[Special Note Regarding Forward-Looking Statements](index=3&type=section&id=SPECIAL%20NOTE%20REGARDING%20FORWARD-LOOKING%20STATEMENTS) This section warns readers about forward-looking statements concerning future operations and financial position, noting inherent risks and uncertainties - The report contains forward-looking statements about the company's future operations, financial position, strategy, and plans, identified by specific keywords like 'believe,' 'may,' 'will,' 'estimate,' 'continue,' 'anticipate,' 'design,' 'intend,' 'expect'[6](index=6&type=chunk) - Key areas of forward-looking statements include patient enrollment in clinical trials, regulatory approval, commercialization efforts, third-party contracts, market potential, funding, research and development timelines, data availability, the impact of the COVID-19 pandemic, expense estimates, personnel retention, and intellectual property[8](index=8&type=chunk)[10](index=10&type=chunk) - Readers are cautioned against undue reliance on these statements due to inherent risks and uncertainties, including those detailed in the 'Risk Factors' section, and the company disclaims any obligation to update them after the report date[7](index=7&type=chunk)[10](index=10&type=chunk)[11](index=11&type=chunk) [PART I - FINANCIAL INFORMATION](index=5&type=section&id=PART%20I%20-%20FINANCIAL%20INFORMATION) This part presents the company's condensed interim financial statements and management's discussion and analysis of financial condition [ITEM 1. Condensed Interim Financial Statements](index=5&type=section&id=ITEM%201.%20CONDENSED%20INTERIM%20FINANCIAL%20STATEMENTS.) This section presents the unaudited condensed interim financial statements for Acurx Pharmaceuticals, Inc., including the balance sheets, statements of operations, changes in shareholders' equity, and cash flows for the periods ended March 31, 2023, and 2022, along with detailed explanatory notes [Condensed Interim Balance Sheets](index=6&type=section&id=Condensed%20Interim%20Balance%20Sheets) This section provides a snapshot of the company's financial position, detailing assets, liabilities, and equity as of specific dates | Metric | March 31, 2023 | December 31, 2022 | Change (vs. Dec 31, 2022) | | :--------------------------- | :------------- | :---------------- | :------------------------ | | Cash | $7,178,820 | $9,111,751 | -$1,932,931 | | Total Assets | $7,385,421 | $9,376,706 | -$1,991,285 | | Total Current Liabilities | $2,073,982 | $2,061,685 | +$12,297 | | Total Shareholders' Equity | $5,311,439 | $7,315,021 | -$2,003,582 | | Accumulated Deficit | $(41,544,042) | $(38,641,085) | -$(2,902,957) | [Condensed Interim Statements of Operations](index=7&type=section&id=Condensed%20Interim%20Statements%20of%20Operations) This section outlines the company's financial performance over specific periods, focusing on revenues, expenses, and net loss | Metric | Three Months Ended March 31, 2023 | Three Months Ended March 31, 2022 | Change (YoY) | | :--------------------------- | :-------------------------------- | :-------------------------------- | :----------- | | Research and Development | $1,015,583 | $818,888 | +$196,695 | | General and Administrative | $1,887,374 | $1,851,250 | +$36,124 | | Total Operating Expenses | $2,902,957 | $2,670,138 | +$232,819 | | Net Loss | $(2,902,957) | $(2,670,138) | -$(232,819) | | Basic and Diluted Net Loss Per Common Share | $(0.25) | $(0.26) | +$0.01 | | Weighted Average Common Shares Outstanding | 11,639,395 | 10,232,843 | +1,406,552 | [Condensed Interim Statements of Changes in Shareholders' Equity](index=8&type=section&id=Condensed%20Interim%20Statements%20of%20Changes%20in%20Shareholders%27%20Equity) This section details changes in the company's equity accounts, including common shares, additional paid-in capital, and accumulated deficit | Metric | Balance at Jan 1, 2023 | Balance at Mar 31, 2023 | Change (QoQ) | | :--------------------------- | :--------------------- | :---------------------- | :----------- | | Common Shares | 11,627,609 | 11,671,795 | +44,186 | | Common Stock Amount | $11,628 | $11,672 | +$44 | | Additional Paid-In Capital | $45,944,478 | $46,843,809 | +$899,331 | | Accumulated Deficit | $(38,641,085) | $(41,544,042) | -$(2,902,957)| | Total Shareholders' Equity | $7,315,021 | $5,311,439 | -$(2,003,582)| - Share-based compensation and payments to vendors contributed **$733,472** and **$165,903**, respectively, to additional paid-in capital during the three months ended March 31, 2023[19](index=19&type=chunk) [Condensed Interim Statements of Cash Flows](index=9&type=section&id=Condensed%20Interim%20Statements%20of%20Cash%20Flows) This section presents cash inflows and outflows from operating, investing, and financing activities over specific periods | Metric | Three Months Ended March 31, 2023 | Three Months Ended March 31, 2022 | Change (YoY) | | :--------------------------- | :-------------------------------- | :-------------------------------- | :----------- | | Net Loss | $(2,902,957) | $(2,670,138) | -$(232,819) | | Net Cash Used in Operating Activities | $(1,932,931) | $(1,876,000) | -$(56,931) | | Cash at Beginning of Period | $9,111,751 | $12,958,846 | -$(3,847,095)| | Cash at End of Period | $7,178,820 | $11,082,846 | -$(3,904,026)| - Adjustments to reconcile net loss to net cash used in operating activities for Q1 2023 included **$733,472** in share-based compensation and **$165,903** in share-based payments to vendors[22](index=22&type=chunk) [Notes to the Condensed Interim Financial Statements (Unaudited)](index=10&type=section&id=NOTES%20TO%20THE%20CONDENSED%20INTERIM%20FINANCIAL%20STATEMENTS%20%28UNAUDITED%29) This section provides detailed explanatory notes that supplement the condensed interim financial statements, offering context and additional information [NOTE 1 – Nature of Operations](index=10&type=section&id=NOTE%201%20%E2%80%93%20NATURE%20OF%20OPERATIONS) This note describes the company's business as a clinical-stage biopharmaceutical firm, its lead product, and its going concern status - Acurx Pharmaceuticals is a clinical-stage biopharmaceutical company, formed in **July 2017** with operations commencing in **February 2018**, focused on developing novel antibiotics for serious bacterial infections[25](index=25&type=chunk) - The lead antibiotic product candidate, ibezapolstat (formerly ACX-362E), targets C. difficile infections (CDI) and was acquired in **February 2018**[27](index=27&type=chunk) - The company has not generated any revenues since inception, has experienced net losses and negative cash flows, and as of March 31, 2023, had approximately **$7.2 million** in cash, which is insufficient to meet anticipated cash requirements for at least **12 months**, raising substantial doubt about its ability to continue as a going concern[28](index=28&type=chunk)[29](index=29&type=chunk) - The COVID-19 pandemic has disrupted and is expected to continue disrupting operations, with potential material adverse effects on the company's operational and financial performance, although current financial statements do not reflect specific adjustments[26](index=26&type=chunk) [NOTE 2 – Summary of Significant Accounting Policies](index=12&type=section&id=NOTE%202%20%E2%80%93%20SUMMARY%20OF%20SIGNIFICANT%20ACCOUNTING%20POLICIES) This note outlines the key accounting principles and estimates applied in the preparation of the financial statements [Basis of Presentation](index=12&type=section&id=Basis%20of%20Presentation) This section details the framework and principles used for preparing the unaudited condensed interim financial statements - The unaudited condensed interim financial statements are prepared in accordance with GAAP and SEC rules for interim reporting, including all necessary normal, recurring adjustments[31](index=31&type=chunk) - Interim results are not necessarily indicative of full fiscal year results and should be read in conjunction with the audited financial statements from December 31, 2022[31](index=31&type=chunk) [Use of Estimates](index=12&type=section&id=Use%20of%20Estimates) This section explains the necessity of management's judgments and assumptions in preparing the financial statements - Financial statements require management to make estimates and assumptions that affect reported asset and liability amounts, contingent disclosures, and expenses[32](index=32&type=chunk) - Actual results could differ from these estimates, which are based on historical experience and various reasonable factors[32](index=32&type=chunk) [Income Taxes](index=12&type=section&id=Income%20Taxes) This section describes the company's approach to income tax accounting, including its effective tax rate and valuation allowance - The company estimates an annual effective tax rate of **0%** due to net losses, resulting in no current federal or state income tax expense[33](index=33&type=chunk) - A full valuation allowance has been recorded against all deferred tax assets, as the realization of tax benefits from net operating losses is not considered more likely than not[33](index=33&type=chunk) [Concentration of Credit Risk](index=12&type=section&id=Concentration%20of%20Credit%20Risk) This section highlights the company's exposure to credit risk due to its cash balances held in a single financial institution - The company maintains its cash balance in one financial institution, with approximately **$7.2 million** in U.S. bank accounts not fully insured by the FDIC as of March 31, 2023[34](index=34&type=chunk) [Research and Development](index=12&type=section&id=Research%20and%20Development) This section details the accounting policy for research and development costs, including expensing and estimation of clinical trial expenses - Research and development costs are expensed when incurred; cash advances for future services are deferred and expensed in the period the service is provided[35](index=35&type=chunk) - Clinical trial costs are estimated based on the progress to completion of specific tasks, such as subject enrollment and clinical site activations, and are reflected as prepaid or accrued expenses[36](index=36&type=chunk) | Metric | Three Months Ended March 31, 2023 | Three Months Ended March 31, 2022 | | :--------------------------- | :-------------------------------- | :-------------------------------- | | Research and Development Expenses | $1,015,583 | $818,888 | [Share-Based Compensation](index=14&type=section&id=Share-Based%20Compensation) This section outlines the accounting treatment for equity awards granted to officers and directors, including valuation methods - The cost of services performed by officers and directors in exchange for equity awards is recognized over the requisite service period based on the grant-date fair value[38](index=38&type=chunk) - Compensation expense for stock options is determined using the Black-Scholes option pricing model, which requires subjective assumptions like expected price volatility, derived from comparable public companies due to the lack of a public market for the company's stock options[39](index=39&type=chunk) [Share-Based Payments to Vendors](index=14&type=section&id=Share-Based%20Payments%20to%20Vendors) This section describes the accounting for equity awards issued to vendors in exchange for services - The cost of services performed by vendors in exchange for common stock, stock options, or warrants is accounted for based on the grant-date fair value of the award or the fair value of services rendered, whichever is more readily determinable, and expensed in the same period as if cash were paid[40](index=40&type=chunk) [Major Vendor](index=14&type=section&id=Major%20Vendor) This section highlights the company's significant reliance on a single major vendor for R&D expenditures and liabilities | Metric | March 31, 2023 | December 31, 2022 | | :----------------------------------- | :------------- | :---------------- | | R&D Expenditures from Major Vendor | ~60% | ~49% | | Accounts Payable & Accrued Expenses from Major Vendor | ~82% | ~56% | - The company continues to maintain this major vendor relationship and anticipates incurring significant expenses with this vendor over the next **12 months**[41](index=41&type=chunk) [NOTE 3 - Accounts Payable and Accrued Expenses](index=14&type=section&id=NOTE%203%20-%20ACCOUNTS%20PAYABLE%20AND%20ACCRUED%20EXPENSES) This note provides a detailed breakdown of the company's accounts payable and accrued expenses by category | Category | March 31, 2023 | December 31, 2022 | Change (QoQ) | | :-------------------------------------- | :------------- | :---------------- | :----------- | | Accrued compensation expenses | $20,390 | $542,895 | -$(522,505) |\n| Accrued research and development | $1,910,749 | $1,405,536 | +$505,213 |\n| Accrued professional fees | $124,430 | $83,715 | +$40,715 |\n| Other accounts payable and accrued expenses | $18,413 | $29,539 | -$(11,126) |\n| Total | $2,073,982 | $2,061,685 | +$12,297 | [NOTE 4 – Issuance of Equity Interests](index=14&type=section&id=NOTE%204%20%E2%80%93%20ISSUANCE%20OF%20EQUITY%20INTERESTS) This note details the company's equity issuances, including its IPO and subsequent offerings, and their impact on common stock - Acurx Pharmaceuticals, LLC converted to Acurx Pharmaceuticals, Inc. in **June 2021**, authorizing **200,000,000 shares** of common stock, with **11,671,795 outstanding** as of March 31, 2023[43](index=43&type=chunk) - The IPO in **June 2021** issued **2,875,000 shares** at **$6.00 per share**, resulting in **$14.8 million net cash proceeds**, and converted **14,082,318 membership interests** into **7,041,208 common shares**[44](index=44&type=chunk) - A **July 2022** registered direct offering and concurrent private placement issued **1,159,211 common shares** and **130,769 pre-funded warrants**, generating **$4.2 million gross proceeds** (**$3.7 million net**)[47](index=47&type=chunk)[48](index=48&type=chunk) - In connection with the **July 2022** offering, the company issued series A and B warrants to purchase **1,289,980 shares each** to investors and affiliates, and **63,018 warrants** to placement agents[47](index=47&type=chunk)[49](index=49&type=chunk) [NOTE 5 – Share-Based Compensation](index=16&type=section&id=NOTE%205%20%E2%80%93%20SHARE-BASED%20COMPENSATION) This note describes the company's equity incentive plan, stock option activity, and unrecognized compensation expense - The **2021** Equity Incentive Plan reserves an aggregate of **2,874,063 shares** of common stock, with **535,868 shares still available** for issuance as of March 31, 2023, to attract, retain, and incentivize directors, officers, employees, and consultants[51](index=51&type=chunk) - In **February 2023**, the company granted **467,500 stock options** to employees and consultants at an exercise price of **$3.41**, resulting in **$36,507** of general and administrative expense for the three months ended March 31, 2023[57](index=57&type=chunk) | Stock Option Activity (as of March 31, 2023) | Number of Options | Weighted Average Exercise Price | | :------------------------------------------- | :---------------- | :------------------------------ | | Outstanding at beginning of period | 2,467,500 | $6.12 | | Granted | 467,500 | $3.41 | | Exercised | — | — | | Forfeited | — | — | | Outstanding at end of period | 2,935,000 | $5.69 | | Exercisable | 1,714,861 | $6.12 | - Total unrecognized compensation expense for stock options as of March 31, 2023, was **$4,824,706**, with a weighted average vesting period for unvested options of **1.88 years**[62](index=62&type=chunk) [NOTE 6 – Share-Based Payments to Vendors](index=19&type=section&id=NOTE%206%20%E2%80%93%20SHARE-BASED%20PAYMENTS%20TO%20VENDORS) This note details the issuance of common stock and warrants to vendors for services and the associated expenses - In the first quarter of **2023**, the company granted **36,000 shares** of common stock at a grant date fair value of **$3.31** to an investor relations consultant, recognizing **$119,160** in general and administrative expenses[65](index=65&type=chunk) - In the fourth quarter of **2022**, grants of **43,186 common shares** and up to **10,096 warrants** were made to vendors, resulting in **$46,742** of general and administrative expenses for the three months ended March 31, 2023[65](index=65&type=chunk) [NOTE 7 – Net Loss Per Share](index=19&type=section&id=NOTE%207%20%E2%80%93%20NET%20LOSS%20PER%20SHARE) This note explains the calculation of basic and diluted net loss per share and the treatment of potentially dilutive securities - Basic and diluted net loss per share are determined by dividing net loss by the weighted average common shares outstanding during the period[66](index=66&type=chunk) - Potentially dilutive shares, consisting of **4,217,809 warrants** and **2,935,000 stock options**, are excluded from diluted net loss per share computations for all periods because their inclusion would be antidilutive[66](index=66&type=chunk) [NOTE 8 – Commitments and Contingencies](index=19&type=section&id=NOTE%208%20%E2%80%93%20COMMITMENTS%20AND%20CONTINGENCIES) This note outlines the company's contractual obligations, including milestone and royalty payments related to product development - The company is required to make certain milestone payments totaling **$700,000** in aggregate related to the development of ACX-362E (ibezapolstat), with **$50,000** already paid and no additional milestones reached as of March 31, 2023[67](index=67&type=chunk) - The company is also obligated to make royalty payments equal to **4% of net sales** of ACX-362E for a period equal to the last to expire of any applicable patents[67](index=67&type=chunk) [ITEM 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=21&type=section&id=ITEM%202.%20MANAGEMENT%27S%20DISCUSSION%20AND%20ANALYSIS%20OF%20FINANCIAL%20CONDITION%20AND%20RESULTS%20OF%20OPERATIONS) This section provides a narrative analysis of Acurx Pharmaceuticals' financial condition and results of operations, covering its business overview, recent developments, the impact of COVID-19, a breakdown of operating expenses, liquidity and capital resources, critical accounting policies, and its status as an emerging growth company [Overview](index=21&type=section&id=Overview) This section provides a general introduction to the company's business, its lead product candidate, and development strategy - Acurx Pharmaceuticals is a clinical-stage biopharmaceutical company developing a new class of antibiotics that block DNA polymerase IIIC (Pol IIIC) for Gram-positive bacterial infections, including C. difficile, Enterococcus, Staphylococcus, and Streptococcus[70](index=70&type=chunk)[71](index=71&type=chunk)[72](index=72&type=chunk) - The lead antibiotic candidate, ibezapolstat, demonstrated a **100% clinical cure rate** (**10 out of 10 patients**) in a Phase 2a clinical trial for C. difficile infections (CDI) and commenced enrollment in a Phase 2b trial on December 3, 2021[73](index=73&type=chunk)[76](index=76&type=chunk) - The company intends to 'de-risk' this new class of antibiotics through its drug development activities and potentially partner with a fully-integrated pharmaceutical company for late-stage clinical trials and commercialization[72](index=72&type=chunk) [Recent Developments](index=23&type=section&id=Recent%20Developments) This section highlights key recent events and milestones impacting the company's operations and financial position [ECCMID 2023 Scientific Conference Presentations](index=23&type=section&id=ECCMID%202023%20Scientific%20Conference%20Presentations) This section details the company's presentations at a major scientific conference regarding its lead product candidate - In **April 2023**, the company provided two presentations at the **33rd Annual European Congress of Clinical Microbiology and Infectious Disease (ECCMID)**, covering ibezapolstat's novel pharmacology against C. difficile and an update on the preclinical, systemic oral and IV program for other gram-positive infections[78](index=78&type=chunk) [Protocol Amendment, Referring Physician Program and Trial Site Expansion](index=23&type=section&id=Protocol%20Amendment%2C%20Referring%20Physician%20Program%20and%20Trial%20Site%20Expansion) This section describes strategic initiatives to accelerate patient enrollment and trial progress for the Phase 2b study - A protocol amendment was filed in **January 2023** and accepted by the FDA in **March 2023**, allowing an Independent Data Monitoring Committee (IDMC) to review interim clinical data for the Phase 2b trial after **36 patients** are enrolled (**26 currently enrolled**)[79](index=79&type=chunk) - The company launched an innovative Referring Physician Program and increased Phase 2b clinical trial sites from **12 to 28** in **July 2022** to optimize and accelerate patient enrollment[80](index=80&type=chunk)[83](index=83&type=chunk) [Registered Direct Offering](index=25&type=section&id=Registered%20Direct%20Offering) This section details the company's recent equity financing, including shares, warrants, and net proceeds - In **July 2022**, the company completed a registered direct offering and concurrent private placement, issuing **1,159,211 common shares** and **130,769 pre-funded warrants**, generating **$4.2 million** in gross proceeds and approximately **$3.7 million** in net proceeds[84](index=84&type=chunk)[85](index=85&type=chunk) - Series A and B warrants to purchase **1,289,980 shares each** were issued to investors and affiliates, with exercise prices of **$3.55** and **$3.25**, respectively[86](index=86&type=chunk) - Placement agents received a cash fee of **$287,874** and **63,018 warrants** with an exercise price of **$3.60**[87](index=87&type=chunk)[49](index=49&type=chunk) [Initial Public Offering](index=26&type=section&id=Initial%20Public%20Offering) This section provides information on the company's IPO, including shares issued, proceeds, and allocation of funds - The company completed its IPO on **June 29, 2021**, issuing **2,875,000 shares** of common stock at **$6.00 per share**, resulting in **$14.8 million** in net cash proceeds[90](index=90&type=chunk) - IPO proceeds are allocated to complete the Phase 2b clinical trial of ibezapolstat, preclinical development of ACX-375C, and general corporate purposes[90](index=90&type=chunk) [Effects of Coronavirus (COVID-19) on Our Business](index=26&type=section&id=Effects%20of%20Coronavirus%20%28COVID-19%29%20on%20Our%20Business) This section discusses the ongoing and potential impacts of the COVID-19 pandemic on the company's operations and financial performance - The COVID-19 pandemic has caused significant disruptions, including decreased patient enrollment rates in clinical trials, and its ongoing impact remains uncertain due to new variants, inflation, supply chain issues, and labor shortages[91](index=91&type=chunk)[92](index=92&type=chunk) - While the company has not experienced material adverse impacts to date, it acknowledges potential material adverse effects on its business, financial condition, and operations if the pandemic's challenges persist[93](index=93&type=chunk) [Components of our Results of Operations](index=26&type=section&id=Components%20of%20our%20Results%20of%20Operations) This section breaks down the key elements contributing to the company's financial performance, including revenue and expenses [Revenue](index=26&type=section&id=Revenue) This section clarifies the company's revenue generation status and future expectations - The company has not generated any revenue since its inception and does not expect to generate revenue from product sales in the near future, if at all[94](index=94&type=chunk) [Research and Development Expenses](index=28&type=section&id=Research%20and%20Development%20Expenses) This section details the nature and expected trajectory of the company's research and development expenditures - Research and development expenses are recognized as incurred and primarily relate to the development of ibezapolstat, preclinical studies, and other portfolio activities, including external CRO and consultant fees, laboratory supplies, manufacturing, and license fees[96](index=96&type=chunk) - The company plans to substantially increase R&D expenses for the foreseeable future as it continues the development of product candidates, with the timing, duration, and costs of future clinical trials and preclinical studies being inherently unpredictable[98](index=98&type=chunk) - Future clinical development costs will vary significantly based on factors such as per-patient trial costs, the number of trials and sites, patient enrollment rates, safety monitoring, and the efficacy and safety profile of the product candidate[99](index=99&type=chunk)[100](index=100&type=chunk) [General and Administrative Expenses](index=30&type=section&id=General%20and%20Administrative%20Expenses) This section describes the composition and anticipated future trends of the company's general and administrative costs - General and administrative expenses primarily consist of salaries, employee-related costs (including stock-based compensation), facility costs, legal fees for intellectual property and corporate matters, professional fees, and insurance costs[101](index=101&type=chunk) - These expenses are anticipated to increase in the future to support continued research and development, pre-commercialization, and commercialization activities, as well as increased audit, legal, regulatory, and investor relations costs associated with operating as a public company[101](index=101&type=chunk) [Results of Operations (Three Months Ended March 31, 2023 Compared to the Three Months Ended March 31, 2022)](index=30&type=section&id=Results%20of%20Operations%20%28Three%20Months%20Ended%20March%2031%2C%202023%20Compared%20to%20the%20Three%20Months%20Ended%20March%2031%2C%202022%29) This section provides a comparative analysis of the company's financial performance for the specified three-month periods | Metric | Three Months Ended March 31, 2023 (in thousands) | Three Months Ended March 31, 2022 (in thousands) | Percentage Change | | :--------------------------- | :----------------------------------------------- | :----------------------------------------------- | :---------------- | | Research and Development | $1,016 | $819 | 24 % | | General and Administrative | $1,887 | $1,851 | 2 % | | Total Operating Expenses | $2,903 | $2,670 | 9 % | | Net Loss | $(2,903) | $(2,670) | 9 % | - Research and development expenses increased by **$0.2 million** (**24%**) due to Phase 2b clinical trial related costs and increased consulting costs[103](index=103&type=chunk) - Net loss increased by **$0.2 million** (**9%**) to **$2.9 million**, primarily due to the increase in research and development expenses[103](index=103&type=chunk)[104](index=104&type=chunk) [Liquidity and Capital Resources](index=31&type=section&id=Liquidity%20and%20Capital%20Resources) This section discusses the company's ability to meet its short-term and long-term financial obligations and its funding sources [Overview (Liquidity)](index=31&type=section&id=Overview%20%28Liquidity%29) This section provides a summary of the company's financial position, cumulative losses, and funding needs - Since inception, the company has incurred cumulative losses of approximately **$41.5 million** as of March 31, 2023, and has generated no revenue from operations, relying primarily on equity issuances for funding[105](index=105&type=chunk) - As of March 31, 2023, the company had approximately **$7.2 million** in cash and **$5.3 million** in working capital, but these resources are not sufficient to fund anticipated operations for at least **12 months**, raising substantial doubt about its ability to continue as a going concern[106](index=106&type=chunk)[143](index=143&type=chunk) - The company received net cash proceeds of approximately **$14.8 million** from its IPO in **June 2021** and **$3.7 million** from a registered direct offering and private placement in **July 2022**[105](index=105&type=chunk) [Net Cash Used in Operating Activities](index=31&type=section&id=Net%20Cash%20Used%20in%20Operating%20Activities) This section details the cash outflows from the company's primary business operations | Metric | Three Months Ended March 31, 2023 (in thousands) | Three Months Ended March 31, 2022 (in thousands) | | :--------------------------- | :----------------------------------------------- | :----------------------------------------------- | | Net Cash Used in Operating Activities | $(1,933) | $(1,876) | - Net cash used in operating activities was **$1.9 million** for the three months ended March 31, 2023, with the net loss exceeding cash used by **$1.0 million**, primarily due to **$0.9 million** in share-based compensation and vendor payments[108](index=108&type=chunk) [Net Cash Provided by Financing Activities](index=31&type=section&id=Net%20Cash%20Provided%20by%20Financing%20Activities) This section reports the cash flows generated from or used in the company's financing activities - There was no cash provided from financing activities for the three months ended March 31, 2023, or 2022[109](index=109&type=chunk) [Critical Accounting Policies and Estimates](index=31&type=section&id=Critical%20Accounting%20Policies%20and%20Estimates) This section highlights the accounting policies that require significant judgment and estimation by management [Research and Development (Critical Accounting Policy)](index=33&type=section&id=Research%20and%20Development%20%28Critical%20Accounting%20Policy%29) This section details the critical accounting policy for expensing and estimating research and development costs - Research and development costs are expensed as incurred, with cash advances deferred and expensed when services are provided[112](index=112&type=chunk) - Costs for clinical trial activities are estimated based on the progress to completion of specific tasks, such as subject enrollment, and are subject to adjustment, with potential differences between estimated and actual service timing[113](index=113&type=chunk) [Share-Based Compensation (Critical Accounting Policy)](index=33&type=section&id=Share-Based%20Compensation%20%28Critical%20Accounting%20Policy%29) This section outlines the critical accounting policy for valuing and recognizing share-based compensation expenses - Share-based compensation for employees, officers, and directors is recognized over the service period at grant-date fair value, determined using the Black-Scholes option pricing model[114](index=114&type=chunk)[115](index=115&type=chunk) - The Black-Scholes model relies on subjective assumptions, particularly expected price volatility, which is estimated using comparable public companies due to the lack of a public market for the company's stock; changes in these assumptions could impact reported expenses[115](index=115&type=chunk) [Share-Based Payments to Vendors (Critical Accounting Policy)](index=33&type=section&id=Share-Based%20Payments%20to%20Vendors%20%28Critical%20Accounting%20Policy%29) This section describes the critical accounting policy for valuing and expensing equity awards issued to vendors - Share-based payments to vendors are expensed based on the grant-date fair value of the award or the fair value of services rendered, whichever is more readily determinable[116](index=116&type=chunk) - The Black-Scholes option pricing model is also used for valuing options and warrants issued to vendors, and changes in its assumptions or alternative valuation methods could impact reported expenses[116](index=116&type=chunk) [Other Company Information](index=33&type=section&id=Other%20Company%20Information) This section provides additional relevant information about the company, including its regulatory status and accounting pronouncements [Emerging Growth Company Status](index=33&type=section&id=Emerging%20Growth%20Company%20Status) This section explains the company's status as an emerging growth company and the associated reduced reporting requirements - The company is an 'emerging growth company' (EGC) and 'smaller reporting company,' allowing it to take advantage of reduced reporting requirements[117](index=117&type=chunk)[243](index=243&type=chunk)[247](index=247&type=chunk) - Exemptions include providing only two years of audited financial statements, not requiring auditor attestation on internal controls (**Section 404(b)**), and delaying the adoption of new accounting standards[119](index=119&type=chunk)[244](index=244&type=chunk)[246](index=246&type=chunk) - EGC status will last for up to **five years** or until specific revenue or market capitalization thresholds are met[245](index=245&type=chunk) [Recent Accounting Pronouncements](index=35&type=section&id=Recent%20Accounting%20Pronouncements) This section addresses the impact of newly issued accounting standards on the company's financial reporting - The Financial Accounting Standards Board has issued new accounting pronouncements, but the company does not believe they will significantly impact its financial accounting measurements or disclosures[120](index=120&type=chunk) [ITEM 3. Quantitative and Qualitative Disclosures about Market Risk](index=36&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 - As a smaller reporting company, Acurx Pharmaceuticals is exempt from providing quantitative and qualitative disclosures about market risk[122](index=122&type=chunk) [ITEM 4. Controls and Procedures](index=36&type=section&id=ITEM%204.%20CONTROLS%20AND%20PROCEDURES) This section details the company's disclosure controls and procedures, which management, including the CEO and CFO, evaluated as effective at a reasonable assurance level as of March 31, 2023. It also confirms no material changes in internal control over financial reporting during the period and acknowledges the inherent limitations of control systems [Evaluation of Disclosure Controls and Procedures](index=36&type=section&id=Evaluation%20of%20Disclosure%20Controls%20and%20Procedures) This section describes management's assessment of the effectiveness of the company's disclosure controls and procedures - Management, including the principal executive and financial officers, concluded that the company's disclosure controls and procedures were effective at a reasonable assurance level as of March 31, 2023[124](index=124&type=chunk) - Disclosure controls and procedures are designed to ensure that information required to be disclosed in SEC reports is recorded, processed, summarized, and reported timely[123](index=123&type=chunk) [Changes in Internal Control over Financial Reporting](index=36&type=section&id=Changes%20in%20Internal%20Control%20over%20Financial%20Reporting) This section reports on any material changes to the company's internal control over financial reporting during the period - There were no changes in the company's internal control over financial reporting during the period covered by this Quarterly Report that materially affected, or are reasonably likely to materially affect, its internal control over financial reporting[126](index=126&type=chunk) [Inherent Limitations over Internal Controls](index=36&type=section&id=Inherent%20Limitations%20over%20Internal%20Controls) This section acknowledges the intrinsic limitations of control systems, which prevent absolute assurance against errors or fraud - Management believes that disclosure controls and internal control over financial reporting are designed to provide reasonable, not absolute, assurance of achieving their objectives and preventing or detecting all errors and fraud[127](index=127&type=chunk) - Control systems are subject to inherent limitations, including resource constraints and the possibility of deterioration over time due to changes in conditions or compliance, meaning misstatements due to error or fraud may occur and not be detected[127](index=127&type=chunk)[128](index=128&type=chunk) [PART II - OTHER INFORMATION](index=38&type=section&id=PART%20II%20-%20OTHER%20INFORMATION) This part provides additional information not covered in the financial statements, including legal proceedings and risk factors [ITEM 1. Legal Proceedings](index=38&type=section&id=ITEM%201.