Acurx Pharmaceuticals(ACXP) - 2021 Q4 - Annual Report

Business Overview 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 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] - 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] - 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][21] - 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] Our Technology 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] - 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][21] - 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] - 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][34] - 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][33] About QIDP and Fast Track Designations 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] - 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][37] - 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] Mechanism of Action 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] - 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] - 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] Leiden University Medical Center/Health Holland Research Project 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][44] - 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] Pre-Clinical Studies 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] - 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] - 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][49] 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][52] - 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][63] In vivo Efficacy Animal Models 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] - 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] 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][75] C. difficile Infection Overview 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] - 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] - 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] Current CDI Antibiotic Treatments 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] - Fidaxomicin (Dificid) is approved for CDI treatment but has not demonstrated superiority over vancomycin in treating highly virulent strains, such as ribotype 027[83] - 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] - 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][130][131][133] Clinical Strategy 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] - 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][92] - 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] - 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] Regulatory Status 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] - 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] Government Regulation 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][98] - 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] - 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] 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] - 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] - 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] Market Opportunity 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] - 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] - 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] - Ibezapolstat's unique mechanism of action provides significant market penetration potential for treating patients with recurrent infections[125] 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][127] - 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] - 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][130][131][133] - 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] Competitive Strengths 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] - 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] - 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][139][140] - The company possesses a simple and low-cost manufacturing process, with anticipated cost of sales below 5% of the expected retail price[138] - 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] Intellectual Property and Market Exclusivity 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][140] - 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][143] - 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] - 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] GAIN Exclusivity for Antibiotics 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] Potential External Positive Drivers in 2022 for Sector 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] - 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] - 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] - 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] Pipeline Products 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] 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] - 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] - 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] Employees and Human Capital Resources 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] - 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] Corporate Information 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] - The company's principal executive offices are located at 259 Liberty Avenue, Staten Island, New York 10305[160] Available Information 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] Risk Factors The company faces significant risks including limited operating history, funding needs, reliance on ibezapolstat, regulatory hurdles, and intense competition Risks Relating to Our Business 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][168][172][176] - 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][170][171] - 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][179][182] - 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][187] - 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][201][204] - 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][213][214][217] Risks Related to Regulatory Approval 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][219][220] - 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][222][223][224] - 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][226] - 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][229][230][231][232][233] Risks Related to Our Dependence on Third Parties 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][235][237] - 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][239][243][244] - 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][246][248][249] - 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][251][252] - 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][255][256][257] Risks Related to Intellectual Property 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][260] - 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][262] - 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][264][265] - 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][266][267][268][269] Risks Related to Our Common Stock 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] - 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][272] - 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][275][276][277] - 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][280][281] - 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][283][284] - 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][286][287] General Risk Factors 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][289][290] - 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][293][294] - 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][296] - 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] - 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][299][301] - 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][304] - 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][307][308][309] Unresolved Staff Comments The company has no unresolved staff comments to report - The company has no unresolved staff comments[314] Properties 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] Legal Proceedings 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] Mine Safety Disclosures Mine safety disclosures are not applicable to the company's operations - Mine safety disclosures are not applicable[315] PART II 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 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] - As of March 15, 2022, there were approximately 351 record holders of the company's common stock[318] - 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] - The company did not sell any unregistered equity securities during the fiscal year ended December 31, 2021[320] - 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] - 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] Selected Financial Data This section states that selected financial data is not applicable - Selected financial data is not applicable[322] Management's Discussion and Analysis of Financial Condition and Results of Operations 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][328][332] - 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 $14.8 million[335] - The COVID-19 pandemic led to a significant decrease in patient enrollment rates for Phase 2a and Phase 2b clinical trials but did not impact R&D activities with key suppliers[338] Summary of Results of Operations (Year Ended December 31) | Metric | 2021 ($ 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 $13 million in cash, and expects existing capital resources to be sufficient to meet cash requirements for at least the next 12 months[334][350][362] Summary of Cash Flows (Year Ended December 31) | Activity | 2021 ($ 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 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] - 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] - 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][332] - 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][332] - As of December 31, 2021, the company had approximately $13 million in cash[334] Recent Developments 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] - 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] - 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] - 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] Components of our Results of Operations 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] - 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][345] - 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] Results of Operations 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] - 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] Liquidity and Capital Resources 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] - The company's working capital has primarily been funded through equity issuances, including private placements and an IPO[351] - The company raised approximately $12.9 million in net cash proceeds through equity financings between March 2018 and October 2020[352] - The company received a $66,503 Paycheck Protection Program (PPP) loan in May 2020, which was fully forgiven on April 13, 2021[355] - The company completed its IPO in June 2021, generating $14.8 million in net cash proceeds[356] Summary of Cash Flows (Year Ended December 31) | Activity | 2021 ($ 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] - Net cash provided by financing activities was $14.8 million in 2021, primarily from net proceeds of the IPO[359] - 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] Recent Accounting Pronouncements 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] Critical Accounting Policies and Significant Judgments and Estimates 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] - 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] - 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] - 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] - 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] - 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] Quantitative and Qualitative Disclosures About Market Risk 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] - 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] Financial Statements and Supplementary Data 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] Changes in and Disagreements with Accountants on Accounting and Financial Disclosure 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] Controls and Procedures 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] - 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] - 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][387] - No significant changes in internal control over financial reporting occurred during the reporting period[389] Other Information This section states that there is no other information to report - No other information[389] Disclosure Regarding Foreign Jurisdictions that Prevent Inspections 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] PART III This section provides information on directors, executive officers, corporate governance, executive compensation, and security ownership Directors, Executive Officers and Corporate Governance 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] [Executive Compensatio