What changed in this filing

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Item 2. Management’s Discussion and Analysis

2022-11-10 compared with 2022-08-12 · 59 added, 54 removed, 180 unchanged (39% of the section changed)

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You should review the disclosure under the heading “Risk Factors” in this Quarterly Report on Form 10-Q for a discussion of important factors that could cause our actual results to differ materially from those anticipated in these forward-looking statements.

Acurx Pharmaceuticals, Inc., (the “Company”), a Delaware corporation, formerly Acurx Pharmaceuticals, LLC (the “Company”) is a publicly-held, clinical stage biopharmaceutical company developing a new class of antibiotics for infections caused by bacteria listed as priority pathogens by the World Health Organization (“WHO”), the U.S.

Acurx Pharmaceuticals, Inc., (the “Company”), a Delaware corporation, formerly Acurx Pharmaceuticals, LLC (the “Company”) is a clinical stage biopharmaceutical company developing a new class of antibiotics for infections caused by bacteria listed as priority pathogens by the World Health Organization (“WHO”), the U.S.

Centers for Disease Control and Prevention (“CDC”) and the U.S.

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According to the WHO, the current clinical development pipeline remains insufficient to tackle the challenge of the increasing emergence and spread of antimicrobial resistance.

Our approach is to develop antibiotic candidates that block the DNA polymerase IIIC (“Pol IIIC”).

We believe we are developing the first Pol IIIC inhibitor to enter clinical trials.

Our approach is to develop a new class of antibiotic candidates that block the DNA polymerase IIIC (“Pol IIIC”).

We believe we are developing the first Pol IIIC inhibitor to enter clinical trials and have clinically validated the efficacy of our lead antibiotic candidate in a Phase 2a clinical trial.

Pol IIIC is the primary catalyst for DNA replication of several Gram-positive bacterial cells.

Our research and development pipeline includes clinical stage and early stage antibiotic candidates that target Gram-positive bacteria for oral and/or parenteral treatment of infections caused by Clostridium difficile (“C.

difficile”), Enterococcus (including vancomycin-resistant strains (“VRE”)), Staphylococcus (including methicillin-resistant strains (“MRSA”)), and Streptococcus (including antibiotic resistant strains).

difficile”), Enterococcus (including vancomycin-resistant strains (“VRE”)), Staphylococcus (including methicillin-resistant strains ), and Streptococcus (including antibiotic resistant strains).

Pol IIIC is required for the replication of DNA in certain Gram-positive bacterial species.

By blocking this enzyme, our antibiotic candidates are believed to be bactericidal and inhibit proliferation of several common bacterial pathogens, including both sensitive and resistant C.

difficile, MRSA, vancomycin-resistant Enterococcus, penicillin-resistant Streptococcus pneumonia (“PRSP”) and other resistant bacteria.

By blocking this enzyme, our antibiotic candidates are believed to be bactericidal and inhibit proliferation of several common Gram-positive bacterial pathogens, including both sensitive and resistant C.

difficile, methicillin-resistant Staphylococcus aureus (“MRSA”), vancomycin-resistant Enterococcus, penicillin-resistant Streptococcus pneumonia (“PRSP”) and other resistant bacteria.

We intend to “de-risk” this new class of antibiotics through our drug development activities and potentially partner with a fully-integrated pharmaceutical company for late-stage clinical trials and commercialization.

Our lead antibiotic candidate, ibezapolstat (formerly named ACX-362E), has a novel mechanism of action that targets the Pol IIIC enzyme, a previously unexploited scientific target.

On December 3, 2021, we commenced enrollment in a double-blind, active controlled clinical trial of ibezapolstat versus vancomycin, the standard of care to treat C.

Phase 2a clinical data validate the efficacy of our lead antibiotic candidate as well as Pol IIIC as an appropriate bacterial target.

On December 3, 2021, we commenced enrollment in a Phase 2b 64-patient, randomized (1-to1), non-inferiority, double-blind trial of oral ibezapolstat compared to oral vancomycin, a standard of care to treat C.

difficile infections (“CDI”).

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The SAB reviewed the study data presented by management, including adverse events and efficacy outcomes, and discussed its clinical impressions.

The SAB unanimously supported the early termination of the Phase 2a trial after 10 patients were enrolled in the trial instead of 20 patients as originally planned.

The SAB unanimously supported the early termination of the Phase 2a trial after 10 patients were

enrolled in the trial instead of 20 patients as originally planned.

The early termination was further based on the evidence of meeting the treatment goals of eliminating the infection with an acceptable adverse event profile.

