What changed in this filing

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Item 2. Management’s Discussion and Analysis

2024-05-14 compared with 2023-11-13 · 104 added, 122 removed, 112 unchanged (67% 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., 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.

We are a late-stage biopharmaceutical company focused on developing a new class of small molecule antibiotics for difficult-to-treat bacterial infections.

Our approach is to develop antibiotic candidates with a Gram-positive selective spectrum (“GPSS®”) that block the active site of the Gram positive specific bacterial enzyme deoxyribonucleic acid (“DNA”) polymerase IIIC ("pol IIIC”), inhibiting DNA replication and leading to Gram-positive bacterial cell death.

Our research and development (“R&D”) pipeline includes antibiotic product candidates that target Gram-positive bacteria, including Clostridioides difficile, methicillin-resistant Staphylococcus aureus (“MRSA”), vancomycin resistant Enterococcus (“VRE”) and drug-resistant Streptococcus pneumoniae (“DRSP”).

These bacterial targets are listed as priority pathogens by the World Health Organization (“WHO”), the United States (“U.S.”) Centers for Disease Control and Prevention (“CDC”) and the U.S.

Food and Drug Administration (“FDA”).

Priority pathogens are those which require new antibiotics to address the worldwide crisis of antimicrobial resistance (“AMR”) as identified by the WHO, CDC and FDA.

Our Market Opportunity

The CDC estimates that, in the U.S., antibiotic-resistant pathogens infect one individual every 11 seconds and result in one death every 15 minutes.

The WHO recently stated that growing antimicrobial resistance is equally as dangerous as the ongoing COVID-19 pandemic, threatens to unwind a century of medical progress and may leave us defenseless against infections that today can be treated easily.

The WHO recently stated that growing antimicrobial resistance is equally as dangerous as the recent COVID-19 pandemic, threatens to unwind a century of medical progress and may leave us defenseless against infections that today can be treated easily.

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 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 bacterial target by demonstrating the efficacy of our lead antibiotic candidate in a Phase 2a clinical trial.

We believe we are developing the first DNA pol IIIC inhibitor to enter Phase 3 clinical trials and our Phase 2 clinical trial has provided positive clinical trial results for our lead pol IIIC antibiotic candidate.

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), and Streptococcus (including antibiotic resistant strains).

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 Clostridioides difficile (“C.

difficile”), Enterococcus (including VRE), Staphylococcus (including MRSA), 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 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.

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

We expect to partner with a fully-integrated pharmaceutical company for late-stage clinical trials and commercialization or conduct Phase 3 clinical trials prior to such partnership and continue to review partnership opportunities on an ongoing basis up to FDA approval.

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.

Phase 2a clinical efficacy of our lead antibiotic validate the Pol IIIC bacterial target.

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

difficile infections (“CDI”).

Prior to that, we completed our Phase 2a clinical trial of ibezapolstat to treat patients with CDI and reported the top-line data in November 2020.

The Phase 2a clinical trial was terminated early based upon the recommendation of our Scientific Advisory Board (the “SAB”).

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

The SAB noted that 10 out of 10 patients enrolled in the Phase 2a trial reached the Clinical Cure endpoint, defined in the study protocol as the resolution of diarrhea in the 24-hour period immediately before the end of treatment that is maintained for 48 hours after end of treatment.

Such cure was sustained, meaning that the patients showed no sign of infection recurrence, for 30 days thereafter.

This constitutes a 100% response rate for the primary and secondary endpoints of the trial.

All 10 patients enrolled in the Phase 2a trial met the study’s primary and secondary efficacy endpoints, namely, Clinical Cure at end of treatment and Sustained Clinical Cure of no recurrence of CDI at the 28-day follow-up visit.

No treatment-related serious adverse events (“SAEs”) were reported by the investigators who enrolled patients in the trial.

We believe these results represent the first-ever clinical data showing Pol IIIC has potential as a therapeutically relevant antibacterial target.

