Acurx Pharmaceuticals, Inc. (NASDAQ:ACXP) Q2 2022 Earnings Conference Call August 16, 2022 8:30 AM ET Company Participants Robert Shawah - CFO David Luci - CEO Conference Call Participants Jim Molloy - Alliance Global Partners Operator Greetings. Welcome to Acurx Pharmaceuticals' Second Quarter 2022 Results and Business Update. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] Please note, this conference is b ...

[PART I - FINANCIAL INFORMATION](index=5&type=section&id=PART%20I%20-%20FINANCIAL%20INFORMATION) [Item 1. Condensed Interim Financial Statements (unaudited)](index=5&type=section&id=Item%201.%20Condensed%20Interim%20Financial%20Statements%20(unaudited)) Acurx Pharmaceuticals, Inc. presents its unaudited interim financial statements, reporting a **net loss of $2.7 million** for Q1 2022 and **$11.1 million cash** sufficient for at least 12 months Condensed Interim Balance Sheet Highlights | Metric | March 31, 2022 (unaudited) | December 31, 2021 (Note 2) | | :---------------------- | :------------------------- | :------------------------- | | Cash | $11,082,846 | $12,958,846 | | Total Assets | $11,322,300 | $13,254,150 | | Total Current Liabilities | $633,028 | $843,909 | | Total Shareholders' Equity | $10,689,272 | $12,410,241 | Condensed Interim Statements of Operations Highlights (Three Months Ended March 31) | Metric | 2022 (unaudited) | 2021 (unaudited) | | :------------------------- | :--------------- | :--------------- | | Research and Development | $818,888 | $91,908 | | General and Administrative | $1,851,250 | $1,382,421 | | Total Operating Expenses | $2,670,138 | $1,474,329 | | Net Loss | $(2,670,138) | $(1,474,329) | | Basic and Diluted Net Loss Per Share | $(0.26) | $(0.21) | Condensed Interim Statements of Cash Flows Highlights (Three Months Ended March 31) | Metric | 2022 (unaudited) | 2021 (unaudited) | | :------------------------------ | :--------------- | :--------------- | | Net Cash Used in Operating Activities | $(1,876,000) | $(547,138) | | Net Decrease in Cash | $(1,876,000) | $(547,138) | | Cash at End of Period | $11,082,846 | $2,628,273 | - The company is a clinical-stage biopharmaceutical company focused on developing novel antibiotics for serious bacterial infections, with its lead candidate ibezapolstat targeting CDI. It has not generated any revenue since inception and expects to continue incurring losses[25](index=25&type=chunk)[28](index=28&type=chunk)[29](index=29&type=chunk) - As of March 31, 2022, the company had a **cash balance of approximately $11.1 million**, which management estimates will be sufficient to meet anticipated cash requirements for at least 12 months. However, additional equity financing and grant funding will be needed to sustain operations until profitability is achieved[29](index=29&type=chunk) - Research and development expenses significantly increased to **$818,888** for the three months ended March 31, 2022, from **$91,908** in the prior year, primarily due to Phase 2b clinical trial costs and increased consulting[35](index=35&type=chunk)[100](index=100&type=chunk) Accounts Payable and Accrued Expenses | Category | March 31, 2022 | December 31, 2021 | | :---------------------------- | :------------- | :---------------- | | Accrued compensation expenses | $15,625 | $508,343 | | Accrued research and development | $532,322 | $229,090 | | Accrued professional fees | $78,725 | $43,102 | | Other accounts payable and accrued expenses | $6,356 | $63,374 | | Total | $633,028 | $843,909 | - The company completed its IPO on June 29, 2021, issuing **2,875,000 shares at $6.00 per share**, generating net cash proceeds of approximately **$14.8 million**. Prior to the IPO, it converted from an LLC to a corporation, and membership interests were converted to common stock[45](index=45&type=chunk)[46](index=46&type=chunk) Stock Option Activity (Three Months Ended March 31, 2022) | Metric | Shares | Weighted Average Exercise Price | | :----------------------------------- | :--------- | :------------------------------ | | Outstanding at the beginning of the period | 2,357,500 | $6.21 | | Granted | 80,000 | $4.44 | | Vested | (1,096,833) | $6.18 | | Outstanding and expected to vest | 1,340,667 | $6.13 | - Total unrecognized share-based compensation expense as of March 31, 2022, was **$6,268,497**, with a weighted average vesting period of **2.27 years**[56](index=56&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=15&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses Acurx Pharmaceuticals' Q1 2022 financial condition and operations, noting increased R&D and G&A expenses, a higher net loss, and liquidity for its clinical-stage antibiotic development - Acurx Pharmaceuticals is a clinical-stage biopharmaceutical company developing a new class of antibiotics targeting DNA polymerase IIIC (Pol IIIC) for Gram-positive bacterial infections, including those identified as priority pathogens by WHO, CDC, and FDA[66](index=66&type=chunk)[67](index=67&type=chunk)[68](index=68&type=chunk) - The lead antibiotic candidate, ibezapolstat, targets CDI and has shown promising results in a Phase 2a clinical trial with a **100% Clinical Cure rate**. Enrollment for a double-blind, active-controlled Phase 2b clinical trial commenced on December 3, 2021[69](index=69&type=chunk)[70](index=70&type=chunk)[71](index=71&type=chunk) - The COVID-19 pandemic has disrupted clinical trial enrollment rates, but the company believes it has highlighted the importance of antibiotic development. A Paycheck Protection Program (PPP) loan received in May 2020 was fully forgiven in April 2021[75](index=75&type=chunk)[76](index=76&type=chunk)[78](index=78&type=chunk) - The company has not generated any revenue since its inception and does not expect to in the near future. Research and development expenses are recognized as incurred and are expected to substantially increase as product candidates advance[79](index=79&type=chunk)[80](index=80&type=chunk)[82](index=82&type=chunk) Results of Operations Summary (Three Months Ended March 31, in thousands) | Expense Category | 2022 (in thousands) | 2021 (in thousands) | Percentage Increase (Decrease) | | :---------------------------- | :------------------ | :------------------ | :----------------------------- | | Research and Development Expenses | $819 | $92 | 790% | | General and Administrative Expenses | $1,851 | $1,382 | 34% | | Total Operating Expenses | $2,670 | $1,474 | 81% | | Net Loss | $(2,670) | $(1,474) | 81% | - The increase in Research and Development expenses by **$0.7 million** was primarily due to Phase 2b clinical trial related costs and increased consulting costs. General and Administrative expenses rose by **$0.5 million**, mainly from higher professional fees, legal, insurance, and compensation costs[88](index=88&type=chunk) - As of March 31, 2022, the company had working capital of **$10.7 million**, primarily consisting of **$11.1 million in cash**. Net cash used in operating activities was **$1.9 million** for the three months ended March 31, 2022, compared to **$0.5 million** for the same period in 2021[90](index=90&type=chunk)[94](index=94&type=chunk) - The company is an 'emerging growth company' and 'smaller reporting company,' allowing it to take advantage of reduced reporting requirements and an extended transition period for adopting new accounting standards[104](index=104&type=chunk)[105](index=105&type=chunk)[212](index=212&type=chunk) [Item 3. Quantitative and Qualitative Disclosures about Market Risk](index=22&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) Acurx Pharmaceuticals is exempt from market risk disclosures due to its status as a smaller reporting company - The company is exempt from providing quantitative and qualitative disclosures about market risk due to its status as a smaller reporting company[107](index=107&type=chunk) [Item 4. Controls and Procedures](index=22&type=section&id=Item%204.%20Controls%20and%20Procedures) Management identified a material weakness in disclosure controls and procedures as of March 31, 2022, due to inadequate segregation of duties, with remediation efforts initiated - Management concluded that disclosure controls and procedures were not effective as of March 31, 2022, due to a material weakness in internal control over financial reporting, specifically inadequate segregation of duties resulting from the company's size and limited personnel[108](index=108&type=chunk) - To remediate the material weakness, management has engaged a third-party specialist to review internal controls and recommend improvements, and has hired a controller who commenced employment in April 2022[109](index=109&type=chunk) - No changes in internal control over financial reporting were identified during the period that materially affected, or are reasonably likely to materially affect, the company's internal control over financial reporting[111](index=111&type=chunk) [PART II - OTHER INFORMATION](index=23&type=section&id=PART%20II%20-%20OTHER%20INFORMATION) [Item 1. Legal Proceedings](index=23&type=section&id=Item%201.%20Legal%20Proceedings) The company is not currently involved in any legal proceedings expected to materially impact its business - The company is not currently involved in any litigation or legal proceedings that management believes would have a material adverse effect on its business[113](index=113&type=chunk) [Item 1A. Risk Factors](index=23&type=section&id=Item%201A.%20Risk%20Factors) This section outlines significant risks, including limited operating history, ongoing losses, funding needs, reliance on ibezapolstat, regulatory hurdles, third-party dependencies, and intellectual property challenges - The company is a clinical-stage biopharmaceutical company with a limited operating history, no products approved for commercial sale, and has incurred significant net losses since inception, expecting these losses to continue[115](index=115&type=chunk)[116](index=116&type=chunk)[121](index=121&type=chunk) - A material weakness in internal control over financial reporting due to inadequate segregation of duties was identified as of March 31, 2022, which could adversely affect financial reporting accuracy and timing[118](index=118&type=chunk) - The company will need substantial additional funding beyond its current **$11.1 million cash balance** (as of March 31, 2022) to support ongoing research and development, clinical trials, and potential commercialization efforts, with no assurance of availability on acceptable terms[125](index=125&type=chunk)[127](index=127&type=chunk)[129](index=129&type=chunk) - The business heavily relies on the successful development and commercialization of its lead product candidate, ibezapolstat, for CDI. Failure to achieve timely regulatory approval or market acceptance would materially harm the business[134](index=134&type=chunk)[135](index=135&type=chunk)[137](index=137&type=chunk) - Clinical trials are costly, unpredictable, and subject to intense regulatory scrutiny. Delays in patient enrollment, unforeseen events, or failure to demonstrate safety and efficacy could prevent or delay marketing approval[143](index=143&type=chunk)[144](index=144&type=chunk)[162](index=162&type=chunk)[163](index=163&type=chunk)[166](index=166&type=chunk) - The company depends on third-party manufacturers for product candidates and third-party CROs/investigators for clinical trials, increasing risks related to supply, quality, compliance, and control over timelines and resources[181](index=181&type=chunk)[185](index=185&type=chunk)[186](index=186&type=chunk) - The company faces significant competition from larger, better-capitalized pharmaceutical companies and is exposed to product liability risks inherent in drug development[140](index=140&type=chunk)[146](index=146&type=chunk) - Intellectual property protection is critical, and the company may be involved in costly and time-consuming lawsuits to protect or enforce its patents, or may need to license third-party IP, which may not be available on reasonable terms[195](index=195&type=chunk)[198](index=198&type=chunk)[201](index=201&type=chunk)[203](index=203&type=chunk) - As an 'emerging growth company' and 'smaller reporting company,' the company benefits from reduced reporting requirements but this status could make its common stock less attractive to investors, and its stock price may be volatile[209](index=209&type=chunk)[210](index=210&type=chunk)[213](index=213&type=chunk)[216](index=216&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=47&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company details the use of **$14.8 million net proceeds** from its June 2021 IPO, primarily for ibezapolstat's Phase 2b trial and general corporate purposes, with no material changes - The company completed its IPO on June 29, 2021, generating net cash proceeds of **$14.8 million** from the sale of **2,875,000 shares of common stock at $6.00 per share**[246](index=246&type=chunk) - Proceeds from the IPO are allocated to: (i) completing the Phase 2b clinical trial of ibezapolstat for CDI, (ii) completing preclinical development of ACX-375C, and (iii) general corporate purposes, including research, development, manufacturing, capital expenditures, and hiring[246](index=246&type=chunk)[247](index=247&type=chunk) - There has been no material change in the planned use of proceeds from the IPO as described in the prospectus[247](index=247&type=chunk) [Item 3. Defaults Upon Senior Securities](index=50&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) No defaults upon senior securities were reported for the period - There were no defaults upon senior securities[248](index=248&type=chunk) [Item 4. Mine Safety Disclosure](index=50&type=section&id=Item%204.%20Mine%20Safety%20Disclosure) This item is not applicable to the company - This item is not applicable to the registrant[248](index=248&type=chunk) [Item 5. Other Information](index=50&type=section&id=Item%205.%20Other%20Information) No other information is reported under this item - No other information is reported under this item[248](index=248&type=chunk) [Item 6. Exhibits](index=51&type=section&id=Item%206.%20Exhibits) This section lists exhibits filed with the Quarterly Report, including officer certifications and Inline XBRL documents Key Exhibits Filed | Exhibit Number | Description of Exhibit | | :------------- | :--------------------- | | 31.1* | Certification of Principal Executive Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | | 31.2* | Certification of Principal Financial and Accounting Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | | 32.1* | Certification of Principal Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 | | 32.2* | Certification of Principal Financial and Accounting Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 | | 101.INS | Inline XBRL Instance Document | | 104 | Cover Page Interactive Data File | - Certifications 31.1, 31.2, 32.1, and 32.2 are furnished pursuant to the Sarbanes-Oxley Act and are deemed not filed for purposes of Section 18 of the Securities Exchange Act[251](index=251&type=chunk)

Financial Data and Key Metrics Changes - Acurx ended the fiscal year on December 31, 2021, with cash totaling $13 million, an increase from $3.2 million as of December 31, 2020, reflecting a net increase of $17.3 million from the IPO, offset by IPO-related costs of $2.5 million and operating expenditures of approximately $5 million for the year [17][18] - The company reported a net loss of $2.6 million or $0.26 per diluted share for Q4 2021, compared to a net loss of $1.1 million or $0.16 per diluted share for the same period in the prior year [20] - For the full year, the net loss was $12.7 million or $1.49 per diluted share, compared to a net loss of $4.6 million or $0.74 per diluted share for the year ended December 31, 2020 [20] Business Line Data and Key Metrics Changes - Research and development expenses for the year ended December 31, 2021, were $2 million, a slight decrease from $2.2 million in 2020, attributed to lower consulting expenses, partially offset by higher manufacturing costs related to the Phase 2b trial [18][19] - General and administrative expenses for the year were $10.8 million, significantly up from $2.4 million in the prior year, primarily due to non-cash stock-based compensation and increased professional fees [19] Market Data and Key Metrics Changes - The company initiated a Phase 2b clinical trial for its lead antibiotic candidate, ibezapolstat, in patients with C. difficile infection, with enrollment expected to be completed in the second half of 2022 [7][8] - Acurx's Phase 2a trial data indicated a 0% recurrence rate for C. difficile infection, positioning the company favorably against competitors [27] Company Strategy and Development Direction - Acurx is focused on aggressive business development, including territorial licensing deals for its second product candidate, ACX-375, which is currently in preclinical development [29] - The company aims to leverage its favorable clinical data to establish a strong position in the market, especially following recent failures of competitors in the C. difficile therapeutic space [24][26] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the competitive landscape, noting that recent failures of competitors like Summit Therapeutics and Pfizer create opportunities for Acurx to capture market share in frontline therapy for C. difficile [24][27] - The company is actively pursuing non-dilutive grants and potential licensing deals to support its development programs, despite delays in legislative initiatives like the Pasteur Act due to shifting congressional priorities [35] Other Important Information - Acurx's IPO in June 2021 raised gross proceeds of $17.25 million, which has significantly bolstered its financial position [15] - The company has participated in various healthcare conferences to enhance its investor relations strategy [15] Q&A Session Summary Question: Can you talk about some of the recent challenges in the space and where Acurx fits now in that competitive landscape? - Management highlighted that recent failures of competitors like Summit and Pfizer have created a favorable environment for Acurx, positioning it well for frontline therapy [24][26] Question: Can you discuss potential business development activities, including regional partnerships? - Management confirmed an aggressive business development program with ongoing discussions for territorial licensing deals and other partnerships [29] Question: Is there an opportunity for labeling related to superiority or microbiome impact for ibezapolstat? - Management indicated that there is potential for exploring superiority endpoints in future trials, particularly in relation to microbiome impact [31][32] Question: Any updates on the Pasteur Act given the current geopolitical situation? - Management noted that while the Pasteur Act is still a priority, recent events have shifted congressional focus, potentially delaying its progress [35]