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Our Phase 2b clinical trial commenced enrollment on December 3, 2021.

The SAB is comprised of seven scientists and clinicians who have significant expertise in the scientific disciplines required for the research and development of antibiotics.

The members of the SAB serve at the pleasure of management, are paid in cash on an hourly basis for their services and do not receive equity compensation.

Generally, the SAB is consulted by management during the process of designing our preclinical and clinical trials as well as in the process of analyzing data generated from these trials, although the SAB’s services are not limited to such activities.

Currently available antibiotics used to treat CDI infections utilize other mechanisms of action.

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We believe the Referring Physician Program, which has a number of other supportive elements, will enhance the rate of enrollment potentially mitigating or partially mitigating the countervailing enrollment disruption caused by the COVID-19 pandemic.

Additionally, in July 2022, we increased the target number of clinical trial sites participating in our Phase 2b clinical trial from a targeted twenty-four clinical trial sites up to thirty clinical trial sites.

With sixteen clinical trial sites active and eight more clinical trial sites currently onboarding, our scientific team will target six additional clinical trial sites to participate in the Phase 2b clinical trial.

Registered Direct Offering

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Sailer, a member of our board of directors (collectively, the “Affiliate Investors”), and a single U.S.

institutional investor (the “Investor”) pursuant to which we issued

and sold in a registered direct offering an aggregate of 1,159,211 shares of our common stock, par value $0.001 per share and pre-funded warrants to purchase an aggregate of 130,769 shares of our common stock.

institutional investor (the “Investor”) pursuant to which we issued and sold in a registered direct offering an aggregate of 1,159,211 shares of our common stock, par value $0.001 per share and pre-funded warrants to purchase an aggregate of 130,769 shares of our common stock.

The Affiliate Investors purchased an aggregate of 59,211 shares of common stock at a purchase price of $3.80 per share.

The Investor purchased an aggregate of 1,100,000 shares of common stock at a purchase price of $3.25 per share and an aggregate of 130,769 pre-funded warrants at a purchase price of $3.2499 per pre-funded warrant.

The Investor purchased an aggregate of 1,100,000 shares of common stock at a purchase price of $3.25 per share and an aggregate of 130,769 pre-funded warrants at a purchase price of $3.2499

per pre-funded warrant.

The pre-funded warrants sold to the Investor have an exercise price of $0.0001, were immediately exercisable and may be exercised at any time until fully exercised.

As of September 30, 2022, all of the pre-funded warrants were exercised.

The gross proceeds to us from the registered direct offering were $4.2 million and net proceeds after deducting the placement agents’ fees and other offering expenses payable by us were approximately $3.7 million.

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Vaccines for COVID-19 continue to be administered in the United States and other countries around the world, but the extent and rate of vaccine adoption, the long-term efficacy of these vaccines and other factors remain uncertain.

Authorities throughout the world have implemented measures to contain or mitigate the spread of the virus, including physical distancing, travel bans and restrictions, closure of non-essential businesses, quarantines, work-from-home

directives, mask requirements, shelter-in-place orders and vaccination programs.

Authorities throughout the world have implemented measures to contain or mitigate the spread of the virus, including at various times physical distancing, travel bans and restrictions, closure of non-essential businesses, quarantines, work-from-home directives, mask requirements, shelter-in-place orders and vaccination programs.

Despite these efforts, COVID-19 has persisted, has mutated into new variants, and is expected to become endemic.

Additionally, new waves of COVID-19 or its variants could cause the reinstatement of such limitations.

The impact of COVID-19 and its variants, including direct and indirect economic effects as a result of inflation, supply chain disruptions and labor shortages, have been and remain unpredictable.

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Results of Operations

Three Months Ended June 30, 2022 Compared to the Three Months Ended June 30, 2021

The following table presents a summary of the changes in our results of operations for the three months ended June 30, 2022 compared with the three months ended June 30, 2021:

Three Months Ended September 30, 2022 Compared to the Three Months Ended September 30, 2021

The following table presents a summary of the changes in our results of operations for the three months ended September 30, 2022 compared with the three months ended September 30, 2021:

Three Months Ended

Increase (Decrease)

September 30,

(in thousands)

Research and Development Expenses

General and Administrative Expenses

OPERATING EXPENSES:

Research and Development

General and Administrative

TOTAL OPERATING EXPENSES

Gain on PPP Loan Forgiveness

Research and Development Expenses

Research and development expenses were $0.9 million for the three months ended June 30, 2022 and $0.1 million for the three months ended June 30, 2021, an increase of $0.8 due to Phase 2b clinical trial related costs and increased consulting costs.