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

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

A Phase 2 clinical trial, comprised of a Phase 2a segment and a Phase 2b segment, provided data that demonstrates positive clinical trial results for our lead antibiotic candidate and demonstrates pol IIIC as an appropriate bacterial target.

Our Lead Product Candidate

Currently available antibiotics used to treat C .

difficile infections “(CDI”) utilize other mechanisms of action.

We believe ibezapolstat is the first antibiotic candidate to work by blocking the DNA pol IIIC enzyme in C.

This enzyme is necessary for replication of the DNA of certain Gram-positive bacteria, like C.

Our Other Candidates

We also have an early-stage pipeline of antibiotic product candidates with the same previously unexploited mechanism of action, which has established proof of concept in animal studies.

This pipeline includes ACX-375C, a potential oral and parenteral treatment targeting Gram-positive bacteria, including MRSA, VRE and PRSP.

We continue to evaluate strategic transactions for the Company, including a partner for the further development and potential commercialization of our lead antibiotic candidate, ibezapolstat, as well as a potential sale, merger, third-party licensing arrangement or other strategic transaction.

At this time, we have no commitments from potential partners or others to provide the Company with capital.

Recent Developments

Completion of Phase 2b Clinical Trial

On October 2, 2023, we discontinued our Phase 2b clinical trial of our lead antibiotic candidate, ibezapolstat, targeting the treatment of patients with CDI and anticipate advancing to Phase 3 clinical trials more expeditiously than originally planned.

We made the decision to discontinue the Phase 2b clinical trial in consultation with our medical and scientific advisors and statisticians based upon observed aggregate blinded data and other factors, including the cost to maintain clinical trial sites and slow enrollment due to COVID-19.

The Company determined that the Phase 2b clinical trial has performed as anticipated for each of ibezapolstat, our lead antibiotic candidate, and vancomycin, the control agent and a standard of care to treat patients with CDI, with high rates of clinical cure observed across the trial and no emerging safety concerns reported to date.

Accordingly, the Independent Data Monitoring Committee will not be required to perform an interim analysis of the Phase 2b clinical trial data as originally planned but is supportive of the Company’s decision to early discontinue the Phase 2b clinical trial and will remain involved for the Company’s Phase 3 clinical trials.

Prior to discontinuing the Phase 2b clinical trial, the Company notified FDA of its decision to early discontinue the trial.

Completion of the Phase 2b Segment of our Phase 2 Clinical Trial

On October 2, 2023, we discontinued the Phase 2b segment of our clinical trial of our lead antibiotic candidate, ibezapolstat, targeting the treatment of patients with CDI and we anticipate advancing to Phase 3 clinical trials more expeditiously than originally planned.

We made the decision to discontinue the Phase 2b segment of our clinical trial in consultation with our medical and scientific advisors and statisticians based upon observed aggregate blinded data and other factors, including the cost to maintain clinical trial sites and slow enrollment due to COVID-19.

We determined that the Phase 2b segment of our clinical trial performed as anticipated for each of ibezapolstat, our lead antibiotic candidate, and vancomycin, the control agent and a standard of care to treat patients with CDI, with high rates of clinical cure observed across the trial and no emerging safety concerns reported to date.

Accordingly, the Independent Data Monitoring Committee w as not required to perform an interim analysis of the Phase 2b clinical trial data as originally planned but was supportive of our decision to discontinue the Phase 2b segment of our clinical trial early and will remain involved for our Phase 3 clinical trials.

Prior to discontinuing the Phase 2b clinical trial, we notified FDA of our decision to early discontinue the trial.

The trial was not discontinued due to safety concerns.

Top-Line Ibezapolstat Phase 2 Efficacy Results

On November 2, 2023, the Company announced top-line Phase 2 efficacy and safety results from the clinical trial of ibezapolstat in patients with CDI.

The overall observed Clinical Cure rate in the combined Phase 2 trials in patients with CDI was 96% (25 out of 26 patients), based on 10 out of 10 patients (100%) in Phase 2a in the modified intent to treat population, plus 15 out of 16 (94%) patients in Phase 2b in the per protocol population, who experienced Clinical Cure during treatment with ibezapolstat.

Ibezapolstat was well-tolerated, with three patients each experiencing one mild adverse event assessed by the blinded investigator to be drug-related.

Ibezapolstat Phase 2 Clinical Results

On November 2, 2023, we announced top-line results from the Phase 2b segment of our Phase 2 clinical trial of ibezapolstat in patients with CDI.

In the Phase 2b segment of the clinical trial, the observed Clinical Cure rate in the per protocol population was 15 of 16 patients (94%) in the ibezapolstat arm and 14 out of 14 patients (100%) in the vancomycin arm, respectively.

In the Phase 2a segment of the clinical trial that evaluated ibezapolstat in patients with CDI, the observed Clinical Cure rate in the per protocol population was 10 out of 10 patients (100%).

In a post hoc analysis conducted with the data available at the time of discontinuation of the trial, the overall observed Clinical Cure rate for ibezapolstat in the combined Phase 2a and Phase 2b segments of the clinical trial in patients with CDI was 96% (25 out of 26 patients), based on 10 out of 10 patients (100%) in the Phase 2a segment in the per protocol population, plus 15 out of 16 (94%) patients in the Phase 2b segment We believe that, based on the post hoc pooled Phase 2 ibezapolstat Clinical Cure rate of 96% and the historical vancomycin cure rate of approximately 81% (Vancocin® Prescribing Information, January 2021), Phase 3 trials conducted in accordance with the applicable FDA Guidance for Industry (October 2022) would be able to demonstrate the non-inferiority of ibezapolstat to vancomycin, though there can be no assurance that these early-stage, Phase 2 data will predict results in Phase 3 clinical trials.

Further analysis of the secondary and exploratory endpoints from the Phase 2b segment showed the following:

● 15 of 15 (100%) of the ibezapolstat-treated patients who achieved Clinical Cure (CC) at end of treatment (EOT) remained free of C.

difficile Infection (CDI) recurrence through one month after EOT, for a Sustained Clinical Cure (SCC) rate of 100%.

In the Phase 2a segment, 10 of 10 (100%) of the ibezapolstat-treated patients who had achieved CC at EOT remained free of CDI recurrence through one month after EOT, for an SCC rate of 100%;

● 2 of 14 patients treated with standard of care, vancomycin, experienced recurrent infection within one month after EOT for a SCC of 86%;

For extended clinical cure, data also showed that 100% (5 of 5) of ibezapolstat-treated patients who agreed to observation for up to three months following CC at EOT experienced no recurrence of infection;

● Additional microbiology and microbiome analysis of patients in the Phase 2b segment data showed that ibezapolstat outperformed vancomycin showing eradication of fecal C.

difficile at Day 3 of treatment in 15 of 16 treated patients (94%), versus vancomycin which had eradication of C.

difficile in 10 of 14 treated patients (71%);

● Ibezapolstat, but not vancomycin, consistently preserved and allowed regrowth of key gut bacterial species believed to confer health benefits including to prevent recurrence of CDI.

Ibezapolstat was well-tolerated in the Phase 2 clinical trial.

In the Phase 2b segment, there were three patients each experiencing one mild adverse event assessed by the blinded investigator to be drug-related.

All three events were gastrointestinal in nature and resolved without treatment.

There were no drug-related treatment withdrawals or no drug-related serious adverse events, or other safety findings of concern.

In the Phase 2b vancomycin control arm, 14 out of 14 patients experienced clinical cure.