[Business Overview](index=7&type=section&id=Item%201.%20Business.) The company is a clinical-stage biopharmaceutical firm developing novel antibiotics, with its lead candidate ibezapolstat in Phase 2b clinical trials for C. difficile infection [Company Overview](index=7&type=section&id=Overview) Acurx Pharmaceuticals is a clinical-stage biopharmaceutical company developing novel antibiotics for priority pathogens, with ibezapolstat for C. difficile infection and ACX-375C for Gram-positive bacteria - The company is a clinical-stage biopharmaceutical company dedicated to developing novel antibiotics for WHO, CDC, and FDA priority pathogen infections, addressing the global antimicrobial resistance crisis[15](index=15&type=chunk) - The company's approach involves developing antibiotic candidates that block DNA Polymerase IIIC (Pol IIIC), a key catalyst for DNA replication in several Gram-positive bacteria[16](index=16&type=chunk) - The lead antibiotic candidate, ibezapolstat (formerly ACX-362E), with a novel mechanism targeting the Pol IIIC enzyme, began enrolling C. difficile infection (CDI) patients in a double-blind, active-controlled clinical trial on December 3, 2021[18](index=18&type=chunk)[21](index=21&type=chunk) - The company also has an early-stage antibiotic pipeline, ACX-375C, utilizing the same Pol IIIC inhibition mechanism, intended for oral and/or parenteral treatment of Gram-positive bacterial infections, including MRSA, VRE, and PRSP[24](index=24&type=chunk) [Our Technology](index=9&type=section&id=Our%20Technology) The company's technology centers on DNA Polymerase IIIC inhibitors, with ibezapolstat demonstrating **100%** clinical cure rates in Phase 2a trials and receiving FDA Fast Track and QIDP designations - Phase 2a clinical trial results provided the first clinical validation of DNA Polymerase IIIC as a therapeutically relevant antibacterial target[25](index=25&type=chunk) - In the Phase 2a trial, all **10 patients** achieved clinical cure and sustained clinical cure endpoints (**100% response rate**), with no treatment-related serious adverse events reported[20](index=20&type=chunk)[21](index=21&type=chunk) - Phase 1 clinical trials showed ibezapolstat had very low systemic exposure after oral administration, high and sustained fecal concentrations approximately **2,500 times** the minimum inhibitory concentration (MIC) required to kill CDI bacteria, and minimal impact on healthy gut flora[30](index=30&type=chunk) - Ibezapolstat has received FDA Fast Track and Qualified Infectious Disease Product (QIDP) designations, which provide incentives such as priority review and an additional **5 years** of market exclusivity through the GAIN Act[31](index=31&type=chunk)[34](index=34&type=chunk) - On February 5, 2018, the company acquired global manufacturing, development, and commercialization rights for ibezapolstat from GLSynthesis Inc., paying **$110,174** in cash and **100,000** Class B membership interests, with up to **$700,000** in milestone payments (of which **$50,000** has been paid) and a **4%** net sales royalty[32](index=32&type=chunk)[33](index=33&type=chunk) [About QIDP and Fast Track Designations](index=11&type=section&id=About%20QIDP%20and%20Fast%20Track%20Designations) This section explains the GAIN Act's QIDP and FDA Fast Track designations, which provide extended market exclusivity and expedited review for novel antibacterial drugs, with ACX-375C also expected to qualify - The GAIN Act (part of FDASIA in 2012) aims to encourage the development of novel antibiotic and antifungal products for serious or life-threatening infections, providing QIDP with a **5-year** extension of market exclusivity, FDA priority review, and Fast Track eligibility[34](index=34&type=chunk) - FDA Fast Track designation is designed to expedite the development and regulatory review of new drugs for serious or life-threatening conditions with high unmet medical needs, offering more frequent interactions with the FDA review team and the opportunity for rolling submission of New Drug Application (NDA) sections[35](index=35&type=chunk)[37](index=37&type=chunk) - The company anticipates its second antibiotic candidate, ACX-375C, will also qualify for FDA QIDP and Fast Track designations due to its antimicrobial activity against eligible pathogens like MRSA and VRE[38](index=38&type=chunk) [Mechanism of Action](index=13&type=section&id=Mechanism%20of%20Action) DNA Polymerase IIIC (Pol IIIC) inhibitors, such as ibezapolstat, block DNA replication in Gram-positive bacteria by forming an inactive ternary complex with the enzyme and DNA - DNA Pol IIIC is essential for replicative DNA synthesis in aerobic, low G-C Gram-positive bacteria[39](index=39&type=chunk) - dGTP analogs like ibezapolstat pair with template cytosine via a 'base-pairing domain,' while an 'aryl domain' binds to an 'aryl-specific receptor' near the Pol IIIC enzyme's dNTP binding site, forming an inactive ternary complex of inhibitor, DNA, and Pol IIIC, thereby inhibiting DNA replication[40](index=40&type=chunk) - In vitro studies show ibezapolstat (362E) effectively inhibits purified Pol IIIC from C. difficile and B. subtilis, and increases the oriC:terC ratio in C. difficile by **8-16 fold**, consistent with inhibited DNA replication[42](index=42&type=chunk) [Leiden University Medical Center/Health Holland Research Project](index=14&type=section&id=Leiden%20University%20Medical%20Center%2FHealth%20Holland%20Research%20Project) Health Holland awarded a **$500,000** grant to Leiden University Medical Center for the 'POLSTOP2' project, collaborating with the company to elucidate PolC structures and accelerate ACX-375 lead candidate selection for multi-drug resistant bacteria - In August 2021, Health Holland awarded approximately **$500,000** to Leiden University Medical Center (LUMC) for the 'POLSTOP2' research project, aiming to study DNA polymerase and its binding interactions with the company's inhibitors[43](index=43&type=chunk)[44](index=44&type=chunk) - This project aims to accelerate the company's ACX-375 program's lead product candidate selection for multi-drug resistant bacteria (e.g., MRSA, VRE, and DRSP), addressing the need for novel antibiotics against WHO, CDC, and FDA high-priority resistant Gram-positive pathogens[44](index=44&type=chunk) [Pre-Clinical Studies](index=16&type=section&id=Pre-Clinical%20Studies) Ibezapolstat completed all IND-enabling preclinical studies, demonstrating good genetic toxicology, cardiovascular safety, rapid systemic clearance, high fecal concentrations, and potent bactericidal activity against C. difficile with minimal impact on gut flora - Ibezapolstat's genetic toxicology studies (Ames, mouse lymphoma, micronucleus tests) were all negative, and cardiovascular safety studies showed adequate safety margins with no significant cardiovascular risks in telemetered dogs[46](index=46&type=chunk) - In 14-day toxicology studies, the No Observed Adverse Effect Level (NOAEL) was approximately **1000 mg/kg** in rats and **200 mg/kg/day** in dogs[46](index=46&type=chunk) - Pharmacokinetic studies showed ibezapolstat had rapid systemic clearance and a short half-life (**0.34 hours**) after intravenous administration in male rats; oral bioavailability was **8.6%**, but fecal concentrations were high (approximately **100-200 mcg/mL**), far exceeding the MIC required to kill C. difficile[47](index=47&type=chunk)[49](index=49&type=chunk) 22 C. difficile Isolates MIC Test (µg/mL), Median | Drug | MIC range (µg/mL) | MIC50 (µg/mL) | MIC90 (µg/mL) | | :------------ | :---------------- | :------------ | :------------ | | Ibezapolstat | 1 – 4 | 2 | 4 | | Vancomycin | 1 – 8 | 1 | 4 | | Metronidazole | 0.25 – 4 | 1 | 4 | - Ibezapolstat demonstrated high activity against C. difficile but no activity against healthy gut bacteria like Bifidobacterium and Eubacterium species, indicating minimal disruption to the gut microbiota[51](index=51&type=chunk)[52](index=52&type=chunk) - Ibezapolstat showed bactericidal activity with MBC:MIC ratios of **1 to 4** for three C. difficile isolates, and bactericidal activity was observed at higher doses and later time points in time-kill kinetics studies[62](index=62&type=chunk)[63](index=63&type=chunk) [In vivo Efficacy Animal Models](index=21&type=section&id=In%20vivo%20Efficacy%20Animal%20Models) In a golden Syrian hamster model of C. difficile infection, ibezapolstat (GLS-362E) demonstrated superior efficacy over GLS-359E and vancomycin, achieving **100% survival** with extended treatment and significantly reducing recurrence - In the golden Syrian hamster model of C. difficile infection, GLS-362E (ibezapolstat) was more effective than GLS-359E at lower doses[72](index=72&type=chunk) - Extending GLS-362E treatment to **7 or 14 days** increased survival rates to **60% and 100%**, respectively, with surviving hamsters testing negative for toxin A and/or B in intestinal contents[73](index=73&type=chunk) Hamster Efficacy Against C. difficile Infection | Drug | Survivors acute infection/total animals | Survivors with no recurrent infection /total animals | | :---------------------- | :-------------------------------------- | :--------------------------------------------------- | | GLS362 (ibezapolstat) | 7/7 | 6/7 | | vancomycin | 7/7 | 3/7 | - In a **10-day** dosing regimen, GLS-362E treatment resulted in an **86%** survival rate at **36 days** post-infection, compared to **43%** for vancomycin, indicating ibezapolstat's advantage in preventing recurrence[73](index=73&type=chunk)[75](index=75&type=chunk) [C. difficile Infection Overview](index=24&type=section&id=C.%20difficile%20Infection%20Overview) C. difficile infection (CDI) is a severe bacterial infection causing over **one million** cases and **29,000** deaths annually in the US and Europe, characterized by high recurrence rates and classified as an urgent public health threat by the CDC - C. difficile infection (CDI) is a bacterial infection of the colon causing inflammation and severe diarrhea, with over **one million** cases annually in the US and Europe, and approximately **29,000** deaths per year in the US[76](index=76&type=chunk) - A significant clinical issue with CDI is disease recurrence, with **20% to 40%** of patients experiencing a second infection, and the risk of recurrence rising to **65%** after a third infection, with each recurrence associated with greater disease severity and mortality[80](index=80&type=chunk) - The CDC listed C. difficile as one of five pathogens posing an immediate public health threat requiring urgent and aggressive action in its 2013 and 2019 updates[81](index=81&type=chunk) [Current CDI Antibiotic Treatments](index=26&type=section&id=Current%20CDI%20Antibiotic%20Treatments) Current CDI treatments like vancomycin and metronidazole cause high recurrence rates due to gut microbiome damage, while fidaxomicin shows no superiority for highly virulent strains, and other novel therapies are in development - Current standard treatments for CDI are vancomycin or metronidazole, both broad-spectrum antibiotics that severely damage the gut microbiota, making patients susceptible to CDI recurrence, with recurrence rates of **24.0%** and **27.1%**, respectively[82](index=82&type=chunk) - Fidaxomicin (Dificid) is approved for CDI treatment but has not demonstrated superiority over vancomycin in treating highly virulent strains, such as ribotype 027[83](index=83&type=chunk) - Summit Therapeutics announced in December 2021 that its ridinilazole failed to meet its primary endpoint in Phase 3 clinical trials, and the company is considering its subsequent strategy[86](index=86&type=chunk) - Other CDI treatments in development include Merck's monoclonal antibody bezlotoxumab, Pfizer's PF-06425090 vaccine, and fecal microbiota therapies such as Seres Therapeutics' SER-109 and Rebiotix's RBX2660[129](index=129&type=chunk)[130](index=130&type=chunk)[131](index=131&type=chunk)[133](index=133&type=chunk) [Clinical Strategy](index=28&type=section&id=Clinical%20Strategy) The company completed Phase 1 and an early-terminated Phase 2a trial for ibezapolstat, initiated a **64-patient** Phase 2b non-inferiority study against vancomycin, and plans two **400-patient** Phase 3 trials after FDA consultation - Phase 1 clinical trials were successfully completed in August 2019, showing ibezapolstat had low systemic exposure and high fecal concentrations, supporting its progression to Phase 2 trials[89](index=89&type=chunk) - Phase 2a clinical trials were terminated early in August 2020, based on Scientific Advisory Board (SAB) recommendations, as all **10 patients** achieved **100%** clinical cure and sustained clinical cure endpoints with no treatment-related serious adverse events[91](index=91&type=chunk)[92](index=92&type=chunk) - Phase 2b clinical trials began enrollment on December 3, 2021, designed as a **64-patient** vancomycin-controlled, non-inferiority study to compare the efficacy and safety of ibezapolstat (**450mg twice daily**) versus vancomycin (**125mg four times daily**)[92](index=92&type=chunk) - The company plans to meet with the FDA after completing Phase 2b clinical trials to finalize the size and scope of the Phase 3 clinical trial program, which is expected to involve two trials of approximately **400 patients** each[94](index=94&type=chunk) [Regulatory Status](index=30&type=section&id=Regulatory%20Status) Ibezapolstat has received FDA IND, Fast Track, and QIDP designations, which are expected to shorten regulatory approval by **2 to 3 years** and provide priority review and an additional **5 years** of market exclusivity - The company anticipates ibezapolstat's regulatory approval timeline will be shortened by **2 to 3 years** due to inherited manufacturing and preclinical data from the former sponsor[95](index=95&type=chunk) - Ibezapolstat has received FDA IND, Fast Track, and QIDP designations, which provide FDA priority review, Fast Track eligibility, and an additional **5 years** of statutory exclusivity in the U.S. after product approval, through the GAIN Act[95](index=95&type=chunk) [Government Regulation](index=31&type=section&id=Government%20Regulation) Drug products are extensively regulated by government agencies across all stages from R&D to marketing, requiring adherence to FDA approval processes including preclinical studies, IND, clinical trials, NDA, and post-market compliance - The research, development, testing, manufacturing, quality control, approval, labeling, packaging, storage, record-keeping, promotion, advertising, distribution, and marketing of drug products are extensively regulated by government agencies in the U.S. and other countries[96](index=96&type=chunk)[98](index=98&type=chunk) - The FDA drug approval process includes: completing GLP-compliant preclinical studies, submitting an IND to initiate human clinical trials, obtaining IRB approval at each clinical trial site, conducting adequate and well-controlled human clinical trials under GCP, submitting an NDA, FDA inspection of manufacturing facilities for cGMP compliance, FDA auditing of clinical trial sites for GCP, and FDA review and approval of the NDA[99](index=99&type=chunk) - After product approval, manufacturers and products remain subject to ongoing FDA regulation, including monitoring and record-keeping activities, adverse event reporting, product sampling and distribution restrictions, and promotional and advertising requirements; non-compliance can lead to mandatory labeling changes, post-market trials, distribution restrictions, fines, warning letters, product recalls, or withdrawal of approval[113](index=113&type=chunk) [Manufacturing](index=36&type=section&id=Manufacturing) The company believes ibezapolstat's manufacturing process is efficient, with commercial-scale API production and **150mg** capsules showing good **36-month** stability data, expecting a cost of sales below **5%** of the estimated selling price - Management believes ibezapolstat's manufacturing process is efficient, with anticipated cost of sales below **5%** of the preliminary estimated selling price[114](index=114&type=chunk) - Ibezapolstat API has been successfully manufactured in **1 kg** and **9 kg** batches, with the **9 kg** batch considered commercial scale, and shows good **36-month** stability data, meeting FDA standards[116](index=116&type=chunk) - Ibezapolstat capsules (**150mg**) have been manufactured and used in Phase 1 and Phase 2a clinical trials, and will be used in Phase 2b trials, with **36-month** stability data showing no significant changes in critical quality attributes, and an expected shelf life of at least **24 months**[117](index=117&type=chunk) [Market Opportunity](index=38&type=section&id=Market%20Opportunity) C. difficile infection (CDI) represents a significant market opportunity with an estimated **600,000** annual cases in the US and high recurrence rates, creating substantial unmet need for antibiotics that significantly reduce recurrence; ibezapolstat is projected to achieve **$500 million** in peak annual sales - C. difficile infection (CDI) accounts for approximately **500,000** infections and **20,000** deaths annually in the U.S.; internal estimates suggest an annual incidence closer to **600,000** cases with a mortality rate of approximately **9.3%**[118](index=118&type=chunk) - Current market antibiotics, despite high initial cure rates, fail to effectively clear C. difficile from the gut and cause significant damage to the gut microbiome, leading to recurrence in over **25%** of CDI patients after treatment cessation, thus creating a substantial unmet need for antibiotics that significantly reduce recurrence[119](index=119&type=chunk) - The company estimates that if approved, ibezapolstat could capture over **20%** of the CDI market in its peak sales year, with projected peak annual sales of approximately **$500 million** based on preliminary estimated pricing of **$3,000 to $3,500** per course of therapy[124](index=124&type=chunk) - Ibezapolstat's unique mechanism of action provides significant market penetration potential for treating patients with recurrent infections[125](index=125&type=chunk) [Competition](index=40&type=section&id=Competition) The biopharmaceutical industry is highly competitive, with the company facing rivals from large pharmaceutical firms, academic institutions, and various CDI treatment options including existing antibiotics, monoclonal antibodies, vaccines, and fecal microbiota therapies - The biopharmaceutical industry is characterized by rapid technological development and intense competition, with the company facing rivals from large pharmaceutical, specialty pharmaceutical, and biotechnology companies, academic institutions, government agencies, and private and public research organizations[126](index=126&type=chunk)[127](index=127&type=chunk) - Ibezapolstat's competitors include existing broad-spectrum antibiotics (e.g., vancomycin and metronidazole, both with generics), the approved fidaxomicin (Dificid®), and Summit Therapeutics' ridinilazole (which failed to meet its primary endpoint in Phase 3 clinical trials)[129](index=129&type=chunk) - Other CDI treatments in development include Merck's monoclonal antibody bezlotoxumab, Pfizer's PF-06425090 vaccine, fecal microbiota therapies (e.g., Seres Therapeutics' SER-109 and Rebiotix's RBX2660), and novel small molecule drugs (e.g., Crestone Inc's CRS3123 and MGB Biopharma's MGB-BP-3)[129](index=129&type=chunk)[130](index=130&type=chunk)[131](index=131&type=chunk)[133](index=133&type=chunk) - Currently, novel antibiotics in clinical development have not demonstrated improvements in initial clinical cure rates (ICR) or sustained clinical response (SCR) superior to existing marketed antibiotics[134](index=134&type=chunk) [Competitive Strengths](index=44&type=section&id=Competitive%20Strengths) The company's competitive strengths include ibezapolstat's novel mechanism of action, high selectivity, **100%** cure rates in Phase 2a, QIDP and Fast Track designations, strong patent protection until **2030**, and a low-cost manufacturing process - Ibezapolstat possesses a novel mechanism of action, expected to be highly advantageous in the context of persistent recurrent CDI and growing antimicrobial resistance, and its molecular structure and mechanism are unrelated to other antibacterial chemical classes, thus not expected to promote bacterial resistance to other antibiotics[135](index=135&type=chunk) - Phase 1 trials showed ibezapolstat had highly selective activity against C. difficile with minimal gut microbiota disruption; Phase 2a clinical trial data demonstrated **100%** end-of-treatment cure rates and **100%** sustained clinical response in **10 patients**, with a favorable safety profile[137](index=137&type=chunk) - Ibezapolstat has received FDA QIDP and Fast Track designations and has existing patent coverage in major global pharmaceutical markets (U.S., Europe, Japan, and Canada) until September **2030**[138](index=138&type=chunk)[139](index=139&type=chunk)[140](index=140&type=chunk) - The company possesses a simple and low-cost manufacturing process, with anticipated cost of sales below **5%** of the expected retail price[138](index=138&type=chunk) - The company believes there is a high probability of success for the Phase 2b trial, as ibezapolstat only needs to achieve a **75%** cure rate to be considered non-inferior if vancomycin's cure rate is **81%**[138](index=138&type=chunk) [Intellectual Property and Market Exclusivity](index=46&type=section&id=Intellectual%20Property%20and%20Market%20Exclusivity) Ibezapolstat holds US patents expiring in September **2030** and will receive **10 years** of regulatory exclusivity due to QIDP and Fast Track designations, while ACX-375C has multiple US patents expiring in December **2039** and is also expected to receive **10 years** of exclusivity - Ibezapolstat holds two U.S. patents (U.S. Patent Numbers 6,926,763 and 8,796,292), with the compound patent (8,796,292) expiring in September **2030**; similar compound patents exist in Europe, Japan, and Canada, all expiring in September **2030**[139](index=139&type=chunk)[140](index=140&type=chunk) - Due to FDA's grant of QIDP and Fast Track designations for ibezapolstat for oral CDI treatment, the company will receive **10 years** of regulatory exclusivity from the date of FDA market approval[141](index=141&type=chunk)[143](index=143&type=chunk) - The company's second antibiotic program, ACX-375C, has been granted three U.S. patents, with one U.S. patent application and multiple foreign applications pending; its patent protection (absent extensions) will expire globally in December **2039**[144](index=144&type=chunk) - Management anticipates that the ACX-375C series of lead product candidates will also qualify for QIDP and Fast Track designations, and are expected to receive **10 years** of regulatory exclusivity from the date of FDA approval[145](index=145&type=chunk) [GAIN Exclusivity for Antibiotics](index=48&type=section&id=GAIN%20Exclusivity%20for%20Antibiotics) The GAIN Act, passed in **2012** as part of FDASIA, aims to incentivize the development of novel antibacterial and antifungal drug products for serious and life-threatening infections - The GAIN Act, passed in **2012** as part of FDASIA, aims to encourage the development of antibacterial and antifungal drug products for pathogens causing serious and life-threatening infections[146](index=146&type=chunk) [Potential External Positive Drivers in 2022 for Sector](index=48&type=section&id=Potential%20External%20Positive%20Drivers%20in%202022%20for%20Sector) The antimicrobial sector in **2022** may benefit from the PASTEUR Act's **$750 million to $3 billion** 'pull' incentives, the **$1 billion** AMR Action Fund, the DISARM Act, and similar EU 'pull' incentives - The PASTEUR Act, legislation under consideration by the U.S. Congress, if approved, would provide **$750 million to $3 billion** in 'pull' incentives for novel antibiotic developers addressing critical needs, along with transitional support to fund Phase 3 clinical trials and manufacturing requirements[147](index=147&type=chunk) - The AMR Action Fund, backed by over **20** global pharmaceutical companies with over **$1 billion**, aims to fund clinical activities for up to **15** novel antibiotic classes targeting pathogens on WHO and CDC priority lists[148](index=148&type=chunk) - The DISARM Act, legislation under consideration by the U.S. Congress, aims to eliminate current financial barriers to prescribing novel, potentially more effective antibiotics, thereby improving patient outcomes and reducing public health costs[148](index=148&type=chunk) - The European Union is considering adopting similar 'pull' incentives and may create new regulatory organizations akin to BARDA to incentivize critical antibiotic development programs within the EU[150](index=150&type=chunk) [Pipeline Products](index=50&type=section&id=Pipeline%20Products) The company is developing novel ACX-375C antibacterial molecules with the same Pol IIIC inhibition mechanism as ibezapolstat, showing potent activity against Gram-positive bacteria like MRSA and VRE, with early leads demonstrating superior efficacy in mouse models and an estimated **$1 billion** peak annual sales potential - The ACX-375C series of novel antibacterial molecules shares the same mechanism of action as ibezapolstat, inhibiting the Pol IIIC enzyme, and demonstrates potent activity against Gram-positive bacteria such as C. difficile, MRSA, VRE, and PRSP[151](index=151&type=chunk) Number of Potent MICs for Pol IIIC Inhibitor Compounds Against MRSA and/or VRE | MIC Range | MRSA | VRE | MRSA and VRE | | :-------- | :------------- | :------------- | :--------------- | | < 1 µg/mL | 18 compounds | 51 compounds | 17 compounds | | >1 to <2 µg/mL | 65 compounds | 100 compounds | 61 compounds | | >2 to < 4 µg/mL | 74 compounds | 80 compounds | 21 compounds | - Some novel lead compounds demonstrated superior efficacy over low-dose vancomycin in a lethal systemic MRSA infection mouse model, evidenced by increased survival rates and survival times[156](index=156&type=chunk) - The company plans to select lead and backup compounds by mid-**2022**, followed by PK/PD, safety, and solubility testing, and entry into IND-enabling toxicology studies in the first half of **2023**[157](index=157&type=chunk) - These bacterial targets (MRSA, VRE, and PRSP) affect approximately **6 million** patients annually in the U.S., with early estimates of peak annual sales potential around **$1 billion** (market share of **4% to 5%**)[158](index=158&type=chunk) [Employees and Human Capital Resources](index=52&type=section&id=Employees%20and%20Human%20Capital%20Resources) As of March 15, 2022, the company had **three** full-time employees, none in R&D, with human capital goals focused on attracting, retaining, and incentivizing staff and consultants through equity and cash plans - As of March 15, 2022, the company had **three** full-time employees, none of whom were engaged in research and development activities[159](index=159&type=chunk) - The company's human capital objectives include identifying, recruiting, retaining, motivating, and integrating existing and new employees, advisors, and consultants through equity and cash incentive plans to enhance shareholder value and company success[159](index=159&type=chunk) [Corporate Information](index=52&type=section&id=Corporate%20Information) The company was formed in Delaware in July **2017**, began operations in February **2018**, converted to a Delaware corporation and renamed Acurx Pharmaceuticals, Inc. on June 23, **2021**, and is headquartered in Staten Island, New York - The company was formed as a Delaware limited liability company in July **2017** and commenced operations in February **2018**; on June 23, **2021**, it converted to a Delaware corporation and changed its name to Acurx Pharmaceuticals, Inc.[160](index=160&type=chunk) - The company's principal executive offices are located at 259 Liberty Avenue, Staten Island, New York 10305[160](index=160&type=chunk) [Available Information](index=54&type=section&id=Available%20Information) The company regularly files annual, quarterly, and current reports with the SEC, accessible on the SEC website and freely available on the company's investor relations website - The company files annual, quarterly, and current reports, proxy statements, and other documents with the SEC, which are available on the SEC's website (www.sec.gov)[162](index=162&type=chunk) - The company makes its annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and code of conduct available free of charge on its website (www.acurxpharma.com) under the 'Investors—SEC Filings' section[163](index=163&type=chunk) [Risk Factors](index=54&type=section&id=Item%201A.%20Risk%20Factors.) The company faces significant risks including limited operating history, funding needs, reliance on ibezapolstat, regulatory hurdles, and intense competition [Risks Relating to Our Business](index=56&type=section&id=Risks%20Relating%20to%20Our%20Business) The company faces risks from its limited operating history, continuous losses, reliance on ibezapolstat's success, product liability, dependence on key management, competition, COVID-19 impacts, and the unreliability of early clinical data - The company is a clinical-stage biopharmaceutical company with a limited operating history, has incurred continuous losses since inception, and expects to continue incurring losses, potentially never achieving or maintaining profitability[167](index=167&type=chunk)[168](index=168&type=chunk)[172](index=172&type=chunk)[176](index=176&type=chunk) - The company has identified material weaknesses in its internal control over financial reporting, specifically insufficient segregation of duties, which if not effectively established and maintained, could adversely affect the accuracy and timeliness of financial reporting[169](index=169&type=chunk)[170](index=170&type=chunk)[171](index=171&type=chunk) - The company may require substantial additional funding, and if unable to raise capital on a timely basis or on acceptable terms, it may be forced to delay, scale back, or discontinue product development programs or commercialization efforts[178](index=178&type=chunk)[179](index=179&type=chunk)[182](index=182&type=chunk) - The company is highly dependent on the success of its lead product candidate, ibezapolstat, and its inability to commercialize or significant delays in commercialization would materially harm the business[186](index=186&type=chunk)[187](index=187&type=chunk) - The COVID-19 pandemic could adversely affect the company's preclinical studies and clinical trials, including delays in patient enrollment, difficulties in initiating clinical trial sites, diversion of healthcare resources, and supply chain disruptions[200](index=200&type=chunk)[201](index=201&type=chunk)[204](index=204&type=chunk) - Results from preclinical studies and early clinical trials may not be indicative of future results, and interim or preliminary data announced or published by the company may change as more patient data or additional endpoints (including efficacy and safety) are analyzed[210](index=210&type=chunk)[213](index=213&type=chunk)[214](index=214&type=chunk)[217](index=217&type=chunk) [Risks Related to Regulatory Approval](index=71&type=section&id=Risks%20Related%20to%20Regulatory%20Approval) The company faces risks that clinical trials may fail to demonstrate safety and efficacy, leading to delays or inability to complete product development, and that failure to obtain or comply with government approvals and healthcare regulations could adversely impact business - If clinical trials for lead product candidates fail to demonstrate safety and efficacy to the satisfaction of the FDA or EMA, or otherwise fail to produce favorable results, the company may incur additional costs or experience delays, potentially preventing completion of development and commercialization of ibezapolstat or any other product candidate[218](index=218&type=chunk)[219](index=219&type=chunk)[220](index=220&type=chunk) - Various unforeseen events may occur during clinical trials, such as delays in patient enrollment, failure of third-party contractors to perform contractual obligations, or regulatory authorities suspending or terminating trials, all of which could delay or prevent potential market approval or commercialization of product candidates[220](index=220&type=chunk)[222](index=222&type=chunk)[223](index=223&type=chunk)[224](index=224&type=chunk) - Failure to obtain costly government approvals (including required FDA approvals) or to comply with ongoing government regulations related to proposed products and formulations could delay or limit the introduction of proposed formulations and products, and result in failure to achieve revenues or maintain ongoing operations[225](index=225&type=chunk)[226](index=226&type=chunk) - Current and potential future healthcare legislation and regulatory actions, such as amendments to the Affordable Care Act (ACA), drug pricing control measures, and modifications to Medicaid programs, could adversely affect the company's business and operating results[227](index=227&type=chunk)[229](index=229&type=chunk)[230](index=230&type=chunk)[231](index=231&type=chunk)[232](index=232&type=chunk)[233](index=233&type=chunk) [Risks Related to Our Dependence on Third Parties](index=77&type=section&id=Risks%20Related%20to%20Our%20Dependence%20on%20Third%20Parties) The company's reliance on third parties for sales, marketing, manufacturing, and clinical trials, coupled with uncertainties in third-party reimbursement and compliance with healthcare laws, poses risks to product commercialization, supply, development, and market acceptance - The company lacks sales or marketing infrastructure, and if it fails to build sales and marketing capabilities or enter into agreements with third parties to market and sell product candidates, it may not successfully commercialize ibezapolstat or any other product candidate[234](index=234&type=chunk)[235](index=235&type=chunk)[237](index=237&type=chunk) - The company relies on third-party manufacturers for product candidates needed for preclinical studies and ongoing clinical trials, and expects to continue relying on third parties for additional clinical trials and eventual commercialization, increasing risks of insufficient supply or unacceptable costs, which could delay, prevent, or impair development or commercialization efforts[238](index=238&type=chunk)[239](index=239&type=chunk)[243](index=243&type=chunk)[244](index=244&type=chunk) - The company relies on third-party clinical investigators, contract research organizations (CROs), clinical data management organizations, and consultants to design, conduct, supervise, and monitor preclinical studies and clinical trials, resulting in less control over the timing, quality, and other aspects of clinical trials[245](index=245&type=chunk)[246](index=246&type=chunk)[248](index=248&type=chunk)[249](index=249&type=chunk) - If end-users of product candidates are unable to obtain adequate reimbursement from third-party payors, or if new restrictive legislation is adopted, market acceptance of the company's proposed products may be limited, and it may not achieve substantial revenues[250](index=250&type=chunk)[251](index=251&type=chunk)[252](index=252&type=chunk) - The company's relationships with future customers and third-party payors will be subject to applicable anti-kickback, fraud and abuse, and other healthcare laws and regulations, which could expose the company to criminal sanctions, civil penalties, contractual damages, reputational harm, and diminished profits and future earnings[253](index=253&type=chunk)[255](index=255&type=chunk)[256](index=256&type=chunk)[257](index=257&type=chunk) [Risks Related to Intellectual Property](index=85&type=section&id=Risks%20Related%20to%20Intellectual%20Property) The company faces risks of patent infringement, costly and time-consuming litigation, the need to license third-party IP, and the failure to adequately protect or enforce its intellectual property rights, which could lead to market share loss or financial harm - Competitors may infringe the company's patents, and the company or its collaborators may need to initiate expensive and time-consuming infringement lawsuits, with outcomes potentially invalidating, rendering unenforceable, or finding no infringement of the company's patents, or refusing to enjoin others from using the relevant technology[259](index=259&type=chunk)[260](index=260&type=chunk) - Intellectual property litigation, even if successful, can result in substantial expenses for the company and divert the attention of technical and management personnel from their normal responsibilities, potentially significantly increasing operating losses and reducing resources available for development activities[261](index=261&type=chunk)[262](index=262&type=chunk) - The company may need to license certain intellectual property from third parties, and if such licenses are unavailable or cannot be obtained on commercially reasonable terms, the company's business could be materially harmed[263](index=263&type=chunk)[264](index=264&type=chunk)[265](index=265&type=chunk) - If the company is unable to adequately protect or enforce its intellectual property rights, or fails to protect the confidentiality of its trade secrets, its business and competitive position will be harmed[265](index=265&type=chunk)[266](index=266&type=chunk)[267](index=267&type=chunk)[268](index=268&type=chunk)[269](index=269&type=chunk) [Risks Related to Our Common Stock](index=89&type=section&id=Risks%20Related%20to%20Our%20Common%20Stock) The company does not expect to pay cash dividends, making capital appreciation the sole source of shareholder return, and faces risks from anti-takeover provisions, simplified reporting as an 'emerging growth company,' stock price volatility, significant influence by major shareholders, and potential delisting from Nasdaq - The company does not intend to pay any cash dividends in the foreseeable future; therefore, capital appreciation of the common stock, if any, will be the sole source of gain for shareholders[271](index=271&type=chunk) - Provisions in the company's organizational documents and under Delaware law may make it more difficult to acquire the company and could prevent attempts by shareholders to replace or remove current management[271](index=271&type=chunk)[272](index=272&type=chunk) - The company is an 'emerging growth company' and a 'smaller reporting company,' benefiting from reduced reporting requirements, which may make its common stock less attractive to investors, leading to an inactive trading market or stock price volatility[273](index=273&type=chunk)[275](index=275&type=chunk)[276](index=276&type=chunk)[277](index=277&type=chunk) - The company's stock price may be highly volatile, influenced by various risk factors including clinical trial results, regulatory decisions, competition, management changes, shifts in market valuations, and macroeconomic and political conditions[278](index=278&type=chunk)[280](index=280&type=chunk)[281](index=281&type=chunk) - The company's executive officers, directors, and their affiliates collectively own approximately **31%** of the outstanding common stock, and will exert significant influence over company affairs, including the outcome of matters requiring shareholder approval, for the foreseeable future[282](index=282&type=chunk)[283](index=283&type=chunk)[284](index=284&type=chunk) - If the company fails to meet Nasdaq's continued listing requirements, its securities may be delisted, which would limit investors' ability to trade its securities and subject the company to additional trading restrictions[285](index=285&type=chunk)[286](index=286&type=chunk)[287](index=287&type=chunk) [General Risk Factors](index=95&type=section&id=General%20Risk%20Factors) As a public company, the firm faces increased costs and management time for compliance, risks of ineffective internal controls, cyberattacks, equity dilution from future financings, employee misconduct, inaccurate financial estimates, non-compliance with anti-corruption or environmental laws, and negative analyst coverage - As a public company, the company will incur significantly increased legal, accounting, and other expenses, and management will need to devote substantial time to new compliance requirements, which could adversely affect the business[288](index=288&type=chunk)[289](index=289&type=chunk)[290](index=290&type=chunk) - Failure to maintain an effective system of internal control over financial reporting could result in inaccurate financial results or an inability to prevent fraud, thereby harming the business and the trading price of common stock[292](index=292&type=chunk)[293](index=293&type=chunk)[294](index=294&type=chunk) - The company relies on digital technologies and faces risks of complex cyber incidents or attacks, which could lead to information theft, data corruption, operational disruption, and/or financial losses[295](index=295&type=chunk)[296](index=296&type=chunk) - The company may issue additional equity in the future through financings, acquisitions, investments, or equity incentive plans, which will dilute the ownership interests of all other shareholders[297](index=297&type=chunk) - The company's employees, principal investigators, consultants, and business partners may engage in misconduct, including non-compliance with regulatory standards and requirements and insider trading, which could result in regulatory sanctions and reputational harm[298](index=298&type=chunk)[299](index=299&type=chunk)[301](index=301&type=chunk) - Estimates and judgments in the company's financial statements, or the assumptions on which they rely, may prove inaccurate, thereby adversely affecting financial performance[303](index=303&type=chunk)[304](index=304&type=chunk) - Failure to comply with the U.S. Foreign Corrupt Practices Act or environmental, health, and safety laws and regulations could subject the company to fines, penalties, or costs that could harm its business[305](index=305&type=chunk)[307](index=307&type=chunk)[308](index=308&type=chunk)[309](index=309&type=chunk) [Unresolved Staff Comments](index=103&type=section&id=Item%201B.%20Unresolved%20Staff%20Comments.) The company has no unresolved staff comments to report - The company has no unresolved staff comments[314](index=314&type=chunk) [Properties](index=103&type=section&id=Item%202.%20Properties.) The company's headquarters are located in Staten Island, New York, leasing approximately **150 square feet** of office space - The company's principal executive offices are located in Staten Island, New York, leasing approximately **150 square feet** of office space[314](index=314&type=chunk) [Legal Proceedings](index=103&type=section&id=Item%203.%20Legal%20Proceedings.) The company is not currently involved in any legal proceedings that would significantly impact its business - The company is not currently involved in any legal proceedings or legal actions that could have a material adverse effect on its business[315](index=315&type=chunk) [Mine Safety Disclosures](index=103&type=section&id=Item%204.%20Mine%20Safety%20Disclosures.) Mine safety disclosures are not applicable to the company's operations - Mine safety disclosures are not applicable[315](index=315&type=chunk) [PART II](index=104&type=section&id=PART%20II) This section covers market information for common equity, related shareholder matters, and issuer purchases of equity securities [Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=104&type=section&id=Item%205.%20Market%20for%20Registrant%27s%20Common%20Equity%2C%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities.) The company's common stock began trading on Nasdaq on June 25, **2021**, with approximately **351** shareholders, no cash dividends paid or planned, and **$14.8 million** net IPO proceeds allocated to clinical trials and general corporate purposes - The company's common stock began trading on the Nasdaq Capital Market on June 25, **2021**, under the symbol 'ACXP'[317](index=317&type=chunk) - As of March 15, 2022, there were approximately **351** record holders of the company's common stock[318](index=318&type=chunk) - The company has never declared or paid cash dividends and currently intends to retain all available funds and future earnings for business operations and development, with no plans to pay cash dividends in the foreseeable future[319](index=319&type=chunk) - The company did not sell any unregistered equity securities during the fiscal year ended December 31, 2021[320](index=320&type=chunk) - The company completed its initial public offering (IPO) in June **2021**, issuing and selling **2,875,000** shares of common stock at **$6.00** per share, generating net cash proceeds of **$14.8 million** after deducting underwriting discounts, commissions, and other offering expenses[321](index=321&type=chunk) - The net proceeds from the IPO will be used for (i) completing the Phase 2b clinical trial of ibezapolstat in CDI patients, (ii) completing preclinical development of ACX-375C, and (iii) general corporate purposes[335](index=335&type=chunk) [Selected Financial Data](index=104&type=section&id=Item%206.