Research and development expenses were $1.6 million for the three months ended September 30, 2022 and $1.1 million for the three months ended September 30, 2021, an increase of $0.5 million due to Phase 2b clinical trial related costs and increased consulting costs.

General and Administrative Expenses

General and administrative expenses were $1.7 million for the three months ended June 30, 2022 and $3.9 million for the three months ended June 30, 2021, a decrease of $2.2 million.

The decrease was primarily due to a $1.1 million decrease in professional fees and $1.3 million decrease in share-based compensation costs offset by $0.1 million increase in insurance costs.

Net loss was $2.6 million for the three months ended June 30, 2022, and $4.0 million for the three months ended June 30, 2021, a decrease of $1.4 million, due to the reasons stated above.

Six Months Ended June 30, 2022 Compared to Six Months Ended June 30, 2021

The following table presents a summary of the changes in our results of operations for the six months ended June 30, 2022 compared with the six months ended June 30, 2021:

Six Months Ended

Increase (Decrease)

General and administrative expenses were $2.0 million for the three months ended September 30, 2022 and $3.5 million for the three months ended September 30, 2021, a decrease of $1.5 million.

The decrease was primarily due to a $0.2 million decrease in legal fees and $1.3 million decrease in share-based compensation costs.

Net loss was $3.5 million for the three months ended September 30, 2022, and $4.6 million for the three months ended September 30, 2021, a decrease of $1.1 million, due to the reasons stated above.

Nine Months Ended September 30, 2022 Compared to Nine Months Ended September 30, 2021

The following table presents a summary of the changes in our results of operations for the nine months ended September 30, 2022 compared with the nine months ended September 30, 2021:

Nine Months Ended

September 30,

(in thousands)

Research and Development Expenses

General and Administrative Expenses

OPERATING EXPENSES:

Research and Development

General and Administrative

TOTAL OPERATING EXPENSES

Gain on PPP Loan Forgiveness

Gain on forgiveness of Paycheck Protection Program Loan

Research and Development Expenses

Research and development expenses were $1.7 million for the six months ended June 30, 2022, and $0.2 million for the six months ended June 30, 2021, an increase of $1.5 million due to Phase 2b clinical trial related costs and increased consulting costs.

Research and development expenses were $3.3 million for the nine months ended September 30, 2022, and $1.3 million for the nine months ended September 30, 2021, an increase of $2.0 million due to Phase 2b clinical trial related costs and increased consulting costs.

General and Administrative Expenses

General and administrative expenses were $3.6 million for the six months ended June 30, 2022 and $5.4 million for the six months ended June 30, 2021, a decrease of $1.8 million.

The decrease was primarily due to a $1 million decrease in professional fees, and a $1.3 million decrease in share-based compensation costs, offset by $0.4 million increase in legal and insurance costs.

Net loss was $5.3 million for the six months ended June 30, 2022, and $5.5 million for the six months ended June 30, 2021, a decrease of $0.2 million, due to the reasons stated above.

General and administrative expenses were $5.5 million for the nine months ended September 30, 2022 and $8.9 million for the nine months ended September 30, 2021, a decrease of $3.4 million.

The decrease was primarily due to a $1.1 million decrease in professional fees, $2.3 million decrease in share-based compensation costs, $0.3 million decrease in other compensation related costs, offset by $0.3 million increase in filing and insurance costs.

Net loss was $8.8 million for the nine months ended September 30, 2022, and $10.1 million for the nine months ended September 30, 2021, a decrease of $1.3 million, due to the reasons stated above.

Liquidity and Capital Resources

Since inception, we have generated no revenue from operations and we have incurred cumulative losses of approximately $31.8 million as of June 30, 2022.

Since inception, we have generated no revenue from operations and we have incurred cumulative losses of approximately $35.3 million as of September 30, 2022.

We have funded our operations primarily from equity issuances.

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On June 29, 2021, we completed our IPO resulting in net proceeds of approximately $14.8 million after deducting underwriter discounts of $1.4 million and offering costs of approximately $1.1 million.

On July 27, 2022, we completed a registered direct offering and concurrent private placement resulting in net proceeds of approximately $3.7 million after deducting placement agents commission of $0.3 million and offering costs of $0.2 million.

Based upon our lack of revenue expected for the foreseeable future, and because of numerous risks and uncertainties associated with the research, development and future commercialization of our product candidates, we are unable to estimate with certainty the amounts of increased capital outlays and operating expenditures associated with our anticipated clinical trials and development activities.

