Acurx Pharmaceuticals, Inc. — Q3 2021 Form 10-Q
Reporting period: Quarter and nine months ended September 30, 2021. Unaudited interim financial statements. Acurx is a clinical-stage antibiotic developer with no revenue to date.
Business context and development
The company is developing antibiotics targeting bacterial DNA polymerase IIIC. Lead candidate ibezapolstat is being developed for Clostridium difficile infection (CDI); the filing also describes earlier-stage candidates for other Gram-positive infections. In June 2021, Acurx completed its IPO, raising approximately $14.8 million net, and converted from an LLC to a corporation.
Financial results and liquidity
| Metric | Three months ended September 30 | Nine months ended September 30 |
|---|---|---|
| Revenue | None | None |
| Research and development expense | 2021: $1.13 million; 2020: $0.66 million | 2021: $1.31 million; 2020: $1.75 million |
| General and administrative expense | 2021: $3.52 million; 2020: $0.65 million | 2021: $8.87 million; 2020: $1.76 million |
| Net loss | 2021: $4.64 million; 2020: $1.31 million | 2021: $10.12 million; 2020: $3.51 million |
| Basic and diluted loss per share | 2021: $0.46; 2020: $0.21 | 2021: $1.27; 2020: $0.58 |
- At September 30, cash was $14.46 million, prepaid expenses $0.53 million, and working capital approximately $14.3 million. Total liabilities were $0.71 million, consisting of accounts payable and accrued expenses; the PPP loan had been forgiven.
- For the first nine months, operating cash use was $3.51 million and financing cash inflow was $14.80 million, primarily IPO proceeds. Cash increased by $11.28 million from year-end 2020.
- No margins are meaningful because the company has not generated revenue. Stock-based compensation and vendor equity payments materially reduced reported losses relative to cash operating outflow.
Changes, outlook and risks
- Quarterly R&D expense rose 71% year over year, principally reflecting Phase 2b trial costs. Nine-month R&D expense fell 25%, primarily because Phase 2a costs declined after that trial was completed in 2020.
- Quarterly G&A rose to $3.52 million, mainly due to increased stock-based compensation, professional fees, employee costs, legal and insurance costs. Nine-month G&A increased by $7.11 million; the filing attributes much of the rise to stock-based compensation and public-company and professional costs.
- The company expects continuing losses and negative cash flows and says it will need additional funding. Management concluded that substantial doubt exists about the company’s ability to continue as a going concern within one year after the financial statements were issued. It may seek equity, debt, grants, collaborations or licensing arrangements; availability and terms are uncertain.
- IPO proceeds were intended to support completion of the ibezapolstat Phase 2b trial, ACX-375C preclinical development and general corporate purposes. The filing gives no specific financial or operating guidance.
- COVID-19 had slowed enrollment at some sites in the earlier Phase 2a trial; the company reported no material adverse impact at the time, but warned that future trial, supply-chain and operating disruptions remained possible. A single vendor accounted for 45% of nine-month R&D expenditures, and the company anticipated significant spending with it over the following 12 months.
- Disclosure controls were assessed as ineffective at the reasonable-assurance level due to inadequate segregation of duties in the small management team. A third-party specialist was engaged to review controls. The company also noted that $14.5 million of cash was not fully covered by FDIC insurance.
- Other material development risks include clinical-trial enrollment, safety and efficacy outcomes, regulatory approval, third-party manufacturing and research dependence, intellectual-property protection, and future financing. The filing reports no material pending litigation and no subsequent events.
Investor verification priorities
- Review the Phase 2b ibezapolstat trial timeline, enrollment and spending, and progress on ACX-375C preclinical development.
- Assess cash burn and financing needs against management’s going-concern warning; the filing does not provide a specific cash-runway estimate.
- Examine the scale and timing of stock-based compensation, including outstanding options and warrants, when evaluating reported losses and potential dilution.
- Track remediation of ineffective disclosure controls and the company’s reliance on its major R&D vendor.
- Confirm the clinical, regulatory, COVID-19, supply and financing risks as developments occur; the filing cautions that forward-looking expectations may not be achieved.