%20Selected%20Financial%20Data.) This section states that selected financial data is not applicable - Selected financial data is not applicable[322](index=322&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=105&type=section&id=Item%207.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations.) This section discusses the company's financial condition and operating results for the year ended December 31, 2021, highlighting its clinical-stage status, **$14.8 million** IPO proceeds, **$12.7 million** net loss, and **$13 million** cash balance, sufficient for at least **12 months** of operations - The company is a clinical-stage biopharmaceutical company dedicated to developing novel antibiotics for WHO, CDC, and FDA priority pathogen infections, with its lead candidate ibezapolstat beginning enrollment for Phase 2b clinical trials in C. difficile infection (CDI) patients on December 3, 2021[325](index=325&type=chunk)[328](index=328&type=chunk)[332](index=332&type=chunk) - The company completed its initial public offering (IPO) on June 29, 2021, issuing **2,875,000** shares of common stock at **$6.00** per share, generating net cash proceeds of **$14.8 million**[335](index=335&type=chunk) - The COVID-19 pandemic led to a significant decrease in patient enrollment rates for Phase 2a and Phase 2b clinical trials but did not impact R&D activities with key suppliers[338](index=338&type=chunk) Summary of Results of Operations (Year Ended December 31) | Metric | 2021 ($ thousands) | 2020 ($ thousands) | Percentage Change | | :------------------------------------ | :----------------- | :----------------- | :---------------- | | Research and Development | 2,030 | 2,203 | (8)% | | General and Administrative | 10,784 | 2,397 | 350% | | Total Operating Expenses | 12,814 | 4,600 | 179% | | Gain on Forgiveness of PPP Loan | 67 | — | 100% | | Net Loss | (12,747) | (4,600) | 177% | - As of December 31, 2021, the company had approximately **$13 million** in cash, and expects existing capital resources to be sufficient to meet cash requirements for at least the next **12 months**[334](index=334&type=chunk)[350](index=350&type=chunk)[362](index=362&type=chunk) Summary of Cash Flows (Year Ended December 31) | Activity | 2021 ($ thousands) | 2020 ($ thousands) | | :------------------------ | :----------------- | :----------------- | | Operating Activities | (5,013) | (3,352) | | Investing Activities | — | — | | Financing Activities | 14,797 | 4,044 | | Net Increase in Cash | 9,784 | 692 | | Cash at End of Year | 12,958 | 3,175 | [Overview](index=105&type=section&id=Overview_MDA) The company is a clinical-stage biopharmaceutical firm developing novel antibiotics for priority pathogens, with its lead candidate ibezapolstat in Phase 2b clinical trials for C. difficile infection, and held **$13 million** in cash as of December 31, 2021 - The company is a clinical-stage biopharmaceutical company dedicated to developing novel antibiotics for WHO, CDC, and FDA priority pathogen infections, addressing the global antimicrobial resistance crisis[325](index=325&type=chunk) - The company's approach involves developing antibiotic candidates that block DNA Polymerase IIIC (Pol IIIC), a key catalyst for DNA replication in several Gram-positive bacteria[326](index=326&type=chunk) - The lead antibiotic candidate, ibezapolstat (formerly ACX-362E), with a novel mechanism targeting the Pol IIIC enzyme, began enrolling C. difficile infection (CDI) patients in a double-blind, active-controlled clinical trial on December 3, 2021[328](index=328&type=chunk)[332](index=332&type=chunk) - Phase 2a clinical trials were terminated early in August 2020, based on Scientific Advisory Board (SAB) recommendations, as all **10 patients** achieved **100%** clinical cure and sustained clinical cure endpoints with no treatment-related serious adverse events[331](index=331&type=chunk)[332](index=332&type=chunk) - As of December 31, 2021, the company had approximately **$13 million** in cash[334](index=334&type=chunk) [Recent Developments](index=107&type=section&id=Recent%20Developments) The company completed its IPO in June **2021**, raising **$14.8 million** net proceeds, converted to a Delaware corporation, and experienced reduced patient enrollment in clinical trials due to COVID-19, while its PPP loan was fully forgiven in April **2021** - The company completed its initial public offering (IPO) on June 29, 2021, issuing **2,875,000** shares of common stock at **$6.00** per share, generating net cash proceeds of **$14.8 million**[335](index=335&type=chunk) - Prior to the IPO, the company converted from a Delaware limited liability company to a Delaware corporation, converting **14,082,318** Class A and Class B membership interests into **7,041,208** shares of common stock[335](index=335&type=chunk) - The COVID-19 pandemic led to a significant decrease in patient enrollment rates for Phase 2a and Phase 2b clinical trials but did not impact R&D activities with key suppliers[338](index=338&type=chunk) - The company received a **$66,503** Paycheck Protection Program (PPP) loan in May 2020, which was fully forgiven on April 13, 2021, with the gain on forgiveness recognized in the statements of operations[340](index=340&type=chunk) [Components of our Results of Operations](index=109&type=section&id=Components%20of%20our%20Results%20of%20Operations) The company has generated no revenue since inception and expects none in the foreseeable future, with R&D expenses primarily for ibezapolstat development and G&A expenses covering executive compensation and public company costs, both projected to increase - The company has not generated any revenue since inception and does not expect to generate product sales revenue in the foreseeable future[341](index=341&type=chunk) - Research and development expenses are primarily associated with the development of ibezapolstat, preclinical studies, and other preclinical activities, recognized as incurred, and are expected to increase significantly in the future[342](index=342&type=chunk)[345](index=345&type=chunk) - General and administrative expenses primarily include salaries and employee-related costs (including share-based compensation) for executive, finance, and other administrative functions, and are expected to increase in the future due to ongoing R&D activities, commercialization preparations, and audit, legal, regulatory, and investor relations costs associated with being a public company[347](index=347&type=chunk) [Results of Operations](index=112&type=section&id=Results%20of%20Operations) For the year ended December 31, 2021, total operating expenses increased by **179%** to **$12.81 million**, driven by a **350%** rise in general and administrative expenses, resulting in a net loss of **$12.75 million** Summary of Results of Operations (Year Ended December 31) | Metric | 2021 ($ thousands) | 2020 ($ thousands) | Percentage Change | | :------------------------------------ | :----------------- | :----------------- | :---------------- | | Research and Development | 2,030 | 2,203 | (8)% | | General and Administrative | 10,784 | 2,397 | 350% | | Total Operating Expenses | 12,814 | 4,600 | 179% | | Gain on Forgiveness of PPP Loan | 67 | — | 100% | | Net Loss | (12,747) | (4,600) | 177% | - Research and development expenses decreased by **$0.2 million**, primarily due to a **$0.5 million** reduction in consulting-related costs, offset by a **$0.3 million** increase in manufacturing costs related to Phase 2b clinical trials[348](index=348&type=chunk) - General and administrative expenses increased by approximately **$8.4 million**, primarily due to a **$5.3 million** increase in share-based compensation and executive compensation settled with membership interests, a **$0.9 million** increase in compensation-related expenses, and a **$2.2 million** increase in professional fees due to increased legal, accounting, and consulting work[349](index=349&type=chunk) [Liquidity and Capital Resources](index=112&type=section&id=Liquidity%20and%20Capital%20Resources) The company has consistently incurred net losses and negative operating cash flows, holding approximately **$13 million** in cash as of December 31, 2021, primarily from equity issuances including a **$14.8 million** IPO, which is expected to fund operations for at least **12 months** - The company has incurred net losses and negative cash flows from operations since inception and expects this to continue; as of December 31, 2021, the company had approximately **$13 million** in cash[350](index=350&type=chunk) - The company's working capital has primarily been funded through equity issuances, including private placements and an IPO[351](index=351&type=chunk) - The company raised approximately **$12.9 million** in net cash proceeds through equity financings between March 2018 and October 2020[352](index=352&type=chunk) - The company received a **$66,503** Paycheck Protection Program (PPP) loan in May 2020, which was fully forgiven on April 13, 2021[355](index=355&type=chunk) - The company completed its IPO in June 2021, generating **$14.8 million** in net cash proceeds[356](index=356&type=chunk) Summary of Cash Flows (Year Ended December 31) | Activity | 2021 ($ thousands) | 2020 ($ thousands) | | :--------------------------------------------- | :----------------- | :----------------- | | Net cash used in operating activities | (5,013) | (3,352) | | Net cash provided by investing activities | — | — | | Net cash provided by financing activities | 14,797 | 4,044 | | Net increase in cash | 9,784 | 692 | | Cash at beginning of year | 3,175 | 2,483 | | Cash at end of year | 12,958 | 3,175 | - Net cash used in operating activities was **$5.0 million** in 2021, primarily due to a net loss of **$12.7 million**, offset by **$5.2 million** in share-based compensation, **$1.6 million** in share-based payments to vendors, and **$0.9 million** in executive compensation settled with equity[358](index=358&type=chunk) - Net cash provided by financing activities was **$14.8 million** in 2021, primarily from net proceeds of the IPO[359](index=359&type=chunk) - The company believes its existing cash and net proceeds from the IPO are sufficient to meet its cash requirements for at least the next **12 months** following the issuance of the financial statements as of December 31, 2021[362](index=362&type=chunk) [Recent Accounting Pronouncements](index=116&type=section&id=Recent%20Accounting%20Pronouncements) The company believes no new FASB accounting pronouncements issued as of December 31, 2021, had a significant impact on its financial accounting or disclosures during **2021**, nor are they expected to upon adoption - The company believes that no new accounting pronouncements issued by the Financial Accounting Standards Board (FASB) as of December 31, 2021, had a significant impact on its financial accounting measurements or disclosures during 2021, nor are they expected to upon adoption[364](index=364&type=chunk) [Critical Accounting Policies and Significant Judgments and Estimates](index=118&type=section&id=Critical%20Accounting%20Policies%20and%20Significant%20Judgments%20and%20Estimates) Financial statement preparation requires management estimates and assumptions, with the company estimating a **0%** effective tax rate due to losses and maintaining cash balances partially uninsured by FDIC, while R&D and share-based compensation expenses are recognized as incurred or at fair value - The preparation of financial statements requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues, and expenses, as well as the disclosure of contingent assets and liabilities[367](index=367&type=chunk) - The company estimated an annual effective tax rate of **0%** due to losses incurred in 2021; a full valuation allowance has been recorded against all deferred tax assets due to a history of operating losses[368](index=368&type=chunk) - The company maintains its cash balances at one financial institution, and as of December 31, 2021, approximately **$13 million** of the cash balance was not fully insured by the FDIC[370](index=370&type=chunk) - Research and development expenses are expensed as incurred; R&D expenses were **$2.0 million** and **$2.2 million** for 2021 and 2020, respectively[372](index=372&type=chunk) - The company recognizes compensation expense for services provided by executives and directors in exchange for company membership interests, common stock, or stock options, based on the fair value at the grant date[373](index=373&type=chunk) - The company had one significant vendor that accounted for approximately **42%** and **40%** of R&D expenditures in 2021 and 2020, respectively; in 2021, another significant vendor accounted for approximately **15%** of R&D expenditures[377](index=377&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=120&type=section&id=Item%207A.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk.) The company faces market risks primarily from interest rates, foreign currency exchange rates, and inflation, but considers its foreign currency exposure minimal and inflation to have had no material impact on operating results - All of the company's current employees and operations are located in the U.S., and contracts with non-U.S. dollar denominated contractors or suppliers are short-term, resulting in minimal exposure to foreign currency exchange rate fluctuations[379](index=379&type=chunk) - Inflation generally affects the company through increased labor costs and R&D contract costs, but the company believes inflation has not had a material impact on its operating results during the reporting periods[380](index=380&type=chunk) [Financial Statements and Supplementary Data](index=122&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data.) This section indicates that the required financial statements and supplementary data are listed in the financial statements index and incorporated into Item 15 of Part IV of Form 10-K - The required financial statements and related financial statement schedules are listed in the financial statements index and incorporated into Item 15 of Part IV of this Form 10-K[382](index=382&type=chunk) [Changes in and Disagreements with Accountants on Accounting and Financial Disclosure](index=122&type=section&id=Item%209.%20Changes%20in%20and%20Disagreements%20with%20Accountants%20on%20Accounting%20and%20Financial%20Disclosure.) This section states that the company has no changes in or disagreements with accountants on accounting and financial disclosure - The company has no changes in or disagreements with accountants on accounting and financial disclosure[382](index=382&type=chunk) [Controls and Procedures](index=122&type=section&id=Item%209A.%20Controls%20and%20Procedures.) As of December 31, 2021, the company's disclosure controls and procedures were deemed ineffective due to a material weakness in internal control over financial reporting, specifically insufficient segregation of duties, for which remedial actions are underway - As of December 31, 2021, the company's disclosure controls and procedures were deemed ineffective due to a material weakness in internal control over financial reporting, specifically insufficient segregation of duties resulting from the company's limited size and personnel[384](index=384&type=chunk) - To remediate the material weakness in segregation of duties, management has engaged third-party experts to review internal controls and recommend improvements, and has hired a Controller (commencing April 2022) to address segregation of duties issues[385](index=385&type=chunk) - This Form 10-K does not include a management report on the effectiveness of internal control over financial reporting or an attestation report of the registered public accounting firm, due to the transition period provided by the SEC for newly public companies[386](index=386&type=chunk)[387](index=387&type=chunk) - No significant changes in internal control over financial reporting occurred during the reporting period[389](index=389&type=chunk) [Other Information](index=124&type=section&id=Item%209B.%20Other%20Information.) This section states that there is no other information to report - No other information[389](index=389&type=chunk) [Disclosure Regarding Foreign Jurisdictions that Prevent Inspections](index=124&type=section&id=Item%209C.%20Disclosure%20Regarding%20Foreign%20Jurisdictions%20that%20Prevent%20Inspections.) This section states that disclosure regarding foreign jurisdictions that prevent inspections is not applicable - Disclosure regarding foreign jurisdictions that prevent inspections is not applicable[389](index=389&type=chunk) [PART III](index=125&type=section&id=PART%20III) This section provides information on directors, executive officers, corporate governance, executive compensation, and security ownership [Directors, Executive Officers and Corporate Governance](index=125&type=section&id=Item%2010.%20Directors%2C%20Executive%20Officers%20and%20Corporate%20Governance.) The information required for this section will be incorporated by reference from the definitive proxy statement for the **2022** Annual Meeting of Stockholders - The information required for this section will be incorporated by reference from the definitive proxy statement for the **2022** Annual Meeting of Stockholders[391](index=391&type=chunk) [Executive Compensatio

Financial Data and Key Metrics Changes - Acurx ended Q3 2021 with cash totaling $14.5 million, an increase from $3.2 million as of December 31, 2020, reflecting a cash increase of $17.3 million from the IPO, offset by IPO-related expenditures of $2.5 million and operating expenses of $3.5 million for the nine months ended September 30, 2021 [8][10] - The company reported a net loss of $4.6 million or $0.46 per diluted share for Q3 2021, compared to a net loss of $1.3 million or $0.21 per diluted share for Q3 2020 [10] Business Line Data and Key Metrics Changes - Research and development expenses for Q3 2021 were $1.1 million, up from $0.7 million in Q3 2020, primarily due to Phase 2b trial costs [9] - General and administrative expenses for Q3 2021 were $3.5 million, significantly higher than $0.7 million in Q3 2020, mainly due to non-cash stock-based compensation and increased professional fees [9][10] Market Data and Key Metrics Changes - Acurx joined the Russell Microcap Index in September 2021 and participated in several healthcare and investor conferences [6] Company Strategy and Development Direction - The company is focused on advancing its development pipeline of polymerase IIIC inhibitors and has initiated a Phase 2b clinical trial for its lead antibiotic candidate, ibezapolstat, targeting C. difficile infection [2][3] - Acurx is collaborating with Leiden University Medical Center to evaluate the mechanism of action of its pol IIIC inhibitors [6] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in meeting the superiority endpoint in the Phase 2b trial, which includes a secondary endpoint related to microbiome restoration compared to vancomycin [14][15] - The company aims to complete enrollment in the Phase 2b trial by Q2 2022, having activated 12 clinical trial sites [24] Other Important Information - Emerging data from the Phase 2a trial indicated favorable microbiome changes and a correlation between secondary bile acids and low risk of reinfection [5][27] - The company is part of the Antimicrobial Working Group to address antimicrobial resistance and promote policy changes [6] Q&A Session Summary Question: Can you discuss the FDA's openness to microbiome data? - Management noted that the FDA is aware of modifications in clinical programs related to the microbiome and that they have a superiority endpoint in their Phase 2b program regarding microbiome restoration [14][15] Question: When do you expect enrollment of the trials to be complete? - Management aims to complete enrollment in the Phase 2b trial by Q2 2022, with a backup plan to activate additional high-enrolling sites if necessary [24] Question: How important is the microbiome and bile acid data to the company? - Management emphasized the significance of microbiome data in demonstrating the efficacy of ibezapolstat compared to vancomycin, particularly in preventing recurrent infections [25][27]

PART I - FINANCIAL INFORMATION [Item 1. Condensed Interim Financial Statements (unaudited)](index=6&type=section&id=Item%201.%20Condensed%20Interim%20Financial%20Statements%20(unaudited)) This section presents the unaudited condensed interim financial statements, including the Balance Sheets, Statements of Operations, Statements of Changes in Members' and Shareholders' Equity, and Statements of Cash Flows, along with their accompanying notes, for the periods ended September 30, 2021, and December 31, 2020 (balance sheet) or September 30, 2020 (income statement, cash flow, equity) - The company's financial statements are unaudited and prepared in accordance with GAAP for interim reporting, including only normal, recurring adjustments[30](index=30&type=chunk) - The year-end condensed balance sheet data is derived from audited financial statements but lacks full GAAP disclosures[30](index=30&type=chunk) - Interim results are not necessarily indicative of full fiscal year results[30](index=30&type=chunk) [Condensed Interim Balance Sheets](index=6&type=section&id=Condensed%20Interim%20Balance%20Sheets) | Metric | Sep 30, 2021 (unaudited) | Dec 31, 2020 | | :-------------------------- | :----------------------- | :----------- | | **ASSETS** | | | | Cash | $14,459,046 | $3,175,411 | | Prepaid Expenses | $530,582 | $48,609 | | TOTAL ASSETS | $14,989,628 | $3,224,020 | | **LIABILITIES & EQUITY** | | | | Accounts Payable & Accrued | $712,437 | $455,931 | | PPP Loan | — | $66,503 | | TOTAL LIABILITIES | $712,437 | $522,434 | | TOTAL MEMBERS' & SHAREHOLDERS' EQUITY | $14,277,191 | $2,701,586 | | TOTAL LIABILITIES & EQUITY | $14,989,628 | $3,224,020 | [Condensed Interim Statements of Operations](index=7&type=section&id=Condensed%20Interim%20Statements%20of%20Operations) | Metric (Unaudited) | Three Months Ended Sep 30, 2021 | Three Months Ended Sep 30, 2020 | Nine Months Ended Sep 30, 2021 | Nine Months Ended Sep 30, 2020 | | :-------------------------- | :------------------------------ | :------------------------------ | :----------------------------- | :----------------------------- | | Research and Development | $1,126,972 | $659,977 | $1,313,954 | $1,745,446 | | General and Administrative | $3,515,250 | $654,569 | $8,873,160 | $1,761,561 | | TOTAL OPERATING EXPENSES | $4,642,222 | $1,314,546 | $10,187,114 | $3,507,007 | | Gain on PPP Loan Forgiveness | — | — | $66,503 | — | | NET LOSS | $(4,642,222) | $(1,314,546) | $(10,120,611) | $(3,507,007) | | LOSS PER SHARE | | | | | | Basic & Diluted Net Loss Per Share | $(0.46) | $(0.21) | $(1.27) | $(0.58) | | Weighted Average Pro Forma Shares Outstanding | 10,116,403 | 6,266,584 | 7,988,563 | 6,037,254 | [Condensed Interim Statements of Changes in Members' and Shareholders' Equity](index=8&type=section&id=Condensed%20Interim%20Statements%20of%20Changes%20in%20Members'%20and%20Shareholders'%20Equity) - The company underwent a corporate conversion from a limited liability company to a Delaware corporation on June 23, 2021, leading to the conversion of Class A and Class B Membership Interests into common stock[56](index=56&type=chunk)[57](index=57&type=chunk) - Total Members' and Shareholders' Equity significantly increased from **$2,701,586** at January 1, 2021, to **$14,277,191** at September 30, 2021, primarily due to the Initial Public Offering[19](index=19&type=chunk) [Condensed Interim Statements of Cash Flows](index=9&type=section&id=Condensed%20Interim%20Statements%20of%20Cash%20Flows) | Metric (Unaudited) | Nine Months Ended Sep 30, 2021 | Nine Months Ended Sep 30, 2020 | | :---------------------------------- | :----------------------------- | :----------------------------- | | Net Cash Used in Operating Activities | $(3,513,497) | $(2,391,804) | | Net Cash Provided by Financing Activities | $14,797,132 | $3,315,110 | | Net Increase in Cash | $11,283,635 | $923,306 | | Cash at Beginning of Period | $3,175,411 | $2,483,322 | | Cash at End of Period | $14,459,046 | $3,406,628 | [Notes to the Condensed Interim Financial Statements (unaudited)](index=10&type=section&id=Notes%20to%20the%20Condensed%20Interim%20Financial%20Statements%20(unaudited)) This section provides detailed explanations and disclosures for the condensed interim financial statements, covering the company's nature of operations, significant accounting policies, specific account breakdowns, and events such as the PPP loan, executive compensation, equity issuances, and share-based payments [NOTE 1 – NATURE OF OPERATIONS](index=10&type=section&id=NOTE%201%20%E2%80%93%20NATURE%20OF%20OPERATIONS) - Acurx Pharmaceuticals, Inc. is a clinical-stage biopharmaceutical company, formed in July 2017, focused on developing novel antibiotics targeting difficult-to-treat bacterial infections by blocking the DNA polymerase IIIC (Pol IIIC) enzyme[24](index=24&type=chunk) - The company's lead antibiotic candidate, ibezapolstat (formerly ACX-362E), targets Clostridium difficile Infections (CDI), acquired in February 2018[26](index=26&type=chunk) - The company has not generated any revenues since inception, has experienced net losses and negative cash flows, and completed an IPO in June 2021, raising approximately **$17.3 million** gross proceeds[27](index=27&type=chunk)[28](index=28&type=chunk) [NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES](index=11&type=section&id=NOTE%202%20%E2%80%93%20SUMMARY%20OF%20SIGNIFICANT%20ACCOUNTING%20POLICIES) - The financial statements are prepared in accordance with GAAP for interim reporting, with management's estimates affecting reported amounts[30](index=30&type=chunk)[31](index=31&type=chunk) - The company estimates a **0%** annual effective tax rate due to incurred and forecasted losses, and a full valuation allowance has been recorded against deferred tax assets[32](index=32&type=chunk) - Research and development costs are expensed when incurred, and share-based compensation for officers, directors, and vendors is recognized based on grant-date fair value over the vesting period[37](index=37&type=chunk)[38](index=38&type=chunk)[39](index=39&type=chunk) [NOTE 3 - ACCOUNTS PAYABLE AND ACCRUED EXPENSES](index=12&type=section&id=NOTE%203%20-%20ACCOUNTS%20PAYABLE%20AND%20ACCRUED%20EXPENSES) | Category | Sep 30, 2021 | Dec 31, 2020 | | :-------------------------------- | :----------- | :----------- | | Accrued compensation expenses | $252,117 | $317,068 | | Accrued research and development | $314,984 | $89,156 | | Accrued professional fees | $133,194 | $49,707 | | Other accounts payable and accrued expenses | $12,142 | — | | Total | $712,437 | $455,931 | [NOTE 4 – PAYCHECK PROTECTION PROGRAM LOAN](index=13&type=section&id=NOTE%204%20%E2%80%93%20PAYCHECK%20PROTECTION%20PROGRAM%20LOAN) - The company received a **$66,503** PPP loan in May 2020 under the CARES Act, which was fully forgiven in May 2021, resulting in a gain on forgiveness of debt[45](index=45&type=chunk) [NOTE 5 – EXECUTIVE COMPENSATION](index=13&type=section&id=NOTE%205%20%E2%80%93%20EXECUTIVE%20COMPENSATION) - Executive compensation, including base salary and year-end bonuses, was historically settled with Class A Membership Interests, with some compensation deferred[46](index=46&type=chunk)[47](index=47&type=chunk)[48](index=48&type=chunk) - In March 2021, previously granted Class B Membership Interests to executives and non-employee management were cancelled and replaced with options to purchase **770,000** shares of common stock in June 2021[49](index=49&type=chunk)[63](index=63&type=chunk) - New employment agreements for the three executives became effective June 29, 2021, and additional stock options were granted in July 2021[50](index=50&type=chunk)[64](index=64&type=chunk) [NOTE 6 – ISSUANCE OF EQUITY INTERESTS](index=14&type=section&id=NOTE%206%20%E2%80%93%20ISSUANCE%20OF%20EQUITY%20INTERESTS) - The company conducted several private placement equity offerings between 2018 and 2020, issuing Class A Membership Interests, often with warrant coverage, at prices ranging from **$1.00** to **$3.25** per unit[52](index=52&type=chunk)[53](index=53&type=chunk)[54](index=54&type=chunk)[55](index=55&type=chunk)[56](index=56&type=chunk) - On June 23, 2021, Acurx Pharmaceuticals, LLC converted to Acurx Pharmaceuticals, Inc., and on June 29, 2021, completed an IPO, issuing **2,875,000** common shares at **$6.00** per share, generating approximately **$14.8 million** net proceeds[56](index=56&type=chunk)[57](index=57&type=chunk) - All outstanding Class A and Class B Membership Interests were converted into **7,041,208** shares of common stock at a one-for-two ratio during the corporate conversion[57](index=57&type=chunk) [NOTE 7 – SHARE-BASED COMPENSATION](index=16&type=section&id=NOTE%207%20%E2%80%93%20SHARE-BASED%20COMPENSATION) - Share-based compensation expense for board members and corporate advisory council members, previously granted as restricted Class A Membership Interests, became fully vested upon corporate conversion[60](index=60&type=chunk) | Period | Share-Based Compensation Expense | | :----------------------------------- | :------------------------------- | | Three Months Ended Sep 30, 2021 | $0 | | Three Months Ended Sep 30, 2020 | $175,000 | | Nine Months Ended Sep 30, 2021 | $755,556 | | Nine Months Ended Sep 30, 2020 | $508,333 | - The 2021 Equity Incentive Plan was approved, reserving **2,000,000** common shares, with **239,305** shares still available for issuance as of September 30, 2021[62](index=62&type=chunk) - Stock options to purchase **2,357,500** shares were granted during the nine months ended September 30, 2021, with a weighted average exercise price of **$6.21** and a weighted average grant date fair value of **$4.72**[68](index=68&type=chunk) [NOTE 8 – SHARE-BASED PAYMENTS TO VENDORS](index=17&type=section&id=NOTE%208%20%E2%80%93%20SHARE-BASED%20PAYMENTS%20TO%20VENDORS) - The company granted Class A Membership Interests to vendors for consulting services, expensing these costs in the same period as if cash had been paid[69](index=69&type=chunk) | Period | G&A Expense | R&D Expense | | :----------------------------------- | :---------- | :---------- | | Three Months Ended Sep 30, 2021 | $37,500 | $0 | | Three Months Ended Sep 30, 2020 | $78,125 | $53,520 | | Nine Months Ended Sep 30, 2021 | $188,875 | $21,596 | | Nine Months Ended Sep 30, 2020 | $278,000 | $195,716 | - In the third quarter of 2021, the company granted vendors **35,695** shares of common stock, resulting in **$208,270** in selling, general, and administrative expense for the nine months ended September 30, 2021[72](index=72&type=chunk) [NOTE 9 – NET LOSS PER SHARE](index=19&type=section&id=NOTE%209%20%E2%80%93%20NET%20LOSS%20PER%20SHARE) - Basic and diluted net loss per common share for the three and nine months ended September 30, 2021, was **$(0.46)** and **$(1.27)** respectively[15](index=15&type=chunk)[73](index=73&type=chunk) - Potentially dilutive shares (unvested common stock, warrants, stock options) were excluded from diluted EPS calculation as their inclusion would be antidilutive[73](index=73&type=chunk) [NOTE 10 – RELATED PARTY TRANSACTIONS](index=19&type=section&id=NOTE%2010%20%E2%80%93%20RELATED%20PARTY%20TRANSACTIONS) - The company paid and expensed **$7,500** during Q3 2021 for administrative services provided by a former board member, completing a **$15,000** agreement initiated in 2020[74](index=74&type=chunk) [NOTE 11 – RECENT ACCOUNTING PRONOUNCEMENTS](index=19&type=section&id=NOTE%2011%20%E2%80%93%20RECENT%20ACCOUNTING%20PRONOUNCEMENTS) - The company evaluated ASU No. 2016-02, Leases (Topic 842), effective for fiscal years after December 15, 2021, and determined it will not impact financial statements as the company has no lease obligations[75](index=75&type=chunk)[76](index=76&type=chunk) [NOTE 12 – COMMITMENTS AND CONTINGENCIES](index=19&type=section&id=NOTE%2012%20%E2%80%93%20COMMITMENTS%20AND%20CONTINGENCIES) - The company has milestone payment commitments totaling **$700,000** (with **$50,000** already paid) related to the development of ACX-362E (ibezapolstat) and royalty payments of **4%** of net sales[77](index=77&type=chunk) [NOTE 13 – SUBSEQUENT EVENTS](index=19&type=section&id=NOTE%2013%20%E2%80%93%20SUBSEQUENT%20EVENTS) - No subsequent events were reported[78](index=78&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=21&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's perspective on the company's financial condition, results of operations, and liquidity, highlighting key developments, the impact of COVID-19, and a comparison of financial performance for the three and nine months ended September 30, 2021, versus 2020 [Overview](index=21&type=section&id=Overview) - Acurx Pharmaceuticals, Inc. is a clinical-stage biopharmaceutical company focused on developing a new class of antibiotics to address antimicrobial resistance (AMR) by blocking the DNA polymerase IIIC (Pol IIIC) enzyme[80](index=80&type=chunk)[81](index=81&type=chunk) - The company's pipeline includes clinical and early-stage antibiotic candidates targeting Gram-positive bacteria for infections like Clostridium difficile (C. difficile), Enterococcus (VRE), Staphylococcus (MRSA), and Streptococcus[81](index=81&type=chunk) [Recent Developments](index=22&type=section&id=Recent%20Developments) - The company completed its IPO on June 29, 2021, issuing **2,875,000** common shares at **$6.00** per share, generating **$14.8 million** net proceeds[84](index=84&type=chunk) - IPO proceeds are allocated to complete the Phase 2b clinical trial of ibezapolstat for CDI, complete pre-clinical development of ACX-375C, and for general corporate purposes[84](index=84&type=chunk) - Health Holland awarded a **$500,000** research grant to Leiden University Medical Center in July 2021, with the company participating as a scientific collaborator to study DNA Pol IIIC inhibitors[89](index=89&type=chunk) [Effects of Coronavirus (COVID-19) on Our Business](index=22&type=section&id=Effects%20of%20Coronavirus%20(COVID-19)%20on%20Our%20Business) - The COVID-19 pandemic caused significant disruptions, including decreased enrollment rates in the Phase 2a clinical trial for ibezapolstat, though manufacturing and R&D activities with key vendors remained unchanged[86](index=86&type=chunk) - The company received a **$66,503** Paycheck Protection Program (PPP) loan in May 2020, which was fully forgiven on April 13, 2021, resulting in a gain on extinguishment of debt[88](index=88&type=chunk) - The full impact of COVID-19 remains uncertain, but the company is monitoring developments and believes it is well-positioned, despite potential adverse effects on business, financial condition, and cash flows[87](index=87&type=chunk) [Results of Operations](index=23&type=section&id=Results%20of%20Operations) [Three Months Ended September 30, 2021 Compared to the Three Months Ended September 30, 2020](index=23&type=section&id=Three%20Months%20Ended%20September%2030,%202021%20Compared%20to%20the%20Three%20Months%20Ended%20September%2030,%202020) | Expense Category | Sep 30, 2021 (in thousands) | Sep 30, 2020 (in thousands) | Percentage Change | | :----------------------------------- | :-------------------------- | :-------------------------- | :---------------- | | Research and Development Expenses | $1,127 | $660 | **71% Increase** | | Selling, General and Administrative Expenses | $3,515 | $655 | **437% Increase** | | Total Operating Expenses | $4,642 | $1,315 | **253% Increase** | | Net Loss | $4,642 | $1,315 | **253% Increase** | - The significant increase in Selling, General and Administrative Expenses was primarily driven by a **$2.0 million** increase in stock-based compensation, a **$0.2 million** increase in professional fees, **$0.3 million** related to other employee related expenses, and a **$0.3 million** increase in legal and insurance costs[93](index=93&type=chunk) [Nine Months Ended September 30, 2021 Compared to the Nine Months Ended September 30, 2020](index=23&type=section&id=Nine%20Months%20Ended%20September%2030,%202021%20Compared%20to%20the%20Nine%20Months%20Ended%20September%2030,%202020) | Expense Category | Sep 30, 2021 (in thousands) | Sep 30, 2020 (in thousands) | Percentage Change | | :----------------------------------- | :-------------------------- | :-------------------------- | :---------------- | | Research and Development Expenses | $1,314 | $1,745 | **(25)% Decrease** | | Selling, General and Administrative Expenses | $8,873 | $1,762 | **403% Increase** | | Total Operating Expenses | $10,187 | $3,507 | **190% Increase** | | Gain on PPP Loan Forgiveness | $67 | — | **100% Increase** | | Net Loss | $10,120 | $3,507 | **189% Increase** | - The decrease in Research and Development expenses was primarily due to a reduction in Phase 2a clinical trial related costs, which were completed in 2020[97](index=97&type=chunk) - The substantial increase in Selling, General and Administrative expenses was mainly due to a **$4.5 million** increase in stock-based compensation, **$1.5 million** in professional fees, **$0.5 million** of employee related expenses, a **$0.3 million** increase in stock-based director fees due to accelerated vesting, and **$0.3 million** increase in legal and insurance costs[98](index=98&type=chunk) [Liquidity and Capital Resources](index=24&type=section&id=Liquidity%20and%20Capital%20Resources) - The company has incurred cumulative losses of approximately **$23.9 million** since inception as of September 30, 2021, with no revenue generated from operations[100](index=100&type=chunk) - Operations are funded primarily by equity issuances, including **$12.9 million** from equity financings between March 2018 and October 2020, and **$14.8 million** net proceeds from the June 2021 IPO[100](index=100&type=chunk) - As of September 30, 2021, the company had working capital of **$14.3 million**, primarily consisting of **$14.5 million** in cash, offset by **$0.7 million** in accounts payable and accrued expenses[103](index=103&type=chunk) - Management believes substantial doubt exists about the company's ability to continue as a going concern within one year due to expected future losses and the need for additional financing[102](index=102&type=chunk) [Critical Accounting Policies and Estimates](index=25&type=section&id=Critical%20Accounting%20Policies%20and%20Estimates) - Key accounting policies and estimates include federal income taxes (**0%** effective rate due to losses, full valuation allowance on deferred tax assets), concentration of credit risk (cash held in one FDIC-insured institution, exceeding limits at times), and expensing research and development costs when incurred[111](index=111&type=chunk)[114](index=114&type=chunk)[116](index=116&type=chunk) - Share-based compensation for officers, directors, and vendors is recognized based on grant-date fair value over the vesting period[117](index=117&type=chunk)[118](index=118&type=chunk) - The company relies on a major vendor (CRO) for a significant portion of R&D expenditures (**40%** in 2020) and anticipates continued significant expenses with this vendor for clinical trials[120](index=120&type=chunk) [Other Company Information](index=28&type=section&id=Other%20Company%20Information) - The company is an "emerging growth company" and "smaller reporting company" under the JOBS Act, allowing for reduced reporting requirements and an extended transition period for new accounting standards[121](index=121&type=chunk)[122](index=122&type=chunk)[235](index=235&type=chunk)[236](index=236&type=chunk) - The company intends to rely on exemptions such as providing only two years of audited financial statements, not complying with auditor attestation for Section 404, and reduced executive compensation disclosures[233](index=233&type=chunk) [Recent Accounting Pronouncements](index=28&type=section&id=Recent%20Accounting%20Pronouncements) - The company does not believe any recently issued accounting pronouncements will significantly affect its financial accounting measurements or disclosures[123](index=123&type=chunk) [Item 3. Quantitative and Qualitative Disclosures about Market Risk](index=29&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) As a smaller reporting company, Acurx Pharmaceuticals, Inc. is not required to provide quantitative and qualitative disclosures about market risk - The company is exempt from providing market risk disclosures due to its status as a smaller reporting company[125](index=125&type=chunk) [Item 4. Controls and Procedures](index=29&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that the company's disclosure controls and procedures were not effective as of September 30, 2021, primarily due to inadequate segregation of duties given the small management team - Management concluded that disclosure controls and procedures were not effective at the reasonable assurance level as of September 30, 2021[126](index=126&type=chunk) - The ineffectiveness is attributed to inadequate segregation of duties due to the small management team of three persons[127](index=127&type=chunk) - No changes in internal control over financial reporting materially affected, or are reasonably likely to materially affect, internal control during the quarter[129](index=129&type=chunk) PART II - OTHER INFORMATION [Item 1. Legal Proceedings](index=30&type=section&id=Item%201.%20Legal%20Proceedings) The company is not currently a party to any litigation or legal proceedings that management believes would have a material adverse effect on its business - The company is not currently involved in any material litigation or legal proceedings[131](index=131&type=chunk) [Item 1A. Risk Factors](index=30&type=section&id=Item%201A.