As of June 30, 2022, we had working capital of $8.7 million, consisting primarily of $9.1 million of cash and $0.1 million of prepaid expenses, offset by $0.5 million of accounts payable and accrued expenses.

As of September 30, 2022, we had working capital of $9.8 million, consisting primarily of $10.6 million of cash and $0.3 million of prepaid expenses, offset by $1.1 million of accounts payable and accrued expenses.

The following table sets forth selected cash flow information for the periods indicated:

For the six months ended

For the nine months ended

September 30,

(in thousands)

Net cash used in operating activities

Net cash provided by financing activities

Net cash (used in) provided by:

Operating activities

Financing activities

Net (decrease) / increase in cash

Net Cash Used in Operating Activities

Net cash used in operating activities was $3.9 million for the six months ended June 30, 2022.

The net loss was greater than the net cash used in operating activities by $1.4 million, primarily attributable to share-based compensation and share-based vendor payments of $1.7 million, offset by a decrease in accrued expenses of $0.4 million.

Net cash used in operating activities was $0.9 million for the six months ended June 30, 2021.

The net loss was greater than the net cash used in operating activities by $4.6 million, primarily attributable to share-based compensation of $3.4 million and an increase in accounts payable of $1.5 million, offset by an increase in prepaid expense of $0.3 million

Net cash used in operating activities was $6.0 million for the nine months ended September 30, 2022.

The net loss was greater than the net cash used in operating activities by $2.8 million, primarily attributable to share-based compensation and share-based vendor payments of $2.5 million and increase in accrued expenses of $0.3 million.

Net cash used in operating activities was $3.5 million for the nine months ended September 30, 2021.

The net loss was greater than the net cash used in operating activities by $6.6 million, primarily attributable to share-based compensation and share-based vendor payments of $6.9 million and an increase in accounts payable of $0.2 million, offset by an increase in prepaid expense of $0.5 million

Net Cash Provided by Financing Activities

There was no cash provided from financing activities for the six months ended June 30, 2022.

Net cash provided by financing activities was $14.8 million for the six months ended June 30, 2021, which was attributable to the net proceeds from the Company’s IPO.

Net cash provided by financing activities was $3.7 million for the nine months ended September 30, 2022, which was attributable to the net proceeds from the registered direct offering.

Net cash provided by financing activities was $14.8 million for the nine months ended September 30, 2021, which was attributable to the net proceeds from the Company’s IPO.

Critical Accounting Policies and Estimates

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While our significant accounting policies are described in more detail in Note 2, “Summary of Significant Accounting Policies”, we believe the following accounting policies and estimates to be most critical to the preparation of our financial statements.

The Company estimates an annual effective tax rate of 0% as the Company incurred net losses for the six months ended June 30, 2022 resulting in an estimated net loss for both financial statement and tax purposes.

The Company estimates an annual effective tax rate of 0% as the Company incurred net losses for the nine months ended September 30, 2022 resulting in an estimated net loss for both financial statement and tax purposes.

Therefore, no current federal or state income tax expense has been recorded in the financial statements.

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These amounts are deferred and expensed in the period the service is provided.

The Company incurred research and development expenses in the amount of $1,730,580 and $186,981 for the six months ended June 30, 2022 and 2021, respectively.

The Company incurred research and development expenses in the amount of $3,321,623 and $1,313,954 for the nine months ended September 30, 2022 and 2021, respectively.

Share-Based Compensation

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Option valuation models require the input of highly subjective assumptions including the expected price volatility.

The Company’s employee stock options have characteristics significantly different from those of traded options, and changes in the subjective input assumptions can materially affect the fair value computation using the Black-Scholes option pricing model.

The Company’s employee stock options have characteristics significantly different from those of traded options, and changes in the subjective input assumptions can materially

affect the fair value computation using the Black-Scholes option pricing model.

Because there is no public market for the Company’s stock options and very little historical experience with the Company’s stock, similar public companies were used for the comparison of volatility and the dividend yield.

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Recent Accounting Pronouncements

The Financial Accounting Standards Board has issued certain accounting pronouncements as of June 30, 2022 that will become effective in subsequent periods;

The Financial Accounting Standards Board has issued certain accounting pronouncements as of September 30, 2022 that will become effective in subsequent periods;

however, we do not believe that any of those pronouncements would have significantly affected our financial accounting measurements or disclosures had they been in effect, or that they will have a significant impact on us at the time they become effective.

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis