Acurx Pharmaceuticals, Inc. — Q3 2022 Form 10-Q
Reporting period: Three and nine months ended September 30, 2022; filed November 10, 2022. Acurx is a clinical-stage biopharmaceutical company developing antibiotics for serious bacterial infections. It has no approved products and has generated no revenue.
Financial performance and position
| Metric | Q3 2022 / September 30, 2022 | Comparable period / prior year-end |
|---|---|---|
| Revenue | None | None |
| Operating expenses | Q3: $3.54 million; nine months: $8.83 million | Q3 2021: $4.64 million; nine months 2021: $10.19 million |
| Net loss | Q3: $3.54 million ($0.32 per share); nine months: $8.83 million ($0.84 per share) | Q3 2021: $4.64 million ($0.46 per share); nine months 2021: $10.12 million ($1.27 per share) |
| Cash and cash equivalents | $10.61 million | $12.96 million at December 31, 2021 |
| Working capital | $9.8 million | — |
| Total liabilities | $1.18 million, all current | $0.84 million at December 31, 2021 |
| Cash flow | Nine-month operating cash use: $6.05 million; financing cash inflow: $3.70 million | 2021 operating cash use: $3.51 million; financing inflow: $14.80 million |
Gross margin is not applicable because the company reported no revenue. No long-term debt was reported. Cash fell by $2.35 million over the first nine months of 2022.
Changes versus prior comparable periods
- Q3 research and development expense rose 41% to $1.59 million, primarily due to Phase 2b trial and consulting costs. Nine-month R&D expense increased 153% to $3.32 million.
- Q3 general and administrative expense declined 45% to $1.95 million, mainly from lower legal fees and share-based compensation. Nine-month G&A fell 38% to $5.51 million, reflecting lower professional fees, share-based compensation and other compensation costs, partly offset by higher filing and insurance costs.
- Net loss narrowed year over year in both the quarter and nine-month period. The prior-year nine-month result included a $66,503 gain on forgiveness of a Paycheck Protection Program loan.
- July 2022 registered direct offering and concurrent private placement generated approximately $4.2 million gross and $3.7 million net. The company issued common shares and warrants; outstanding common shares were 11,592,609 at September 30, up from 10,215,792 at year-end 2021.
Outlook, developments and risks
- Management estimated September 30 cash would fund anticipated requirements for at least 12 months from issuance of the financial statements. The company expects ongoing losses and says additional equity financing and grant funding will be needed; availability and terms are not assured.
- The lead candidate, ibezapolstat, is in a Phase 2b randomized, double-blind, non-inferiority trial against vancomycin for C. difficile infection. In July, the company expanded the targeted site count from 24 to 30 and launched a referring-physician program to support enrollment. COVID-19-related enrollment disruption remains a risk.
- Management cited Phase 2a results in which all 10 enrolled patients achieved clinical cure and sustained cure, with no treatment-related serious adverse events reported. The small trial and early termination limit the conclusions that can be drawn; later-stage efficacy and safety remain uncertain.
- The company depends on third parties for clinical research and manufacturing. One vendor represented 50% of nine-month R&D expenditures and 55% of accounts payable and accrued expenses at September 30; management anticipates significant spending with this vendor over the next 12 months.
- Other material risks include clinical-trial enrollment, regulatory approval, product safety and efficacy, financing and dilution, supplier concentration, commercialization and reimbursement uncertainty, and the effects of COVID-19, inflation and supply-chain disruptions. The company disclosed no material litigation currently pending.
- Management said disclosure controls were effective at a reasonable assurance level at September 30 and believes a previously identified segregation-of-duties material weakness was remediated after hiring a controller and implementing review procedures. The company cautioned that controls provide reasonable, not absolute, assurance.
Key facts for investors to verify
- Whether the Phase 2b trial is enrolling on schedule and whether the expanded site and referral programs improve recruitment.
- Whether the stated cash runway remains achievable as clinical and operating costs evolve, and when additional financing may be required.
- Potential dilution from the July financing and outstanding warrants: 4,215,080 warrants were outstanding at September 30, with a weighted-average exercise price of $3.29.
- Progress in reducing dependence on the major R&D vendor and maintaining clinical drug supply.
- Whether the reported remediation of internal-control weaknesses is sustained and independently corroborated in future filings.