%20LEGAL%20PROCEEDINGS) The company is not currently involved in any litigation or legal proceedings that management believes would have a material adverse effect on its business. However, it acknowledges that litigation, regardless of outcome, can negatively impact the company due to defense and settlement costs and diversion of management resources - The company is not currently a party to any litigation or legal proceedings that, in management's opinion, are likely to have a material adverse effect on its business[130](index=130&type=chunk) - Regardless of outcome, litigation can have an adverse impact on the company due to defense and settlement costs, diversion of management resources, and other factors[130](index=130&type=chunk) [ITEM 1A. Risk Factors](index=38&type=section&id=ITEM%201A.%20RISK%20FACTORS) This comprehensive section outlines various risks that could materially and adversely affect the company's business, financial condition, results of operations, and future growth prospects. These risks span operational challenges as a clinical-stage company, funding needs, reliance on its lead product candidate, regulatory hurdles, dependence on third parties, intellectual property issues, and risks related to common stock ownership and general market conditions [Risks Related to Our Business](index=40&type=section&id=Risks%20Related%20to%20Our%20Business) This section details the inherent operational and financial risks associated with the company's clinical-stage biopharmaceutical business model - As a clinical-stage biopharmaceutical company with a limited operating history (formed **July 2017**, acquired lead candidate **Feb 2018**), it is difficult to evaluate current business and predict future performance[134](index=134&type=chunk)[135](index=135&type=chunk) - The company has incurred significant net losses since inception (**$2.9 million for Q1 2023**, **$12.1 million for FY 2022**) and expects continued losses, with no revenue from product sales[137](index=137&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 accumulated deficit and negative operating cash flows[139](index=139&type=chunk)[140](index=140&type=chunk) - The company will need substantial additional funding beyond its **$7.2 million cash** as of March 31, 2023, to continue operations for more than **12 months**, and inability to raise capital could delay or eliminate product development[142](index=142&type=chunk)[143](index=143&type=chunk) - The business is heavily reliant on the success of its lead product candidate, ibezapolstat, for CDI treatment, and failure to commercialize it would materially harm the business[151](index=151&type=chunk) - Potential serious adverse side effects or unexpected characteristics identified during development could lead to abandonment or limitation of a product candidate's development[152](index=152&type=chunk)[153](index=153&type=chunk) - Market acceptance of ibezapolstat or other candidates, even if approved, is uncertain and depends on factors like efficacy, safety, pricing, and competition[154](index=154&type=chunk)[157](index=157&type=chunk) - The company is exposed to product liability and non-clinical/clinical liability risks, which could place a substantial financial burden if lawsuits are filed[158](index=158&type=chunk)[159](index=159&type=chunk) - The business substantially depends on its management team (David P. Luci, Robert J. DeLuccia, Robert G. Shawah) and the ability to attract and retain other key qualified personnel[159](index=159&type=chunk)[160](index=160&type=chunk) - Failure to complete key milestones relating to technology and product development, such as demonstrating safety and efficacy in trials and establishing cGMP, would significantly impair financial condition[162](index=162&type=chunk)[163](index=163&type=chunk) - The company will compete with larger and better-capitalized companies, and competitors may develop superior or supplanting products[165](index=165&type=chunk)[166](index=166&type=chunk) - The COVID-19 pandemic could adversely impact the business, including preclinical studies and clinical trials, through delays in enrollment, supply chain disruptions, and limited operations[169](index=169&type=chunk)[170](index=170&type=chunk) - Disruption in the global supply chain for research materials and drug supplies could negatively impact business operations, financial condition, and results of operations[173](index=173&type=chunk) - Uncertainty regarding insurance coverage and reimbursement status of newly approved products could limit marketability and revenue generation[174](index=174&type=chunk)[175](index=175&type=chunk) - Results of preclinical studies and early clinical trials are not necessarily predictive of future results, and interim, 'top-line,' and preliminary data may change, impacting regulatory approval and product profile[176](index=176&type=chunk)[180](index=180&type=chunk)[181](index=181&type=chunk) - A previously identified material weakness in internal control over financial reporting (inadequate segregation of duties) has been remediated, but additional weaknesses could be identified in the future, affecting financial reporting accuracy[182](index=182&type=chunk)[183](index=183&type=chunk)[184](index=184&type=chunk) [Risks Related to Regulatory Approval](index=58&type=section&id=Risks%20Related%20to%20Regulatory%20Approval) This section outlines the significant challenges and uncertainties involved in obtaining and maintaining government approvals for product candidates - Clinical testing is expensive, difficult to design and implement, can take many years, and is uncertain as to outcome; a failure of one or more clinical trials can occur at any stage[187](index=187&type=chunk)[188](index=188&type=chunk) - Unforeseen events during clinical trials, such as negative or inconclusive results, enrollment delays, or contractor non-compliance, could delay or prevent marketing approval or commercialization of product candidates[189](index=189&type=chunk)[190](index=190&type=chunk) - Delays or difficulties in patient enrollment, particularly for acute infections like CDI requiring rapid diagnosis and enrollment within **24 hours**, could significantly delay or require abandonment of clinical trials[191](index=191&type=chunk)[192](index=192&type=chunk)[193](index=193&type=chunk) - Failure to obtain costly government approvals (e.g., FDA) or to comply with ongoing governmental regulations relating to proposed products could delay or limit product introduction and result in failure to achieve revenues[193](index=193&type=chunk)[194](index=194&type=chunk)[195](index=195&type=chunk) - Current and potential future healthcare legislative and regulatory actions, including efforts to repeal/amend the ACA and control prescription drug prices, could adversely affect the company's results of operations[195](index=195&type=chunk)[198](index=198&type=chunk)[199](index=199&type=chunk)[201](index=201&type=chunk) [Risks