appropriate pieces having done our end of Phase 2 meeting with the FDA and really having some good stuff, de risk stuff to talk about. So the timing was perfect because in late May, I signed up for the BIO CEO conference and got an unbelievable audience of potential interested parties around the country. And I had, I think, 29 meetings out in San Diego, and we've hired a household name consultant that works on M and A on the business side, and they've reached out to dozens more on our behalf.

Speaker 3

We have a number of confidentiality agreements signed north of 5, maybe less than 12, but it's a lot more than I anticipated. Now, close only couch and horseshoes and hand grenades, right, James? So we have to close something out, and it's not done until it's done. But there's been a lot of interest. And as we're talking about with Jason, the interest is more than I anticipated it would be in the antibiotic space.

Speaker 3

And I think there are scientific reasons for that. You see Listeria and some of these other things along with C. Diff peaking. And I think there's also an element of social responsibility because the regulatory bodies, CDC, WHO, they're saying more and more publicly about the need for new classes of antibiotics and about the problem of antimicrobial resistance. So I don't know if that answers your questions, but so as I mentioned to Ed Orsi, we're leading in these discussions with we're looking for a way to keep Ibezepolstat as prompt a pace as possible to get out to market.

Speaker 3

And we like to kind of do that as non dilutively as we can. And then we're an open book. We listen to what potential partners would like to do. So some folks like the worldwide rights. Some folks are not positioned that way.

Speaker 3

They don't have infrastructure, say, in the U. S. So they would be more of a European or a territorial Japanese deal. South America seems to go hand in hand with Central America. So we're talking to the biggest and second biggest down there.

Speaker 3

So that's what we have going on. I mean, I don't know how I can't be more transparent than that without violating confidentiality agreements.

Speaker 6

No, absolutely not, Yaron. As always, I always say as much as you can. I appreciate it very much. And almost all of the Austin constant closest to the pin as I recall. But I have a quick question for Rob Shallow, following up on that.

Speaker 6

I'm always interested in the accruals. But on a different note, I know you guys on the ATM, you have about $8,000,000 of use to the ATM of the $17,000,000 total. What's kind of the run rate with the current cash you guys have before or even utilizing the ATM? What does that get you to as you negotiate with these potential partners or the non dilutive funding methods? Sure, Jim.

Speaker 2

Yes, go ahead,

Speaker 3

I was just going to say, with the ATM, we probably have sufficient funds without any trials going on until like the middle of 'twenty six. Without the ATM, it's probably the middle of 'twenty five.

Speaker 1

The next question is from the line of Jonathan Kolver with BioPharm. Please proceed with your questions.

Operator

Hey, David. How are you this morning?

Speaker 3

Good morning, Jonathan.

Operator

Good morning, sir. Kind of following up on the ATM question, how many shares are still outstanding on that? And then secondly, are there any warrants still outstanding from previous financing?

Speaker 3

Sure. Yes, there's the way an ATM is set up, there's no share number associated with it. We can pull down cash off the ATM at an intraday price on any given day. And it's just the question of how many shares are granted is just the math of what the share price is and how much we sold. So there isn't like a fixed number where we're limited.

Speaker 3

And your next question I'm sorry, what was your second question? Are there

Operator

any warrants still outstanding from previous financings?

Speaker 3

Yes. Rob, what's the warrant number? Is it about $5,500,000

Speaker 2

Yes. There are warrants outstanding from previous financings and from legacy warrants, the actual number is $6,100,000 warrants outstanding, weighted average exercise price of $3.28

Speaker 3

Thank you. Thank you, Rob. Dave, if

Operator

you could, could you kind of walk through a bit of what this new microbiome patents, kind of how does that give Iberipalstat and Nekurex such an advantage? Obviously, like you said, it's kind of a newfangled thing, if you will.

Speaker 3

Well, the first advantage is that we now have patent protection in the U. S, which we can export abroad that goes out to June 2042. So that's we can have slow enrollment for a lot of years before kind of the commercial value is any question on this thing. It's just a really long period of time. What's unusual about it is most antibiotics cause dysbiosis.

Speaker 3

That's kind of an imbalance in the healthy gut bacteria. And we now have validation from the USPTO that in fact, our iBEZIFOLASTAT is able to kill C. Difficile bacteria and is able to reduce the likelihood of reinfection that's part of the patent and also we're restoring the healthy microbiome. So anybody who's looking at antibiotics as not being a good thing because they cause dysbiosis generally, we'll look at our antibiotic and say, well, maybe we don't need to replace antibiotics with other stuff because of the dysbiosis it causes. Maybe we just need to find antibiotics that don't cause dysbiosis and in fact help restore a healthy microbiome.

Speaker 3

So in that regard, it's the only antibiotics patent of its kind that I know of. Got you. Thank you.

Operator

Kind of codifying what we've already seen in preclinical and clinical data of the very the specificity as well as kind of the protective nature of that use of Polstat?

Speaker 3

Yes. And when you think about business development and within big pharma, these big pharma companies tend to want to be cutting edge science and they tend to want their reputations to be tied to cutting edge science. And this just helps make our case. Got you. Thank you.

Speaker 3

No problem, Jonathan. Thank you.

Speaker 1

Thank you. At this time, there are no additional questions. I would like to thank everyone for joining us on our conference today. You may now disconnect your lines at this time and we thank you for your participation.

Speaker 3

Thank you, Rob. Thank you.

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