%20Risk%20Factors) This section outlines various risks that could materially and adversely affect the company's business, financial condition, results of operations, and future growth prospects, categorized into risks related to business, regulatory approval, dependence on third parties, intellectual property, common stock ownership, and general factors [Risks Related to Our Business](index=30&type=section&id=Risks%20Related%20to%20Our%20Business) - The company has a limited operating history since its organization in July 2017 and acquisition of its lead product candidate in February 2018, and expects to incur significant operating losses for several years[133](index=133&type=chunk)[134](index=134&type=chunk) - The independent registered public accounting firm has expressed substantial doubt about the company's ability to continue as a going concern due to significant accumulated deficit and negative operating cash flows[135](index=135&type=chunk)[136](index=136&type=chunk) - The company's success heavily relies on the successful development and commercialization of its lead product candidate, ibezapolstat, for CDI, which faces risks including clinical trial completion, regulatory approvals, manufacturing, market acceptance, and competition[137](index=137&type=chunk)[138](index=138&type=chunk) - The COVID-19 pandemic could adversely impact business operations, including preclinical studies and clinical trials, through delays in enrollment, site initiation, supply chain disruptions, and regulatory review[155](index=155&type=chunk)[156](index=156&type=chunk) [Risks Related to Regulatory Approval](index=43&type=section&id=Risks%20Related%20to%20Regulatory%20Approval) - Failure of clinical trials to demonstrate safety and efficacy to regulatory authorities (FDA, EMA) could lead to additional costs, delays, or inability to complete development and commercialization of product candidates[173](index=173&type=chunk) - The company may experience unforeseen events during clinical trials, such as negative results, slow patient enrollment, or non-compliance by third-party contractors, which could delay or prevent marketing approval[175](index=175&type=chunk)[176](index=176&type=chunk) - The company's research, development, manufacture, and marketing activities are subject to extensive government regulation, and failure to obtain or comply with approvals could delay product introduction and impact business[180](index=180&type=chunk)[181](index=181&type=chunk) - Current and future healthcare legislative and regulatory actions, including efforts to control prescription drug prices and changes to programs like Medicare and Medicaid, could adversely affect the company's results of operations[182](index=182&type=chunk)[183](index=183&type=chunk)[184](index=184&type=chunk)[185](index=185&type=chunk)[186](index=186&type=chunk)[188](index=188&type=chunk)[189](index=189&type=chunk) [Risks Related to Our Dependence on Third Parties](index=47&type=section&id=Risks%20Related%20to%20Our%20Dependence%20on%20Third%20Parties) - The company lacks internal sales and marketing infrastructure and experience, requiring it to either build its own sales force or outsource these functions, which carries risks of high costs, delays, and lower profitability[190](index=190&type=chunk)[191](index=191&type=chunk)[192](index=192&type=chunk)[193](index=193&type=chunk) - The company relies on third-party manufacturers for product candidates, increasing risks of insufficient quantities, unacceptable costs, and delays, especially given single-source suppliers for some raw materials[194](index=194&type=chunk)[195](index=195&type=chunk) - Reliance on third-party clinical investigators, CROs, and consultants for preclinical studies and clinical trials means less control over timing and quality, and potential delays or failures if these parties do not perform adequately[200](index=200&type=chunk)[201](index=201&type=chunk) - The ability to commercialize product candidates depends on adequate reimbursement from third-party payers, and efforts to contain healthcare costs could limit market acceptance and revenues[202](index=202&type=chunk)[203](index=203&type=chunk)[204](index=204&type=chunk) [Risks Related to Intellectual Property](index=54&type=section&id=Risks%20Related%20to%20Intellectual%20Property) - The company may be involved in expensive and time-consuming lawsuits to protect or enforce its patents, with risks that patents could be invalidated, unenforceable, or circumvented by competitors[209](index=209&type=chunk)[210](index=210&type=chunk) - Intellectual property litigation could divert substantial resources and management attention, potentially leading to significant expenses, damages, or injunctions preventing product commercialization[211](index=211&type=chunk)[212](index=212&type=chunk) - The company may need to license third-party intellectual property, which may not be available on commercially reasonable terms or at all, potentially harming development and commercialization efforts[213](index=213&type=chunk)[214](index=214&type=chunk) - Failure to adequately protect trade secrets, including unpatented know-how, could harm the company's business and competitive position if such information is disclosed or independently developed by competitors[218](index=218&type=chunk)[219](index=219&type=chunk) [Risks Related to Ownership of Our Common Stock](index=58&type=section&id=Risks%20Related%20to%20Ownership%20of%20Our%20Common%20Stock) - The company expects increased expenses and will need substantial additional funding, and inability to raise capital when needed could force delays, reductions, or elimination of product development or commercialization efforts[220](index=220&type=chunk)[221](index=221&type=chunk)[222](index=222&type=chunk)[223](index=223&type=chunk)[224](index=224&type=chunk)[225](index=225&type=chunk) - Raising additional capital through equity or convertible debt could cause significant dilution to stockholders, while debt financing may impose restrictive covenants[226](index=226&type=chunk)[227](index=227&type=chunk)[228](index=228&type=chunk) - Future sales of a substantial number of common shares by existing stockholders or in connection with future acquisitions/financings could depress the stock price[229](index=229&type=chunk) - Provisions in corporate charter documents and Delaware law, such as classified board, restrictions on stockholder action, and preferred stock issuance authority, could make an acquisition more difficult[230](index=230&type=chunk)[231](index=231&type=chunk)[232](index=232&type=chunk) - The company's status as an "emerging growth company" and "smaller reporting company" allows for reduced reporting requirements, which may make its common stock less attractive to some investors and increase price volatility[233](index=233&type=chunk)[234](index=234&type=chunk)[236](index=236&type=chunk)[237](index=237&type=chunk) [General Risk Factors](index=65&type=section&id=General%20Risk%20Factors) - Cyber incidents or attacks could lead to information theft, data corruption, operational disruption, and financial loss, and the company may lack sufficient protection as an early-stage entity[245](index=245&type=chunk)[246](index=246&type=chunk) - The company is exposed to risks of misconduct by employees, investigators, consultants, and partners, including non-compliance with regulations and fraud, which could result in sanctions or reputational harm[247](index=247&type=chunk)[248](index=248&type=chunk) - Limitations on the effectiveness of internal controls could lead to errors or fraud, materially harming the company, as control systems provide only reasonable, not absolute, assurance[249](index=249&type=chunk)[250](index=250&type=chunk) - Litigation, including product liability, intellectual property, or other legal proceedings, could result in substantial costs, diversion of management resources, and negative impact on business and financial condition[144](index=144&type=chunk)[145](index=145&type=chunk)[254](index=254&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=68&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) This section details the net proceeds from the company's IPO completed on June 29, 2021, and confirms the planned use of these proceeds for clinical trials, preclinical development, and general corporate purposes, with no material change from the original prospectus - The company completed its IPO on June 29, 2021, issuing **2,875,000** common shares at **$6.00** per share, resulting in net proceeds of **$14.8 million** after deducting underwriting discounts and offering expenses[261](index=261&type=chunk) - IPO proceeds are designated for completing the Phase 2b clinical trial of ibezapolstat for CDI, completing pre-clinical development of ACX-375C, and for general corporate purposes[261](index=261&type=chunk) - There has been no material change in the planned use of proceeds from the IPO as described in the prospectus[263](index=263&type=chunk) [Item 3. Defaults Upon Senior Securities](index=70&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) No defaults upon senior securities were reported - No defaults upon senior securities were reported[263](index=263&type=chunk) [Item 4. Mine Safety Disclosure](index=70&type=section&id=Item%204.%20Mine%20Safety%20Disclosure) This item is not applicable to the company - This item is not applicable to the company[263](index=263&type=chunk) [Item 5. Other Information](index=70&type=section&id=Item%205.%20Other%20Information) No other information was reported under this item - No other information was reported[263](index=263&type=chunk) [Item 6. Exhibits](index=71&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed or incorporated by reference as part of the Quarterly Report, including certifications, XBRL documents, and the cover page interactive data file - The report includes certifications from the Principal Executive Officer and Principal Financial and Accounting Officer pursuant to Sections 302 and 906 of the Sarbanes-Oxley Act of 2002[265](index=265&type=chunk)[267](index=267&type=chunk) - Various Inline XBRL documents (Instance, Schema, Calculation, Definition, Labels, Presentation Linkbase Documents) and the Cover Page Interactive Data File are filed as exhibits[267](index=267&type=chunk) [Signatures](index=72&type=section&id=Signatures) The report is duly signed on behalf of Acurx Pharmaceuticals, Inc. by its President and Chief Executive Officer (Principal Executive Officer) and Chief Financial Officer (Principal Financial and Accounting Officer) on November 12, 2021 - The report was signed by David P. Luci, President and Chief Executive Officer, and Robert G. Shawah, Chief Financial Officer, on November 12, 2021[270](index=270&type=chunk)

[FORM 10-Q / Company Information](index=1&type=section&id=FORM%2010-Q) This section provides essential registration details for Acurx Pharmaceuticals, Inc., including its filing status and common stock outstanding [Registrant Information](index=1&type=section&id=Registrant%20Information) Acurx Pharmaceuticals, Inc., a Delaware corporation, filed its 10-Q quarterly report for the period ended June 30, 2021, identifying as a non-accelerated filer, smaller reporting company, and emerging growth company, with 10,119,208 shares of common stock outstanding as of August 13, 2021 - The company filed its Form 10-Q quarterly report for the period ended June 30, 2021[2](index=2&type=chunk) - The company is identified as a non-accelerated filer, a smaller reporting company, and an emerging growth company[3](index=3&type=chunk) Common Stock Issuance | Indicator | Quantity | | :--- | :--- | | Common stock issued and outstanding as of August 13, 2021 | 10,119,208 shares | [Table of Contents](index=2&type=section&id=Table%20of%20Contents) This section lists all chapters and sub-sections of the quarterly report, facilitating efficient navigation [SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS](index=3&type=section&id=SPECIAL%20NOTE%20REGARDING%20FORWARD-LOOKING%20STATEMENTS) This section disclaims forward-looking statements, noting inherent risks and uncertainties that may cause actual results to differ [Forward-Looking Statements Disclaimer](index=3&type=section&id=Forward-Looking%20Statements%20Disclaimer) This quarterly report contains forward-looking statements based on current expectations and projections, subject to risks and uncertainties that may cause actual results to differ materially, with no obligation for the company to update them - This quarterly report contains forward-looking statements based on current expectations and projections, which are subject to risks, uncertainties, and assumptions that could cause actual results to differ materially from expectations[6](index=6&type=chunk)[7](index=7&type=chunk) - The company cautions investors not to place undue reliance on these forward-looking statements and disclaims any obligation to update them after the report date[8](index=8&type=chunk) - Risk factors for forward-looking statements include macroeconomic and financial conditions, adverse effects of the COVID-19 pandemic, costs of being a public company, technological advancements, marketing activities, IT system disruptions or breaches, reliance on third parties, compliance with health and safety laws, intellectual property protection, litigation risks, product shortages, ability to attract key employees, and common stock price volatility[7](index=7&type=chunk) [PART I - FINANCIAL INFORMATION](index=5&type=section&id=PART%20I%20-%20FINANCIAL%20INFORMATION) This part presents the company's unaudited condensed interim financial statements and notes, detailing financial position, operations, equity, and cash flows [ITEM 1. FINANCIAL STATEMENTS](index=5&type=section&id=ITEM%201.%20FINANCIAL%20STATEMENTS) This section presents the company's unaudited condensed interim financial statements and explanatory notes, covering balance sheets, operations, equity, and cash flows [Condensed Interim Balance Sheets](index=5&type=section&id=Condensed%20Interim%20Balance%20Sheets) As of June 30, 2021, the company's cash and total assets significantly increased from December 31, 2020, primarily due to its initial public offering, leading to a substantial rise in total shareholders' equity Key Data from Condensed Interim Balance Sheets | Indicator | June 30, 2021 (Unaudited) | December 31, 2020 | | :--- | :----------------------- | :--------------- | | Cash | $17,095,596 | $3,175,411 | | Prepaid expenses | $344,549 | $48,609 | | Total assets | $17,440,145 | $3,224,020 | | Accounts payable and accrued expenses | $1,918,639 | $455,931 | | Paycheck Protection Program loan | $0 | $66,503 | | Total liabilities | $1,918,639 | $522,434 | | Total shareholders' equity | $15,521,506 | $2,701,586 | [Condensed Interim Statements of Operations](index=6&type=section&id=Condensed%20Interim%20Statements%20of%20Operations) For the three and six months ended June 30, 2021, the company's net loss significantly increased year-over-year, primarily driven by a substantial rise in selling, general, and administrative expenses, partially offset by reduced R&D expenses and PPP loan forgiveness income Condensed Interim Statements of Operations (Three Months) | Indicator | Three Months Ended June 30, 2021 | Three Months Ended June 30, 2020 | Change (%) | | :--- | :--------------------- | :--------------------- | :----- | | Research and development expenses | $95,074 | $400,738 | -76% | | Selling, general and administrative expenses | $3,975,488 | $512,622 | 677% | | Total operating expenses | $4,070,562 | $913,360 | 346% | | Paycheck Protection Program loan forgiveness income | $66,503 | $0 | 100% | | Net loss | $(4,004,059) | $(913,360) | 339% | | Basic and diluted net loss per share | $(0.57) | $(0.15) | 280% | Condensed Interim Statements of Operations (Six Months) | Indicator | Six Months Ended June 30, 2021 | Six Months Ended June 30, 2020 | Change (%) | | :--- | :--------------------- | :--------------------- | :----- | | Research and development expenses | $186,981 | $1,085,469 | -83% | | Selling, general and administrative expenses | $5,357,911 | $1,106,992 | 384% | | Total operating expenses | $5,544,892 | $2,192,461 | 153% | | Paycheck Protection Program loan forgiveness income | $66,503 | $0 | 100% | | Net loss | $(5,478,389) | $(2,192,461) | 150% | | Basic and diluted net loss per share | $(0.79) | $(0.37) | 114% | [Condensed Interim Statements of Changes in Members' and Shareholders' Equity](index=7&type=section&id=Condensed%20Interim%20Statements%20of%20Changes%20in%20Members'%20and%20Shareholders'%20Equity) This statement details equity changes, particularly the company's conversion from an LLC to a corporation in June 2021, involving the conversion of Class A and B member interests into common stock and the impact of the initial public offering - The company completed its corporate conversion on June 23, 2021, transitioning from a Delaware limited liability company to a Delaware corporation[60](index=60&type=chunk) - 14,082,318 Class A and Class B member interests were converted into 7,041,208 shares of common stock at a 1:2 ratio[61](index=61&type=chunk) - The initial public offering was completed on June 29, 2021, issuing 2,875,000 shares of common stock at $6.00 per share, generating net proceeds of approximately **$14.8 million**[61](index=61&type=chunk) [Condensed Interim Statements of Cash Flows](index=8&type=section&id=Condensed%20Interim%20Statements%20of%20Cash%20Flows) For the six months ended June 30, 2021, cash outflow from operating activities decreased, while cash inflow from financing activities significantly increased due to the initial public offering, leading to a substantial rise in the period-end cash balance Key Data from Condensed Interim Statements of Cash Flows | Indicator | Six Months Ended June 30, 2021 | Six Months Ended June 30, 2020 | | :--- | :--------------------- | :--------------------- | | Net cash used in operating activities | $(876,947) | $(1,633,046) | | Net cash provided by financing activities | $14,797,132 | $1,124,163 | | Net increase (decrease) in cash | $13,920,185 | $(508,883) | | Cash at end of period | $17,095,596 | $1,974,439 | - Net cash provided by financing activities significantly increased in the first half of 2021, primarily attributable to the net proceeds from the company's initial public offering[113](index=113&type=chunk) [Notes to the Condensed Interim Financial Statements](index=9&type=section&id=Notes%20to%20the%20Condensed%20Interim%20Financial%20Statements) This section provides detailed explanations of the company's financial statements, covering business nature, accounting policies, key accounts, equity, compensation, and other disclosures [NOTE 1 – NATURE OF OPERATIONS](index=9&type=section&id=NOTE%201%20%E2%80%93%20NATURE%20OF%20OPERATIONS) Acurx Pharmaceuticals, Inc. is a clinical-stage biopharmaceutical company focused on developing novel antibiotics for Gram-positive bacterial infections by blocking the DNA polymerase IIIC (Pol IIIC) enzyme, has incurred losses since inception, and requires additional funding despite a recent IPO - Acurx Pharmaceuticals is a clinical-stage biopharmaceutical company focused on developing novel antibiotics for difficult-to-treat bacterial infections by developing antibiotic candidates that may block the DNA polymerase IIIC (Pol IIIC) enzyme[24](index=24&type=chunk)[87](index=87&type=chunk) - The company's lead antibiotic candidate, ibezapolstat (formerly ACX-362E), is designed to treat Clostridioides difficile infection (CDI)[26](index=26&type=chunk) - The company has not generated any revenue since inception and has incurred recurring net losses and negative cash flows from operations, which are expected to continue for the foreseeable future[27](index=27&type=chunk)[28](index=28&type=chunk) - The company completed its initial public offering on June 29, 2021, issuing 2,875,000 shares of common stock at $6.00 per share for gross proceeds of approximately **$17.3 million**, with a cash balance of approximately **$17.1 million** as of June 30, 2021[28](index=28&type=chunk) [NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES](index=10&type=section&id=NOTE%202%20%E2%80%93%20SUMMARY%20OF%20SIGNIFICANT%20ACCOUNTING%20POLICIES) This note outlines the company's significant accounting policies, including financial statement preparation under U.S. GAAP and SEC rules, use of accounting estimates, 0% effective federal income tax rate due to losses, concentration of credit risk, expensing of R&D costs, and share-based compensation recognition - Financial statements are prepared in accordance with U.S. Generally Accepted Accounting Principles (U.S. GAAP) and the rules and regulations of the U.S. Securities and Exchange Commission (SEC) for interim reporting[31](index=31&type=chunk) - The company estimates an annual effective tax rate of 0% due to incurring losses for the six months ended June 30, 2021, and expecting to continue to incur losses for the full year, resulting in an estimated net loss for both financial statement and tax purposes, thus no current federal or state income tax expense is recorded[33](index=33&type=chunk) - Research and development expenses are expensed as incurred[39](index=39&type=chunk) - The company accounts for the cost of services received from executives and directors in exchange for grants of company member interests, common stock, or stock options based on the fair value of the award at the grant date, recognizing compensation expense over the vesting period[40](index=40&type=chunk) - The company maintains its cash balances at one financial institution, holding **$17.1 million** in a U.S. bank account as of June 30, 2021, which is not fully insured by the FDIC[35](index=35&type=chunk) [NOTE 3 - ACCOUNTS PAYABLE AND ACCRUED EXPENSES](index=11&type=section&id=NOTE%203%20-%20ACCOUNTS%20PAYABLE%20AND%20ACCRUED%20EXPENSES) Accrued