Related to Our Dependence on Third Parties](index=62&type=section&id=Risks%20Related%20to%20Our%20Dependence%20on%20Third%20Parties) This section addresses the risks arising from the company's reliance on external partners for manufacturing, clinical trials, and commercialization - The company lacks a sales or marketing infrastructure and relies on developing its own sales force or outsourcing these functions, both of which carry risks of high costs, delays, or lower profitability[202](index=202&type=chunk)[205](index=205&type=chunk)[207](index=207&type=chunk) - Dependence on third-party manufacturers for product candidates for preclinical studies, clinical trials, and commercial supply increases risks of manufacturing failures, supply disruptions, and non-compliance with cGMP regulations[208](index=208&type=chunk)[209](index=209&type=chunk)[211](index=211&type=chunk)[212](index=212&type=chunk) - Reliance on third-party clinical investigators, CROs, and consultants for preclinical studies and clinical trials means less control over timing, quality, and resource allocation, and non-compliance could delay or invalidate trial results[213](index=213&type=chunk)[214](index=214&type=chunk)[216](index=216&type=chunk) - Commercialization success depends on obtaining adequate reimbursement from governmental authorities, private health insurers, and other third-party payers, which is uncertain due to cost-containment efforts and healthcare reform[217](index=217&type=chunk)[218](index=218&type=chunk)[219](index=219&type=chunk) - Relationships with future customers and third-party payers are subject to applicable anti-kickback, fraud and abuse, and other healthcare laws and regulations, exposing the company to potential criminal sanctions, civil penalties, and reputational harm[220](index=220&type=chunk)[221](index=221&type=chunk)[223](index=223&type=chunk)[224](index=224&type=chunk) [Risks Related to Intellectual Property](index=70&type=section&id=Risks%20Related%20to%20Intellectual%20Property) This section discusses the challenges and potential litigation associated with protecting and enforcing the company's intellectual property rights - The company may be involved in expensive and time-consuming lawsuits to protect or enforce its patents, with risks of patent invalidation, unenforceability, or non-infringement findings[225](index=225&type=chunk)[229](index=229&type=chunk) - Intellectual property litigation, even if resolved favorably, incurs significant expenses, distracts management, and could lead to substantial damages, injunctions, or the need for costly licenses[230](index=230&type=chunk)[231](index=231&type=chunk) - The company may need to license certain intellectual property from third parties, and such licenses may not be available or on commercially reasonable terms, potentially harming or preventing product commercialization[232](index=232&type=chunk)[233](index=233&type=chunk) - Failure to adequately protect or enforce intellectual property rights (patents, trade secrets) or secure rights to third-party patents could lead to loss of valuable rights, reduced market share, or costly litigation[234](index=234&type=chunk)[235](index=235&type=chunk)[237](index=237&type=chunk) - Inability to protect the confidentiality of trade secrets, including unpatented know-how, could harm the company's business and competitive position[238](index=238&type=chunk)[239](index=239&type=chunk) [Risks Related to Ownership of Our Common Stock](index=74&type=section&id=Risks%20Related%20to%20Our%20Ownership%20of%20Common%20Stock) This section covers risks pertinent to investors, including stock price volatility, dividend policy, and corporate governance provisions - The company does not anticipate paying any cash dividends on its common stock in the foreseeable future, meaning capital appreciation, if any, will be the sole source of gain for stockholders[240](index=240&type=chunk) - Provisions in the corporate charter documents and under Delaware law (e.g., classified board, restrictions on stockholder action by written consent, special meeting calls, advance notice for nominations, supermajority vote for certain amendments) could make an acquisition of the company more difficult and may prevent attempts by stockholders to replace or remove current management[240](index=240&type=chunk)[241](index=241&type=chunk)[243](index=243&type=chunk) - The price of the company's stock may be volatile due to numerous factors, including clinical trial results, regulatory decisions, manufacturing issues, key personnel changes, market valuations, and general economic conditions[248](index=248&type=chunk)[249](index=249&type=chunk)[250](index=250&type=chunk) - Officers, directors, and their affiliates collectively own approximately **31%** of outstanding common stock, giving them significant influence over matters requiring stockholder approval[252](index=252&type=chunk) - Failure to satisfy Nasdaq's continued listing requirements could lead to delisting, negatively affecting stock price, liquidity, and the ability to raise future financing[253](index=253&type=chunk)[255](index=255&type=chunk) - The company's certificate of incorporation and bylaws designate the Delaware Court of Chancery as the exclusive forum for certain disputes, potentially limiting stockholders' ability to choose a favorable judicial forum[278](index=278&type=chunk) [General Risk Factors](index=82&type=section&id=General%20Risk%20Factors) This section addresses broad risks impacting the company, such as public company costs, internal controls, cybersecurity, and litigation - Operating as a public company incurs significant increased legal, accounting, and compliance costs, diverting management time and potentially impacting net income or increasing net loss[256](index=256&type=chunk)[257](index=257&type=chunk)[258](index=258&type=chunk) - Failure to maintain an effective system of internal control over financial reporting could lead to inaccurate financial reports, fraud, and loss of investor confidence, potentially requiring restatements[259](index=259&type=chunk)[260](index=260&type=chunk)[261](index=261&type=chunk)[267](index=267&type=chunk)[268](index=268&type=chunk) - Dependence on digital technologies exposes the company to cyber incidents or attacks, which could result in information theft, data corruption, operational disruption, and financial loss[262](index=262&type=chunk) - Future issuances of additional capital stock in connection with financings, acquisitions, investments, or stock incentive plans will dilute existing stockholders' ownership interests[263](index=263&type=chunk) - The company is exposed to risks of fraud or misconduct by employees, principal investigators, consultants, and collaborators, including non-compliance with regulatory standards and healthcare fraud and abuse laws[264](index=264&type=chunk)[265](index=265&type=chunk) - Inaccuracies in estimates and judgments used in financial statements, or the assumptions underlying them, could materially affect financial results, harm the business, and cause the share price to decline[268](index=268&type=chunk)[269](index=269&type=chunk) - Failure to comply with environmental, health, and safety laws and regulations could result in fines, penalties, or costs that harm the business[271](index=271&type=chunk)[274](index=274&type=chunk)[275](index=275&type=chunk) - Litigation, even in the normal course of business, can adversely affect financial condition and operations due to defense costs, diversion of resources, and negative publicity[271](index=271&type=chunk) - If securities or industry analysts do not publish research or reports about the business, or they publish negative reports, the share price and trading volume could decline[275](index=275&type=chunk)[276](index=276&type=chunk) [ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=90&type=section&id=ITEM%202.