The Company is confident that based on the pooled Phase 2 ibezapolstat clinical cure rate of 96% and the historical vancomycin cure rate of approximately 81% (Vancocin® Prescribing Information, January 2021), we will demonstrate non-inferiority of ibezapolstat to vancomycin in Phase 3 trials in accordance with the applicable FDA Guidance for Industry (October, 2022).

The Phase 2b clinical trial met the protocol primary objective of assessing the primary efficacy endpoint of the Clinical Cure rate after 10 days of oral treatment.

Further analyses will be forthcoming regarding secondary and exploratory endpoints, including Sustained Clinical Cure data, Extended Clinical Cure data up to 94 days and comparative effects on the gut microbiome.

The Company is currently preparing for an End-of-Phase 2 Meeting with FDA and advancement to Phase 3.

Warrant Exercise and Share Issuance

As of November 13, 2023, the Company had 13,767,977 shares of common stock issued and outstanding which is an increase of 762,849 shares as of September 30, 2023, primarily due to certain warrant exercises that resulted in the issuance of 682,769 shares.

The Company received approximately $2.2 million in proceeds from these warrant exercises.

In the Phase 2a segment, there were seven adverse events reported in four patients, with only one (nausea) likely related to ibezapolstat.

One severe adverse event occurred (an exacerbation of a migraine headache) but was considered to be unrelated to ibezapolstat.

There were no drug-related treatment withdrawals or no drug-related serious adverse events, or other safety findings of concern in either segment of the Phase 2 clinical trial.

Further analyses will be forthcoming regarding other exploratory endpoints from the Phase 2b segment of the Phase 2 clinical trial later this year.

The Company anticipates presenting data from the Phase 2 clinical trial at one or more scientific conferences throughout 2024.

We convened an End-of-Phase 2 Meeting with FDA in April 2024 and expect to report the results of the FDA meeting as soon as the Company receives final meeting minutes from FDA which we anticipate in May 2024.

2023 At-the-Market Offering

On November 15, 2023, we entered into a Sales Agreement and established an “ATM Program”, pursuant to which we may offer and sell, from time to time through A.G.P/Alliance Global Partners, as sales agent, shares of our common stock having an aggregate offering price of up to $17.0 million.

Under the Sales Agreement, the sales agent is entitled to compensation of 3 .0% of the gross offering proceeds of all shares of common stock sold through it pursuant to the Sales Agreement.

As of the period ended March 31, 2024, we sold a total of 1,819,914 shares of our common stock under the ATM Program at a weighted-average price of $3.88 per share, raising $7.1 million of gross proceeds and net proceeds of $6.7 million, after deducting commissions to the sales agent and other ATM Program related expenses.

There remains approximately $9.9 million available for future sales of shares of common stock under the ATM Program.

2023 Registered Direct Offering

On May 16, 2023, the Company entered into a Securities Purchase Agreement (the “Purchase Agreement”) with a single healthcare-focused U.S.

institutional investor named therein (the “2023 Investor”), pursuant to which the Company issued and sold, in a registered direct offering by the Company directly to the 2023 Investor (the “2023 Registered Offering”), an aggregate of 601,851 shares of common stock at an offering price of $3.00 per share and an aggregate of 731,482 pre-funded warrants exercisable for shares of common stock at an offering price of $2.9999 per pre-funded warrant.

On May 16, 2023, we entered into a Securities Purchase Agreement (the “Purchase Agreement”) with a single healthcare-focused U.S.

institutional investor named therein (the “2023 Investor”), pursuant to which we issued and sold, in a registered direct offering by us directly to the 2023 Investor (the “2023 Registered Offering”), an aggregate of 601,851 shares of common stock at an offering price of $3.00 per share and an aggregate of 731,482 pre-funded warrants exercisable for shares of common stock at an offering price of $2.9999 per pre-funded warrant.

The pre-funded warrants sold to the 2023 Investor have an exercise price of $0.0001 and were immediately exercisable.

As of September 30, 2023, all of the pre-funded warrants were exercised.