professional fees significantly increased as of June 30, 2021, compared to December 31, 2020, primarily driving the overall growth in accounts payable and accrued expenses Accounts Payable and Accrued Expenses Details | Category | June 30, 2021 | December 31, 2020 | | :--- | :------------ | :--------------- | | Accrued compensation expense | $20,242 | $317,068 | | Accrued research and development expenses | $51,246 | $89,156 | | Accrued professional fees | $1,750,146 | $49,707 | | Other accounts payable and accrued expenses | $97,005 | $0 | | **Total** | **$1,918,639** | **$455,931** | [NOTE 4 – PAYCHECK PROTECTION PROGRAM LOAN](index=12&type=section&id=NOTE%204%20%E2%80%93%20PAYCHECK%20PROTECTION%20PROGRAM%20LOAN) The company received a **$66,503** Paycheck Protection Program (PPP) loan in May 2020, which was fully forgiven in May 2021, resulting in the recognition of debt forgiveness income in the statements of operations - The company received a **$66,503** Paycheck Protection Program (PPP) loan in May 2020[48](index=48&type=chunk) - The PPP loan was fully forgiven in May 2021, leading the company to reduce the liability and record debt forgiveness income in the statements of operations[48](index=48&type=chunk) [NOTE 5 – EXECUTIVE COMPENSATION](index=12&type=section&id=NOTE%205%20%E2%80%93%20EXECUTIVE%20COMPENSATION) Executive compensation involved Class A member interests and later stock options, with 770,000 common stock options granted to management in June 2021 replacing previously canceled Class B interests, and new executive employment agreements effective June 29, 2021 - In January 2021, the company issued 57,430 Class A member interests to two executives to settle unpaid year-end bonuses and deferred compensation[51](index=51&type=chunk) - In March 2021, the company and three executives and non-employee management team members voluntarily agreed to cancel previously approved Class B member interest grants[52](index=52&type=chunk) - In June 2021, the company granted 770,000 options to purchase common stock to three management team members in lieu of the previously canceled year-end grants[52](index=52&type=chunk) - The company is currently managed by three executives, with new employment agreements effective June 29, 2021[53](index=53&type=chunk) [NOTE 6 – ISSUANCE OF EQUITY INTERESTS](index=12&type=section&id=NOTE%206%20%E2%80%93%20ISSUANCE%20OF%20EQUITY%20INTERESTS) This note details multiple private equity issuances of Class A member interests and warrants from 2018 to 2020, the June 2021 corporate conversion of LLC interests into common stock, and the subsequent initial public offering - The company conducted multiple private equity issuances of Class A member interests and warrants between 2018 and 2020[54](index=54&type=chunk)[56](index=56&type=chunk)[57](index=57&type=chunk)[58](index=58&type=chunk)[59](index=59&type=chunk)[60](index=60&type=chunk) - On June 23, 2021, Acurx Pharmaceuticals, LLC converted to Acurx Pharmaceuticals, Inc., authorizing 200 million shares of common stock, with 9,916,208 shares issued as of June 30, 2021[60](index=60&type=chunk) - On June 29, 2021, the company completed its initial public offering, issuing 2,875,000 shares of common stock at **$6.00** per share, generating net proceeds of approximately **$14.8 million**[61](index=61&type=chunk) - Issued Class A and Class B member interests (totaling 14,082,318 units) were converted into 7,041,208 shares of common stock at a 1:2 ratio[61](index=61&type=chunk) [NOTE 7 – SHARE-BASED COMPENSATION](index=14&type=section&id=NOTE%207%20%E2%80%93%20SHARE-BASED%20COMPENSATION) Share-based compensation expense significantly increased for the three and six months ended June 30, 2021, primarily due to accelerated vesting of member interests during the corporate conversion and new stock option grants under the 2021 Equity Incentive Plan Share-Based Compensation Expense | Indicator | Three Months Ended June 30, 2021 | Three Months Ended June 30, 2020 | Six Months Ended June 30, 2021 | Six Months Ended June 30, 2020 | | :--- | :--------------------- | :--------------------- | :--------------------- | :--------------------- | | Total share-based compensation expense | $563,889 | $166,666 | $755,556 | $333,333 | - All restricted Class A member interests fully vested upon corporate conversion, leading to the recognition of previously unrecognized compensation expense[64](index=64&type=chunk) - The 2021 Equity Incentive Plan was approved, reserving 2,000,000 shares of common stock[66](index=66&type=chunk) - In June 2021, the company granted 807,500 stock options in lieu of the Class B member interests canceled in March 2021, resulting in **$1,655,885** of general and administrative expense recognized for the three and six months ended June 30, 2021[67](index=67&type=chunk) [NOTE 8 – SHARE-BASED PAYMENTS TO VENDORS](index=15&type=section&id=NOTE%208%20%E2%80%93%20SHARE-BASED%20PAYMENTS%20TO%20VENDORS) The company granted Class A member interests and warrants to vendors for consulting services, and in Q2 2021, entered new agreements to grant common stock and options, alongside cash payments, for future services - The company granted Class A member interests to vendors in exchange for consulting services, expensing them based on fair value[72](index=72&type=chunk) - In the second quarter of 2021, the company entered into several agreements with vendors to grant a total of 175,000 shares of common stock and 100,000 options, along with **$343,500** in cash, for future services[75](index=75&type=chunk) [NOTE 9 – NET LOSS PER SHARE](index=16&type=section&id=NOTE%209%20%E2%80%93%20NET%20LOSS%20PER%20SHARE) Basic and diluted net loss per share for the three and six months ended June 30, 2021, is calculated by dividing net loss by the weighted-average common shares outstanding, with potentially dilutive shares excluded due to their anti-dilutive effect - The company's potentially dilutive shares (including 75,000 unvested common shares, 1,588,477 warrants, and 807,500 stock options) were excluded from the diluted net loss per share calculation because their effect would be anti-dilutive[78](index=78&type=chunk) - The impact of the corporate conversion on weighted-average common shares outstanding and net loss per share has been retroactively reflected for all periods presented[78](index=78&type=chunk) [NOTE 10 – RELATED PARTY TRANSACTIONS](index=16&type=section&id=NOTE%2010%20%E2%80%93%20RELATED%20PARTY%20TRANSACTIONS) In 2020, the company engaged a board member for 12 months of administrative services totaling **$15,000**, with **$7,500** to be expensed in 2021 - In 2020, the company engaged a board member for 12 months of administrative services totaling **$15,000**; as of June 30, 2021, **$0** has been paid and expensed, with the remaining **$7,500** to be expensed in 2021 as services are provided per the agreement[79](index=79&type=chunk) [NOTE 11 – RECENT ACCOUNTING PRONOUNCEMENTS](index=16&type=section&id=NOTE%2011%20%E2%80%93%20RECENT%20ACCOUNTING%20PRONOUNCEMENTS) The company assessed ASU No. 2016-02, "Leases (Topic 842)," effective after December 15, 2021, and determined it will not impact its financial statements as the company currently has no lease obligations - The company evaluated the adoption of ASU No. 2016-02, "Leases (Topic 842)," and determined it will not have an impact on its financial statements as the company currently has no lease obligations[81](index=81&type=chunk) [NOTE 12 – COMMITMENTS AND CONTINGENCIES](index=16&type=section&id=NOTE%2012%20%E2%80%93%20COMMITMENTS%20AND%20CONTINGENCIES) Upon acquiring ACX-362E assets, the company incurred **$700,000** in milestone payment obligations (with **$50,000** already paid) and a 4% royalty payment obligation on net sales of ACX-362E - Upon acquiring assets in February 2018, the company is obligated to pay a total of **$700,000** in milestone payments (of which **$50,000** has been paid) and a 4% royalty on net sales of ACX-362E[82](index=82&type=chunk) [NOTE 13 – SUBSEQUENT EVENTS](index=16&type=section&id=NOTE%2013%20%E2%80%93%20SUBSEQUENT%20EVENTS) In July 2021, the company granted a total of 1,200,000 stock options to three executives and 50,000 stock options to each of five independent directors, all with a 36-month vesting period, under employment agreements - In July 2021, the company granted a total of 1,200,000 stock options to three executives and 50,000 stock options to each of five independent directors, all with a 36-month vesting period, under employment agreements[83](index=83&type=chunk) [ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS](index=17&type=section&id=ITEM%202.%20MANAGEMENT'S%20DISCUSSION%20AND%20ANALYSIS%20OF%20FINANCIAL%20CONDITION%20AND%20RESULTS%20OF%20OPERATIONS) This section discusses the company's financial condition and operating performance, covering business overview, recent developments, operational results, liquidity, and key accounting policies [Overview](index=17&type=section&id=Overview) Acurx Pharmaceuticals is a clinical-stage biopharmaceutical company developing novel antibiotics for Gram-positive bacterial infections, targeting WHO, CDC, and FDA priority pathogens by blocking the DNA polymerase IIIC (Pol IIIC) enzyme, with ibezapolstat as its lead candidate for CDI - Acurx Pharmaceuticals is a clinical-stage biopharmaceutical company dedicated to developing novel antibiotics for bacterial infections listed as priority pathogens by the World Health Organization (WHO), the U.S. Centers for Disease Control and Prevention (CDC), and the U.S. Food and Drug Administration (FDA)[86](index=86&type=chunk) - The company's approach involves developing antibiotic candidates that block DNA polymerase IIIC (Pol IIIC), believing it is developing the first Pol IIIC inhibitor to enter clinical trials[87](index=87&type=chunk)[88](index=88&type=chunk) - The company's pipeline includes ibezapolstat, its lead antibiotic candidate for Clostridioides difficile (C. difficile) infection[87](index=87&type=chunk) [Recent Developments](index=18&type=section&id=Recent%20Developments) This section outlines key recent developments, including the completion of the initial public offering and its intended use of proceeds, as well as the impact of the COVID-19 pandemic on clinical trial enrollment and the forgiveness of the PPP loan [Initial Public Offering](index=18&type=section&id=Initial%20Public%20Offering) The company completed its initial public offering on June 29, 2021, issuing 2,875,000 common shares at **$6.00** per share, generating **$14.8 million** in net proceeds, earmarked for ibezapolstat's Phase 2b clinical trial, ACX-375C preclinical development, and general corporate purposes - The company completed its initial public offering on June 29, 2021, issuing 2,875,000 shares of common stock at **$6.00** per share, generating net proceeds of **$14.8 million**[90](index=90&type=chunk) - Proceeds from the IPO will be used to: (i) complete the Phase 2b clinical trial of ibezapolstat in CDI patients (approximately **$4 million**), (ii) complete preclinical development of ACX-375C, and (iii) for general corporate purposes[90](index=90&type=chunk) - Prior to the IPO, the company converted from a Delaware limited liability company to a Delaware corporation, converting 14,082,318 Class A and Class B member interests into 7,041,208 shares of common stock[90](index=90&type=chunk) [Effects of Coronavirus (COVID-19) on Our Business](index=18&type=section&id=Effects%20of%20Coronavirus%20(COVID-19)%20on%20Our%20Business) The COVID-19 pandemic significantly reduced patient enrollment for ibezapolstat's Phase 2a clinical trial, though manufacturing and R&D with key suppliers remained unaffected, and the company's PPP loan was forgiven, with long-term impacts on operations and financial results remaining uncertain - The COVID-19 pandemic led to a significant decrease in patient enrollment rates for the company's Phase 2a clinical trial of ibezapolstat at certain clinical trial sites[92](index=92&type=chunk) - The company's manufacturing and research and development activities with key suppliers were not impacted by the COVID-19 pandemic[92](index=92&type=chunk) - The company received a **$66,503** Paycheck Protection Program loan in May 2020, which was fully forgiven in April 2021[94](index=94&type=chunk) [Results of Operations](index=19&type=section&id=Results%20of%20Operations) This section analyzes the company's operating results for the three and six months ended June 30, 2021, showing a significant increase in net loss compared to the prior year, primarily due to higher selling, general, and administrative expenses, partially offset by reduced R&D and PPP loan forgiveness [Three Months Ended June 30, 2021 Compared to the Three Months Ended June 30, 2020](index=19&type=section&id=Three%20Months%20Ended%20June%2030%2C%202021%20Compared%20to%20the%20Three%20Months%20Ended%20June%2030%2C%202020) For the three months ended June 30, 2021, net loss increased to **$4 million** from **$0.9 million** in the prior year, mainly due to a 677% rise in selling, general, and administrative expenses, partially offset by a 76% decrease in R&D expenses and PPP loan forgiveness income Summary of Operating Results (Three Months) | Indicator | Three Months Ended June 30, 2021 (in thousands) | Three Months Ended June 30, 2020 (in thousands) | Change (%) | | :--- | :------------------------------- | :------------------------------- | :-------- | | Research and development expenses | 95 | 401 | (76)% | | Selling, general and administrative expenses | 3,976 | 512 | 677% | | Total operating expenses | 4,071 | 913 | 346% | | Paycheck Protection Program loan forgiveness income | 67 | — | 100% | | Net loss | 4,004 | 913 | 339% | - Selling, general, and administrative expenses increased by **$3.4 million**, primarily due to a **$0.4 million** increase in share-based director fees, a **$1.7 million** increase in share-based compensation expense, a **$1.2 million** increase in professional fees, and a **$0.1 million** increase in other employee-related expenses[99](index=99&type=chunk) - Research and development expenses decreased by **$0.3 million**, mainly due to a **$0.2 million** reduction in Phase 2a clinical trial-related costs (completed in 2020) and a **$0.1 million** decrease in consulting fees[98](index=98&type=chunk) [Six Months Ended June 30, 2021 Compared to the Six Months Ended June 30, 2020](index=19&type=section&id=Six%20Months%20Ended%20June%2030%2C%202021%20Compared%20to%20the%20Six%20Months%20Ended%20June%2030%2C%202020) For the six months ended June 30, 2021, net loss increased to **$5.5 million** from **$2.2 million** in the prior year, primarily due to a 384% rise in selling, general, and administrative expenses, partially offset by an 83% decrease in R&D expenses and PPP loan forgiveness income Summary of Operating Results (Six Months) | Indicator | Six Months Ended June 30, 2021 (in thousands) | Six Months Ended June 30, 2020 (in thousands) | Change (%) | | :--- | :------------------------------- | :------------------------------- | :-------- | | Research and development expenses | 187 | 1,085 | (83)% | | Selling, general and administrative expenses | 5,358 | 1,107 | 384% | | Total operating expenses | 5,545 | 2,192 | 153% | | Paycheck Protection Program loan forgiveness income | 67 | — | 100% | | Net loss | 5,478 | 2,192 | 150% | - Selling, general, and administrative expenses increased by **$4.3 million**, primarily attributable to a **$2.4 million** increase in share-based compensation expense, a **$1.4 million** increase in professional fees, and a **$0.5 million** increase in share-based director fees[104](index=104&type=chunk) - Research and development expenses decreased by **$0.9 million**, mainly due to a **$0.3 million** reduction in Phase 2a clinical trial-related costs (completed in 2020) and a **$0.6 million** decrease in consulting fees[104](index=104&type=chunk) [Liquidity and Capital Resources](index=20&type=section&id=Liquidity%20and%20Capital%20Resources) This section discusses the company's liquidity and capital resources, noting no revenue generation since inception, accumulated losses of **$19.3 million**, and funding primarily through equity issuances, including **$14.8 million** net proceeds from its IPO, with management expressing substantial doubt about its ability to continue as a going concern without additional funding [Overview_Liquidity](index=20&type=section&id=Overview_Liquidity) The company has generated no operating revenue since inception, accumulating approximately **$19.3 million** in losses as of June 30, 2021, funding operations primarily through equity issuances, including **$14.8 million** net proceeds from its June 2021 IPO, leading management to express substantial doubt about its ability to continue as a going concern without additional funding - The company has not generated operating revenue since inception, incurring accumulated losses of approximately **$19.3 million** as of June 30, 2021[106](index=106&type=chunk) - The company completed its initial public offering on June 29, 2021, generating net proceeds of approximately **$14.8 million**[106](index=106&type=chunk) - Management believes there is substantial doubt about the company's ability to continue as a going concern for one year from the financial statement issuance date due to uncertainties regarding future financing[107](index=107&type=chunk) - As of June 30, 2021, the company had working capital of **$15.5 million**, primarily comprising **$17.1 million** in cash, offset by **$1.9 million** in accounts payable and accrued expenses[108](index=108&type=chunk) [Net Cash Used in Operating Activities](index=21&type=section&id=Net%20Cash%20Used%20in%20Operating%20Activities) For the six months ended June 30, 2021, net cash used in operating activities decreased to **$0.9 million** from **$1.6 million** in the prior year, with 2021 outflows primarily influenced by increased share-based compensation and accounts payable, partially offset by higher prepaid expenses Net Cash Used in Operating Activities | Indicator | Six Months Ended June 30, 2021 (in thousands) | Six Months Ended June 30, 2020 (in thousands) | | :--- | :------------------------------- | :------------------------------- | | Net cash used in operating activities | (877) | (1,633) | - In the first half of 2021, net cash used in operating activities was **$0.9 million**, with net loss exceeding cash used in operations by **$4.6 million**, primarily attributable to **$3.4 million** in share-based compensation and a **$1.5 million** increase in accounts payable, partially offset by a **$0.3 million** increase in prepaid expenses[112](index=112&type=chunk) [Net Cash Used in Financing Activities](index=21&type=section&id=Net%20Cash%20Used%20in%20Financing%20Activities) For the six months ended June 30, 2021, net cash provided by financing activities significantly increased to **$14.8 million**, primarily driven by net proceeds from the initial public offering, compared to **$1.1 million** in the prior year from private placements Net Cash Provided by Financing Activities | Indicator | Six Months Ended June 30, 2021 (in thousands) | Six Months Ended June 30, 2020 (in thousands) | | :--- | :------------------------------- | :------------------------------- | | Net cash provided by financing activities | 14,797 | 1,124 | - The significant increase in net cash provided by financing activities in the first half of 2021 is primarily attributable to the net proceeds from the company's initial public offering[113](index=113&type=chunk) [Critical Accounting Policies and Estimates](index=21&type=section&id=Critical%20Accounting%20Policies%20and%20Estimates) This section reiterates the company's critical accounting policies and estimates, including a 0% effective federal income tax rate with a full valuation allowance, concentration of credit risk, expensing of R&D costs, share-based compensation, share-based payments to vendors, foreign currency transactions, and reliance on a major CRO supplier - The company estimates an annual effective tax rate of 0% and maintains a full valuation allowance against all deferred tax assets[116](index=116&type=chunk) - Research and development expenses are expensed as incurred[121](index=121&type=chunk) - Share-based compensation and share-based payments to vendors are accounted for based on the fair value at the grant date or the fair value of services received[122](index=122&type=chunk)[123](index=123&type=chunk) - In 2020, one major vendor accounted for approximately **40%** of R&D expenditures, and this vendor is expected to continue providing CRO services for the planned Phase 2b clinical trial[125](index=125&type=chunk) [Other Company Information](index=23&type=section&id=Other%20Company%20Information) This section details the company's status as an "emerging growth company" and "smaller reporting company," allowing for simplified reporting requirements and extended accounting standard transition periods, and notes that recent accounting pronouncements are not expected to materially impact its financial statements [Emerging Growth Company Status](index=23&type=section&id=Emerging%20Growth%20Company%20Status) The company qualifies as an "emerging growth company" and "smaller reporting company" under the JOBS Act, enabling it to utilize simplified reporting requirements and an extended transition period for adopting new accounting standards - The company is an "emerging growth company" and a "smaller reporting company" as defined by the Jumpstart Our Business Startups Act (JOBS Act)[127](index=127&type=chunk)[128](index=128&type=chunk)[241](index=241&type=chunk)[246](index=246&type=chunk) - The company can take advantage of simplified reporting requirements, including providing only two years of audited financial statements and delaying the adoption of new or revised accounting standards[128](index=128&type=chunk)[241](index=241&type=chunk)[245](index=245&type=chunk) [Recent Accounting Pronouncements_Other](index=23&type=section&id=Recent%20Accounting%20Pronouncements_Other) The company does not believe that recently issued accounting pronouncements effective in subsequent periods will have a material impact on its financial accounting measurements or disclosures as of June 30, 2021 - The company does not believe that recently issued accounting pronouncements will have a material impact on its financial accounting measurements or disclosures for 2021, nor will they have a material impact upon adoption[129](index=129&type=chunk) [ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK](index=24&type=section&id=ITEM%203.