%20UNREGISTERED%20SALES%20OF%20EQUITY%20SECURITIES%20AND%20USE%20OF%20PROCEEDS) This section details the use of proceeds from the company's Initial Public Offering (IPO), confirming no material change in the planned allocation of funds [Use of Proceeds from Initial Public Offering](index=90&type=section&id=Use%20of%20Proceeds%20from%20Initial%20Public%20Offering) This section outlines the specific allocation and investment of funds raised from the company's initial public offering - The IPO, completed on **June 29, 2021**, generated **$14.8 million** in net cash proceeds from the sale of **2,875,000 common shares** at **$6.00 each**[279](index=279&type=chunk) - Proceeds have been invested in a money market fund, and there has been no material change in the planned use of funds, which includes completing the Phase 2b clinical trial of ibezapolstat, preclinical development of ACX-375C, and general corporate purposes[279](index=279&type=chunk)[90](index=90&type=chunk) [ITEM 3. Defaults Upon Senior Securities](index=90&type=section&id=ITEM%203.%20DEFAULTS%20UPON%20SENIOR%20SECURITIES) The company reported no defaults upon senior securities during the period - There were no defaults upon senior securities[280](index=280&type=chunk) [ITEM 4. Mine Safety Disclosures](index=90&type=section&id=ITEM%204.%20MINE%20SAFETY%20DISCLOSURES) This item is not applicable to the company's operations - This item is not applicable[280](index=280&type=chunk) [ITEM 5. Other Information](index=90&type=section&id=ITEM%205.%20OTHER%20INFORMATION) No other information was reported under this item - No other information was reported under this item[280](index=280&type=chunk) [ITEM 6. Exhibits](index=91&type=section&id=ITEM%206.%20EXHIBITS) This section lists the exhibits filed or incorporated by reference as part of the Quarterly Report, including various certifications, XBRL documents, and the company's Certificate of Incorporation - The section lists exhibits filed or incorporated by reference, including certifications (**31.1***, **31.2***, **32.1***, **32.2***), XBRL documents (**101.INS**, **101.SCH**, **101.CAL**, **101.DEF**, **101.LAB**, **101.PRE**, **104**), and the Certificate of Incorporation (**3.1**)[282](index=282&type=chunk)[283](index=283&type=chunk) [Signatures](index=92&type=section&id=Signatures) The report is duly signed on behalf of Acurx Pharmaceuticals, Inc. by its President, CEO, and CFO on May 12, 2023 - The report was signed by David P. Luci (President and Chief Executive Officer) and Robert G. Shawah (Chief Financial Officer) on **May 12, 2023**[284](index=284&type=chunk)[285](index=285&type=chunk)

Acurx Pharmaceuticals, Inc. (NASDAQ:ACXP) Q4 2022 Earnings Conference Call March 16, 2023 8:00 AM ET Company Participants Robert Shawah - Co-Founder & Chief Financial Officer David Luci - President & Chief Executive Officer Conference Call Participants Jason McCarthy - Maxim James Molloy - Alliance Global Partners Operator Greetings and welcome to the Acurx Pharmaceutical Fourth Quarter and Full Year 2022 Financial Results and Business Update. [Operator Instructions] As a reminder, this conference is being ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 _____________________ FORM 10-K _____________________ (Mark One) ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2022 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM TO Commission File Number 001-40536 Acurx Pharmaceuticals, Inc. (Exact name of Registrant as specified in its Charter) ...

Financial Data and Key Metrics Changes - The company ended Q3 2022 with cash totaling $10.6 million, down from $13 million as of December 31, 2021 [13] - Research and development expenses for Q3 2022 were $1.6 million, an increase from $1.1 million in Q3 2021, primarily due to Phase 2b trial costs [13] - General and administrative expenses for Q3 2022 were $2 million, down from $3.5 million in Q3 2021, mainly due to reduced share-based compensation and legal fees [14] - The company reported a net loss of $3.5 million or $0.32 per diluted share for Q3 2022, compared to a net loss of $4.6 million or $0.46 per diluted share for Q3 2021 [15] Business Line Data and Key Metrics Changes - The Phase 2b clinical trial for ibezapolstat, the leading antibiotic candidate, is ongoing with 64 patients targeted for enrollment, and currently, 24 sites are open for enrollment [5][6] - The company expanded the number of clinical trial sites from 8 to up to 30 due to slower than expected enrollment [6][11] Market Data and Key Metrics Changes - The company is actively involved in R&D collaborations, including with Leiden University Medical Center, to evaluate the mechanism of action of its antibiotic candidates [7] - Acurx is also focusing on the treatment of MRSA infections, with preclinical data presented at scientific conferences [9] Company Strategy and Development Direction - The company aims to complete lead optimization and conduct manufacturing scale-up for its second antibiotic program targeting MRSA, with plans to submit an IND application [22] - Acurx is pursuing a non-dilutive grant of up to $16 million to support its second antibiotic program, with a decision expected in April 2023 [11][24] Management's Comments on Operating Environment and Future Outlook - Management expressed enthusiasm about the company's fundamentals and progress in Q3 2022, despite challenging times [16] - The company is hopeful about the PASTEUR Act, which could enhance valuations for developers of R&D stage antibiotics [26] Other Important Information - The company recognizes November as C. difficile Awareness Month and supports related foundations [9] - Acurx has presented various aspects of ibezapolstat at prominent scientific conferences, highlighting its favorable killing kinetics compared to standard treatments [8] Q&A Session Summary Question: Update on Phase 2b trial enrollment - The target is 64 patients, and the company plans to announce when 50% enrollment is reached, with potential for early termination if data is favorable [18][20] Question: Path forward for MRSA program - The initial target indication is for abscesses and skin infections caused by MRSA, with plans for both oral and IV formulations [21][22] Question: Update on the PASTEUR Act - The PASTEUR Act is still under consideration, with confidence from industry organizations that it may be approved in the new Congress [25][26]

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