The gross proceeds to the Company from the registered direct offering were approximately $4.0 million and net proceeds after deducting the placements agent’s fees and other offering expenses payable by the Company were approximately $3.5 million.

The Securities were offered by the Company pursuant to a registration statement on Form S-3 (File No.

As of March 31, 2024, all of the pre-funded warrants were exercised.

The gross proceeds to us from the 2023 Registered Offering were approximately $4.0 million and net proceeds after deducting the placements agent’s fees and other offering expenses payable by us were approximately $3.5 million.

The securities were offered by us pursuant to a registration statement on Form S-3 (File No.

333-265956) previously filed with the SEC on July 1, 2022, and which was declared effective by the SEC on July 11, 2022.

In a concurrent private placement (the “2023 Private Placement” and together with the 2023 Registered Offering, the “2023 Offerings”), the Company issued to the Investor series C warrants exercisable for an aggregate of 1,333,333 shares of common Stock at an exercise price of $3.26 per share and series D warrants exercisable for an aggregate of 1,333,333 shares of common stock at an exercise price of $3.26 per share.

Each Series C Warrant will be exercisable commencing on November 18, 2023 and will expire on November 18, 2025.

Each Series D Warrant will be exercisable commencing on November 18, 2023 and will expire on November 19, 2029.

In a concurrent private placement (the “2023 Private Placement” and together with the 2023 Registered Offering, the “2023 Offerings”), we issued to the 2023 Investor Series C Warrants exercisable for an aggregate of 1,333,333 shares of common stock at an exercise price of $3.26 per share and Series D Warrants exercisable for an aggregate of 1,333,333 shares of common stock at an exercise price of $3.26 per share.

Each Series C Warrant was exercisable commencing on November 18, 2023 and will expire on November 18, 2025.

Each Series D Warrant was exercisable commencing on November 18, 2023 and will expire on November 19, 2029.

The 2023 Offerings closed on May 18, 2023.

In connection with the 2023 Offerings, the Company also entered into a Warrant Amendment Agreement with the 2023 Investor.

Under the Warrant Amendment Agreement, the Company amended its existing series A warrants to purchase up to an aggregate of 1,230,769 shares of the Company's common stock and series B warrants to purchase up to an aggregate of 1,230,769 shares of the Company's common stock (collectively, the “Existing Warrants”) that were previously issued in July 2022, such that effective upon the closing of the offering, the amended Existing Warrants will have a termination date of May 18, 2029.

On May 16, 2023, the Company entered into a placement agency agreement (the “2023 Placement Agent Agreement”) with Maxim Group LLC (the “Placement Agent”) pursuant to which the Company engaged Maxim as the placement agent in connection with the 2023 Offerings.

The Placement Agent agreed to use its reasonable best efforts to arrange for the sale of the Securities.

The Company paid the Placement Agent a placement agent fee in cash equal to 5.75% of the gross proceeds from the sale of the Shares, Warrants and Pre-Funded Warrants.

The Company also reimbursed the Placement Agent for all reasonable travel and other out-of-pocket expenses, including the reasonable fees of legal counsel not to exceed $50,000.

The 2023 Placement Agent Agreement also contains representations, warranties, indemnification and other provisions customary for transactions of this nature.

In connection with the 2023 Offerings, we also entered into a Warrant Amendment Agreement with the 2023 Investor.

Under the Warrant Amendment Agreement, we amended our existing Series A Warrants to purchase up to an aggregate of 1,230,769 shares of our common stock and Series B Warrants to purchase up to an aggregate of 1,230,769 shares of our common stock (collectively, the “Existing Warrants”) that were previously issued in July 2022, such that effective upon the closing of the 2023 Offerings, the Existing Warrants were amended to have a termination date of May 18, 2029.

Effects of Coronavirus (COVID-19) on Our Business

The World Health Organization (“WHO”) recognized COVID-19 as a public health emergency of international concern on January 30, 2020 and as a global pandemic on March 11, 2020.