%20QUANTITATIVE%20AND%20QUALITATIVE%20DISCLOSURES%20ABOUT%20MARKET%20RISK) As a smaller reporting company, Acurx Pharmaceuticals is not required to provide quantitative and qualitative disclosures about market risk - As a smaller reporting company, the company is not required to provide quantitative and qualitative disclosures about market risk[131](index=131&type=chunk) [ITEM 4. CONTROLS AND PROCEDURES](index=24&type=section&id=ITEM%204.%20CONTROLS%20AND%20PROCEDURES) This section discusses the company's assessment of disclosure controls and procedures, noting they were not at a reasonable assurance level as of June 30, 2021, due to insufficient segregation of duties, with plans to engage third-party experts for improvement, and confirming no significant changes in internal controls during the quarter [Evaluation of Disclosure Controls and Procedures](index=24&type=section&id=Evaluation%20of%20Disclosure%20Controls%20and%20Procedures) Management, including the CEO and CFO, assessed that the company's disclosure controls and procedures were not at a reasonable assurance level as of June 30, 2021, primarily due to insufficient segregation of duties within a limited management team, with plans to engage third-party experts for review and improvement - Management, including the Chief Executive Officer and Chief Financial Officer, assessed that the company's disclosure controls and procedures were not at a reasonable assurance level as of June 30, 2021[132](index=132&type=chunk) - The primary reason for ineffective disclosure controls and procedures is insufficient segregation of duties due to the limited three-person management team[133](index=133&type=chunk) - Management plans to engage third-party experts to review current internal controls and recommend design improvements to address segregation of duties issues[133](index=133&type=chunk) [Changes in Internal Control over Financial Reporting](index=24&type=section&id=Changes%20in%20Internal%20Control%20over%20Financial%20Reporting) Management's assessment found no changes in internal control over financial reporting that materially affected or are reasonably likely to materially affect internal control during the period covered by this quarterly report - Management's assessment found no changes in internal control over financial reporting that materially affected or are reasonably likely to materially affect internal control during the period covered by this quarterly report[135](index=135&type=chunk) [Inherent Limitations over Internal Controls](index=24&type=section&id=Inherent%20Limitations%20over%20Internal%20Controls) Management acknowledges that internal control systems can only provide reasonable, not absolute, assurance and cannot prevent or detect all errors and fraud due to inherent limitations and resource constraints - Management believes that disclosure controls and procedures and internal control over financial reporting are designed to provide reasonable assurance but cannot prevent or detect all errors and fraud[136](index=136&type=chunk) [PART II - OTHER INFORMATION](index=25&type=section&id=PART%20II%20-%20OTHER%20INFORMATION) This part contains additional information not covered in the financial statements, including legal proceedings, risk factors, equity sales, and exhibits [ITEM 1. LEGAL PROCEEDINGS](index=25&type=section&id=ITEM%201.%20LEGAL%20PROCEEDINGS) The company is not currently involved in any legal proceedings that management believes would have a material adverse effect on its business, though litigation, regardless of outcome, could adversely impact the company due to defense costs, settlement expenses, and diversion of management resources - The company is not currently involved in any legal proceedings or legal actions that management believes would have a material adverse effect on its business[137](index=137&type=chunk) - Regardless of outcome, litigation could adversely affect the company due to defense and settlement costs, diversion of management resources, and other factors[137](index=137&type=chunk) [ITEM 1A. RISK FACTORS](index=25&type=section&id=ITEM%201A.%20RISK%20FACTORS) This section details various risks, including business operations, regulatory approvals, third-party reliance, intellectual property, and common stock ownership, which could materially affect the company [Risks Related to Our Business](index=25&type=section&id=Risks%20Related%20to%20Our%20Business) The company faces risks from its limited operating history, significant losses, auditor's going concern doubt, high dependence on ibezapolstat, development risks, competition, and COVID-19 impacts - The company has a very limited operating history (formed in July 2017, acquired rights to its lead product candidate in February 2018) and expects to incur significant operating losses in the early stages of its development[139](index=139&type=chunk)[140](index=140&type=chunk) - The company's independent registered public accounting firm, in its report on the financial statements as of December 31, 2020, expressed substantial doubt about the company's ability to continue as a going concern, noting significant accumulated losses and negative cash flows from operations[141](index=141&type=chunk)[142](index=142&type=chunk) - The company's ability to generate product revenue, which may take several years or never be achieved, is currently highly dependent on the successful development and commercialization of ibezapolstat[143](index=143&type=chunk) - The company's product candidates are in clinical development and carry a high risk of failure; if product candidates exhibit adverse side effects or unexpected characteristics, their development may need to be abandoned or limited[145](index=145&type=chunk)[146](index=146&type=chunk) - The outbreak of coronavirus disease (COVID-19) could adversely affect the company's business, including preclinical studies and clinical trials, such as delays or difficulties in recruiting clinical trial participants[161](index=161&type=chunk)[162](index=162&type=chunk)[163](index=163&type=chunk) - The company will compete with larger, better-funded companies, and competitors in the drug development or pharmaceutical industry may develop competing products that are superior or completely replace the company's proposed products[158](index=158&type=chunk)[159](index=159&type=chunk) [Risks Related to Regulatory Approval](index=32&type=section&id=Risks%20Related%20to%20Regulatory%20Approval) Regulatory approval is costly, time-consuming, and uncertain, with clinical trials facing risks of failure, delays, or halts, while non-compliance and healthcare legislation may adversely affect the business - Clinical trials are expensive, difficult to design and implement, take many years to complete, and have uncertain outcomes, with potential for failure at any stage[181](index=181&type=chunk) - If the company is unable to enroll a sufficient number of eligible patients in its clinical trials, the clinical trials for ibezapolstat may be delayed or prevented, thereby delaying or preventing necessary marketing approvals[184](index=184&type=chunk)[185](index=185&type=chunk)[187](index=187&type=chunk) - Failure to obtain FDA or foreign regulatory approval, or failure to comply with ongoing government regulations, could delay or limit the introduction of the company's proposed products and formulations, and result in a failure to generate revenue or maintain ongoing operations[188](index=188&type=chunk)[189](index=189&type=chunk)[190](index=190&type=chunk) - Current and potential future healthcare legislation and regulatory actions, particularly those affecting government prescription drug purchasing and reimbursement programs, could adversely affect the company's business[191](index=191&type=chunk)[192](index=192&type=chunk)[194](index=194&type=chunk)[195](index=195&type=chunk)[196](index=196&type=chunk) [Risks Related to Our Dependence on Third Parties](index=35&type=section&id=Risks%20Related%20to%20Our%20Dependence%20on%20Third%20Parties) The company's reliance on third parties for manufacturing, clinical trials, and sales/marketing, coupled with reimbursement challenges and healthcare fraud laws, poses significant risks - The company has no sales or marketing infrastructure and no experience selling or marketing pharmaceutical products; to achieve commercial success for any approved products, the company must establish a sales and marketing organization or outsource these functions to third parties[198](index=198&type=chunk)[201](index=201&type=chunk) - The company contracts with third parties to manufacture its product candidates for preclinical studies and ongoing clinical trials and expects to continue doing so for additional clinical trials and eventual commercialization; this reliance on third parties increases the risk that the company will not have sufficient quantities or acceptable costs of product candidates, which could delay, prevent, or impair its development or commercialization efforts[202](index=202&type=chunk)[203](index=203&type=chunk)[204](index=204&type=chunk)[207](index=207&type=chunk) - The company relies on third-party clinical investigators, contract research organizations (CROs), clinical data management organizations, and consultants to design, conduct, supervise, and monitor preclinical studies and clinical trials for its product candidates; due to its reliance on third parties and inability to independently conduct preclinical studies or clinical trials, the company has less control over the timing, quality, and other aspects of these studies and trials[208](index=208&type=chunk)[209](index=209&type=chunk) - If end-users of product candidates are unable to obtain adequate reimbursement from third-party payors, or if new restrictive legislation is adopted, market acceptance of the company's proposed products may be limited, and the company may not be able to achieve significant revenue[210](index=210&type=chunk)[212](index=212&type=chunk) - The company's relationships with customers and third-party payors will be subject to applicable anti-kickback, fraud and abuse, and other healthcare laws and regulations, which could expose the company to criminal sanctions, civil penalties, contractual damages, reputational harm, and diminished profits and future earnings[213](index=213&type=chunk)[214](index=214&type=chunk)[215](index=215&type=chunk)[216](index=216&type=chunk) [Risks Related to Intellectual Property](index=39&type=section&id=Risks%20Related%20to%20Intellectual%20Property) The company's intellectual property faces risks from infringement, patent validity challenges, licensing needs, costly litigation, and failure to protect trade secrets, all impacting its competitive position - Competitors may infringe the company's patents; to counter infringement or unauthorized use, the company or its collaborators may be required to file infringement claims, which can be expensive and time-consuming[217](index=217&type=chunk)[220](index=220&type=chunk) - The patent position of biotechnology and pharmaceutical companies, including the company, is generally uncertain and involves complex legal and factual questions; the company's patents, patent applications, and other intellectual property may not provide protection against competing technologies or products, or may be held invalid or unenforceable if challenged[225](index=225&type=chunk) - Third parties may own intellectual property, including patent rights, that is important or necessary to the development or commercialization of the company's products; the company may need to use third-party patents or proprietary technology to commercialize its products, in which case it would be required to obtain licenses from these third parties on commercially reasonable terms, or its business could be harmed[222](index=222&type=chunk)[223](index=223&type=chunk) - In addition to patenting certain technologies and products, the company will rely on trade secrets, including unpatented proprietary know-how, technical, and other proprietary and confidential information, to maintain its competitive position; if any of the company's trade secrets were lawfully obtained or independently developed by a competitor, its competitive position would be harmed[227](index=227&type=chunk)[228](index=228&type=chunk) [Risks Related to Ownership of Our Common Stock](index=41&type=section&id=Risks%20Related%20to%20Ownership%20of%20Our%20Common%20Stock) Risks to common stock ownership include the need for substantial additional funding, potential dilution from future financing, stock price volatility, major shareholder influence, anti-takeover provisions, and reduced investor appeal due to emerging growth company status - The company expects its expenses to increase with ongoing R&D activities and the initiation of additional product candidate clinical trials and seeking regulatory approvals; consequently, the company may need to obtain substantial additional funding to support ongoing operations, and if it cannot raise capital when needed or on attractive terms, it may be forced to delay, scale back, or cancel its R&D programs or future commercialization efforts[229](index=229&type=chunk)[230](index=230&type=chunk)[234](index=234&type=chunk) - If the company raises additional funds by issuing equity or convertible debt securities, existing shareholders' ownership interests may be substantially diluted, and the terms of such securities may include rights such as liquidation or other preferences or anti-dilution rights that could adversely affect shareholders' rights[235](index=235&type=chunk)[236](index=236&type=chunk) - The price of the company's common stock may fluctuate, influenced by various factors including actual or anticipated results of clinical trials, regulatory feedback on clinical trial plans, new product introductions by competitors, macroeconomic and market conditions, and analysts' earnings expectations[247](index=247&type=chunk)[248](index=248&type=chunk) - As of June 30, 2021, the company's executive officers, directors, and their affiliates collectively owned approximately **24%** of the company's common stock, giving them significant influence over matters requiring shareholder approval, such as director elections and significant corporate transactions[250](index=250&type=chunk) - Provisions in the company's organizational documents and Delaware law may make it more difficult to acquire the company, even if doing so would be beneficial to shareholders, and may prevent attempts by shareholders to replace or remove current management[239](index=239&type=chunk)[240](index=240&type=chunk)[269](index=269&type=chunk) - The company is an "emerging growth company" and a "smaller reporting company," and it cannot be certain if the reduced reporting requirements applicable to emerging growth companies and smaller reporting companies will make its common stock less attractive to investors[241](index=241&type=chunk)[243](index=243&type=chunk)[246](index=246&type=chunk) [General Risk Factors](index=46&type=section&id=General%20Risk%20Factors) General risks include cyber incidents, employee misconduct, internal control limitations, inaccurate estimates, FCPA non-compliance, adverse litigation, and environmental/health/safety law non-compliance - Cyber incidents or attacks against the company could result in information theft, data corruption, operational disruption, and/or financial loss; as an early-stage company, insufficient investment in data security protection may not adequately protect against such events[255](index=255&type=chunk)[256](index=256&type=chunk) - The company's employees, principal investigators, consultants, and business partners may engage in misconduct or other improper activities, including non-compliance with regulatory standards and requirements and insider trading, which could result in regulatory sanctions and severely harm the company's reputation[257](index=257&type=chunk)[258](index=258&type=chunk) - The effectiveness of internal controls may have limitations, and control systems failing to prevent or detect errors or fraud could cause significant harm to the company[259](index=259&type=chunk)[260](index=260&type=chunk) - If the company fails to comply with environmental, health, and safety laws and regulations, it could face fines or penalties or incur costs that could harm its business[264](index=264&type=chunk)[265](index=265&type=chunk)[266](index=266&type=chunk) - Management has broad discretion over the use of cash, cash equivalents, and marketable securities and may not effectively utilize these financial resources, which could affect the company's operating results and lead to a decline in its stock price[267](index=267&type=chunk) [ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS](index=49&type=section&id=ITEM%202.%20UNREGISTERED%20SALES%20OF%20EQUITY%20SECURITIES%20AND%20USE%20OF%20PROCEEDS) This section discloses the use of proceeds from the company's initial public offering, allocated for ibezapolstat's Phase 2b clinical trial, ACX-375C's preclinical development, and general corporate purposes, confirming no material changes to the planned uses [Use of Proceeds](index=49&type=section&id=Use%20of%20Proceeds) The company completed its initial public offering on June 29, 2021, receiving **$14.8 million** in net proceeds, which will be used to complete ibezapolstat's Phase 2b clinical trial (approximately **$4 million**), ACX-375C's preclinical development, and for general corporate purposes, with no material changes to the planned uses - The company completed its initial public offering on June 29, 2021, generating net proceeds of **$14.8 million**[272](index=272&type=chunk) - Proceeds will be used to: (i) complete the Phase 2b clinical trial of ibezapolstat in CDI patients (approximately **$4 million**), (ii) complete preclinical development of ACX-375C, and (iii) for general corporate purposes[272](index=272&type=chunk) - No material changes have occurred in the planned use of proceeds from the initial public offering[273](index=273&type=chunk) [ITEM 3. DEFAULTS UPON SENIOR SECURITIES](index=49&type=section&id=ITEM%203.%20DEFAULTS%20UPON%20SENIOR%20SECURITIES) The company has no defaults upon senior securities to report - No defaults upon senior securities[273](index=273&type=chunk) [ITEM 4. MINE SAFETY DISCLOSURE](index=49&type=section&id=ITEM%204.%20MINE%20SAFETY%20DISCLOSURE) This item is not applicable to the company's operations - Not applicable[273](index=273&type=chunk) [ITEM 5. OTHER INFORMATION](index=49&type=section&id=ITEM%205.%20OTHER%20INFORMATION) No other information is required to be reported in this section - No other information[273](index=273&type=chunk) [ITEM 6. EXHIBITS](index=50&type=section&id=ITEM%206.%20EXHIBITS) This section lists exhibits filed with or incorporated by reference into this quarterly report, including organizational documents, employment agreements, equity incentive plans, and various certification documents - Exhibits include the Certificate of Incorporation, Bylaws, Common Stock Certificate, Indemnification Agreements, Securities Purchase Agreements, Warrants, Investor Rights Agreement, Amended and Restated Employment Agreements, 2021 Equity Incentive Plan, Stock Option Agreements, Restricted Stock Agreements, Recapitalization Option Exchange Agreement, Master Clinical Services Agreement, Asset Purchase Agreement, and various certification documents[275](index=275&type=chunk)[276](index=276&type=chunk) [SIGNATURES](index=52&type=section&id=SIGNATURES) This section contains the official signatures of the company's authorized officers, certifying the accuracy and completeness of the quarterly report [Report Signatures](index=52&type=section&id=Report%20Signatures) This report was duly signed on August 13, 2021, by David P. Luci, President and Chief Executive Officer, and Robert G. Shawah, Chief Financial Officer - This report was signed on August 13, 2021, by David P. Luci, President and Chief Executive Officer, and Robert G. Shawah, Chief Financial Officer[279](index=279&type=chunk)