Acurx Pharmaceuticals, Inc. — Q1 2022 Form 10-Q
Business context and reporting period
Clinical-stage biopharmaceutical company developing antibiotics that target bacterial DNA polymerase IIIC. This unaudited report covers the three months ended March 31, 2022; the balance sheet compares March 31, 2022 with December 31, 2021. The company has no approved products and has generated no revenue.
Financial performance and liquidity
| Metric | Q1 2022 | Q1 2021 |
|---|---|---|
| Revenue | None | None |
| Research and development expense | $818,888 | $91,908 |
| General and administrative expense | $1,851,250 | $1,382,421 |
| Total operating expenses / net loss | $2,670,138 | $1,474,329 |
| Net loss per share, basic and diluted | $0.26 | $0.21 |
| Net cash used in operating activities | $1,876,000 | $547,138 |
- At March 31, cash was $11.08 million, total assets $11.32 million, current liabilities $633,028 and shareholders’ equity $10.69 million. Working capital was approximately $10.7 million.
- No debt is reported on the balance sheet. The filing does not provide a meaningful operating margin, as the company has no revenue.
- Cash decreased by $1.88 million during the quarter; there were no financing cash flows in either comparable quarter. Management estimates existing cash will cover anticipated requirements for at least 12 months from issuance of the financial statements.
Material changes versus the prior comparable period
- Operating expenses and net loss rose 81% year over year. R&D expense increased primarily due to Phase 2b trial and consulting costs; G&A increased mainly from professional, legal and insurance costs and compensation.
- Operating cash use increased from $547,138 to $1.88 million. Noncash share-based compensation and vendor payments reduced the difference between net loss and cash used.
- Cash declined from $12.96 million at December 31, 2021 to $11.08 million at March 31, 2022. Common shares outstanding increased from 10,215,792 to 10,263,202.
Outlook, risks and unusual items
- Ibezapolstat Phase 2b enrollment began December 3, 2021, testing the candidate against vancomycin for C. difficile infection. Management expects R&D and G&A expenses to increase as development and public-company activities continue; it provided no specific financial guidance.
- The company expects continued losses and will need additional resources to sustain operations until profitability, if achieved. It plans to seek equity financing and grant funding but cannot assure availability or acceptable terms.
- Management reported Phase 2a results in which all 10 enrolled patients achieved clinical cure and sustained cure, with no treatment-related serious adverse events reported. The trial ended early after the Scientific Advisory Board recommendation; the small sample and early-stage results do not establish later-stage efficacy or approval.
- A material weakness in internal control over financial reporting—insufficient segregation of duties due to limited personnel—made disclosure controls ineffective at March 31. The company engaged a third-party controls specialist and hired a controller who began in April 2022; remediation is ongoing.
- One vendor represented about 49% of Q1 R&D expenditures and 53% of accounts payable and accrued expenses at quarter end. Cash held at one bank was not fully FDIC-insured.
- Risks include clinical-trial and regulatory failure or delay, reliance on third-party manufacturers and clinical vendors, COVID-19-related enrollment and supply-chain disruption, and the need for additional capital. The ibezapolstat asset purchase agreement also provides for up to $700,000 in aggregate milestone payments, including $50,000 already paid, and 4% royalties on net sales under the agreement.
- The filing reports no legal proceeding considered likely to have a material adverse effect. Financial statements are unaudited.
Important facts for investors to verify
- Whether cash burn and planned development spending remain consistent with the stated 12-month runway, and when additional financing may be required.
- Phase 2b enrollment, timing, results and any regulatory or safety developments for ibezapolstat.
- Progress and effectiveness of remediation of the material weakness in internal controls.
- Continuity of the concentrated vendor relationship and the adequacy of clinical-trial drug supply.
- Potential dilution from future equity financing and the terms and timing of milestone obligations.