The global pandemic and actions taken to contain COVID-19 have adversely affected the global economy and financial markets.

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 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.

Since the start of the COVID-19 pandemic, we continued to enroll patients in our Phase 2a and Phase 2b clinical trial of our lead antibiotic candidate, ibezapolstat, although enrollment rates decreased significantly compared to expectations at certain of our clinical trial sites.

Other areas of our business experienced no change, including our research and development activities with key vendors.

We believe that the COVID-19 pandemic has highlighted the importance of antibiotic development in responding to global health issues particularly because many hospitalized COVID-19 patients were also prescribed antibiotics which only accelerates the current antimicrobial resistance crisis described by several regulatory bodies worldwide.

The extent to which the COVID-19 pandemic will ultimately impact our business, results of operations, financial condition and cash flows depends on future developments that are highly uncertain, rapidly evolving and difficult to predict at this time.

While we are not experiencing material adverse impacts at this time given the global economic slowdown, the overall disruption of global supply chains and distribution systems and the other risks and uncertainties associated with the COVID-19 pandemic, our business, financial condition, results of operations and growth prospects could be materially and adversely affected.

While we believe that we are well positioned for the future as we navigate the crisis and prepare for an eventual return to a more normal operating environment, we continue to closely monitor the COVID-19 pandemic as we evolve our business continuity plans and response strategy.

Public health crises such as pandemics or similar outbreaks could adversely impact our business.

Notably, the COVID-19 pandemic continues to evolve.

The extent to which COVID-19 impacts our operations or those of our collaborators, vendors, contractors, suppliers, clinical trial sites and other material business relations and governmental agencies will depend on future developments, which are highly uncertain and cannot be predicted with confidence, including the ultimate duration of the outbreak, new information that will emerge concerning the severity of the virus and the actions to contain it or treat its impact, among others.

While the potential economic impact brought by, and the ultimate duration of, the COVID-19 pandemic, have been, and continue to be, difficult to assess or predict, the spread of COVID-19 has caused a broad impact globally.

The extent to which the COVID-19 pandemic may impact our business continues to be highly uncertain and cannot be predicted with confidence.

Components of our Results of Operations

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We anticipate that our general and administrative expenses will increase in the future to support our continued research and development activities, pre-commercialization and, if any product candidates receive marketing approval, commercialization activities.

We also anticipate increased expenses related to audit, legal, regulatory and tax-related services associated with maintaining compliance with exchange listing and SEC requirements, director and officer insurance premiums and investor relations costs associated with operating as a public company.

We also anticipate increased expenses related to audit, legal, regulatory and tax-related services

associated with maintaining compliance with exchange listing and SEC requirements, director and officer insurance premiums and investor relations costs associated with operating as a public company.

Results of Operations

Three Months Ended September 30, 2023 Compared to the Three Months Ended September 30, 2022

The following table presents a summary of the changes in our results of operations for the three months ended September 30, 2023 compared with the three months ended September 30, 2022:

Three Months Ended March 31, 2024 Compared to the Three Months Ended March 31, 2023

The following table presents a summary of the changes in our results of operations for the three months ended March 31, 2024 compared with the three months ended March 31, 2023:

Three Months Ended

September 30,

(in thousands)

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Research and Development Expenses

Research and development expenses were $1.3 million for the three months ended September 30, 2023 and $1.6 million for the three months ended September 30, 2022, a decrease of $0.3 million due to the timing of Phase 2b clinical trial related costs.

General and Administrative Expenses

General and administrative expenses were $1.8 million for the three months ended September 30, 2023 and $2.0 million for the three months ended September 30, 2022, a decrease of $0.2 million.

The decrease was primarily due to $0.2 million decrease in professional fees.

Net loss was $3.1 million for the three months ended September 30, 2023, and $3.5 million for the three months ended September 30, 2022, a decrease of $0.4 million, due to the reasons stated above.

Nine Months Ended September 30, 2023 Compared to the Nine Months Ended September 30, 2022

The following table presents a summary of the changes in our results of operations for the nine months ended September 30, 2023 compared with the nine months ended September 30, 2022:

Nine Months Ended

September 30,

(in thousands)

OPERATING EXPENSES:

Research and Development

General and Administrative

TOTAL OPERATING EXPENSES

Research and Development Expenses

Research and development expenses were $4.1 million for the nine months ended September 30, 2023 and $3.3 million for the nine months ended September 30, 2022, an increase of $0.8 million 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 March 31, 2024 and $1.0 million for the three months ended March 31, 2023, an increase of $0.6 million primarily due to increase in manufacturing related costs.

General and Administrative Expenses

General and administrative expenses were $5.4 million for the nine months ended September 30, 2023 and $5.5 million for the nine months ended September 30, 2022, a decrease of $0.1 million.

The decrease was primarily due to $0.3 million decrease in professional fees offset by $0.2 million increase in share-based compensation.

Net loss was $9.4 million for the nine months ended September 30, 2023, and $8.8 million for the nine months ended September 30, 2022, an increase of $0.6 million, due to the reasons stated above.

General and administrative expenses were $2.8 million for the three months ended March 31, 2024 and $1.9 million for the three months ended March 31, 2023, an increase of $0.9 million.

The increase was primarily due to $0.7 million increase in professional fees and $0.2 million increase in share-based compensation costs.

Net loss was $4.4 million for the three months ended March 31, 2024, and $2.9 million for the three months ended March 31, 2023, an increase of $1.5 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 $48 million as of September 30, 2023.

Since inception, we have generated no revenue from operations and we have incurred cumulative losses of approximately $57.6 million as of March 31, 2024.

We have funded our operations primarily from equity issuances.

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On May 18, 2023, we completed a registered direct offering and a concurrent private placement resulting in net proceeds of approximately $3.5 million after deducting placement agents fee of $0.2 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 September 30, 2023, we had working capital of $3.9 million, consisting primarily of $7.1 million of cash and $0.1 million of prepaid expenses, offset by $3.2 million of accounts payable and accrued expenses.

On November 15, 2023, we entered into a Sales Agreement and established the ATM Program, pursuant to which we may offer and sell, from time to time, through A.G.P./Alliance Global Partners, as sales agent, shares of our common stock having an aggregate offering price of up to $17.0 million.

Under the ATM Program, we raised net proceeds of approximately $6.7 million after deducting sales agent commissions and other related expenses of $0.2 million.

certainty the amounts of increased capital outlays and operating expenditures associated with our anticipated clinical trials and development activities.

As of March 31, 2024, we had working capital of $6.0 million, consisting primarily of $8.9 million of cash and $0.2 million of prepaid expenses, offset by $3.1 million of accounts payable and accrued expenses.

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

For the nine months ended

September 30,

Three Months Ended

(in thousands)

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Financing activities

Net decrease in cash

Net increase/(decrease) in cash

Net Cash Used in Operating Activities

Net cash used in operating activities was $5.6 million for the nine months ended September 30, 2023.

The net loss was greater than the net cash used in operating activities by $3.8 million, primarily attributable to share-based compensation and share-based vendor payments of $2.5 million and an increase in accounts payable and accrued expenses of $1.2 million and decrease in prepaid expenses of $0.1 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 an increase in accrued expenses of $0.3 million.

Net cash used in operating activities was $3.1 million for the three months ended March 31, 2024.

The net loss was greater than the net cash used in operating activities by $1.3 million, primarily attributable to share-based compensation and share-based vendor payments of $1.2 million.

Net cash used in operating activities was $1.9 million for the three months ended March 31, 2023.

The net loss was greater than the net cash used in operating activities by $1.0 million, primarily attributable to share-based compensation and share-based vendor payments of $0.9 million.

Net Cash Provided by Financing Activities

Net cash provided from financing activities was $3.5 million for the nine months ended September 30, 2023, which was attributable to the net proceeds from the 2023 registered direct offering.

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 2022 registered direct offering.

Net cash provided from financing activities was $4.5 million for the three months ended March 31, 2024, which was primarily attributable to the ATM Program.

There was no cash provided from financing activities for the three months ended March 31, 2023.

Critical Accounting Policies and Estimates

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Research and Development

The Company expenses research and development costs when incurred.

At times, the Company may make cash advances for future research and development services.

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

Costs for certain research and development activities, such as the provision of services for clinical trial activity, are estimated based on an evaluation of the progress to completion of specific tasks which may use data such as subject enrollment, clinical site activations or information provided to the Company by its vendors with respect to their actual costs incurred.

Payments for these activities are based on the terms of the individual arrangements, which may differ from the pattern of costs incurred, and are reflected in the financial statements as prepaid or accrued research and development expense, as the case may be.

The estimates are adjusted to

reflect the best information available at the time of the financial statement issuance.

The Company's estimate of the status and timing of services performed could differ from the actual status and timing of services performed.

We expense research and development costs when incurred.

At times, we may make cash advances for future research and development services.

These amounts are deferred and expensed in the period the services are provided.

Costs for certain research and development activities, such as the provision of services for clinical trial activity, are estimated based on an evaluation of the progress to completion of specific tasks which may use data such as subject enrollment, clinical site activations or information provided to us by our vendors with respect to their actual costs incurred.

The estimates are adjusted to reflect the

best information available at the time of the financial statement issuance.

Although we do not expect our estimates to be materially different from amounts actually incurred, our estimate of the status and timing of services performed relative to the actual status and timing of services performed may vary.

Share-Based Compensation

The Company accounts for the cost of services performed by employees, officers and directors received in exchange for an award of Company membership interests, common stock or stock options, based on the grant-date fair value of the award.

The Company recognizes compensation expense based on the requisite service period.

We account for the cost of services performed by employees, directors and consultants received in exchange for an award of the Company’s, common stock or stock options, based on the grant-date fair value of the award.

We recognize compensation expense based on the requisite service period.

Compensation expense associated with stock option awards is recognized over the requisite service period based on the fair value of the option at the grant date determined based on the Black-Scholes option pricing model.

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.

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.

Our 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 our stock options and very little historical experience with our stock, similar public companies were used for the comparison of volatility and the dividend yield.

The risk-free rate of return was derived from U.S.

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We will continue to analyze the expected stock price volatility and will adjust our Black-Scholes option pricing assumptions as appropriate.

Any changes in the foregoing Black-Scholes assumptions, or if we were to elect to utilize an alternative method for valuing stock options granted to employees, officers and directors, could potentially impact our share-based compensation expense and our results of operations.

Any changes in the foregoing Black-Scholes assumptions, or if we were to elect to utilize an alternative method for valuing stock options granted to employees, officers and directors, could potentially impact our stock-based compensation expense and our results of operations.

Share-Based Payments to Vendors

The Company accounts for the cost of services performed by vendors in exchange for an award of our common stock or stock options, based on the grant-date fair value of the award or the fair value of the services rendered, whichever is more readily determinable.

We account for the cost of services performed by vendors in exchange for an award of our common stock or stock options, based on the grant-date fair value of the award or the fair value of the services rendered, whichever is more readily determinable.

We also use Black-Scholes option pricing model for the purpose of estimating the fair value of options and warrants.

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Recent Accounting Pronouncements

The Financial Accounting Standards Board has issued certain accounting pronouncements as of September 30, 2023 that will become effective in subsequent periods;

The Financial Accounting Standards Board has issued certain accounting pronouncements as of March 31, 2024 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