Greetings and welcome to the Acurx Pharmaceuticals Reports Fourth Quarter and Full Year 2023 Earnings Results and Business Update Call. At this time, all participants are in a listen only mode. A question-and-answer session will follow the formal presentation. As a reminder, this conference is being recorded. I would now like to turn the call over to your host, Robert Shawah, Chief Financial Officer for Acurx Pharmaceuticals. Thank you. You may begin.

Thank you, Melissa. Good morning, and welcome to our call. This morning we issued a press release providing financial results and company highlights for the fourth quarter and full year 2023, which is available on our website at acurxpharma.com. Joining me today is David Luci, President and CEO of Acurx; as well as Robert DeLuccia, Executive Chairman. David will give a corporate update and outlook. After that, I'll provide some highlights of the financials from the quarter and year end of December 31, 2023, and then turn the call back over to Dave for his closing remarks. As a reminder, during today's call, we'll be making certain forward-looking statements. These forward-looking statements are based on current information assumptions, estimates and projections about future events that are subject to change and involve a number of risks and uncertainties that may cause actual results to differ materially from those contained in forward-looking statements. Investors should consider these risks and other information described in our filings made with the Securities and Exchange Commission, including our annual report on Form 10-K, which we filed on Friday, March 15, 2024. You are cautioned not to place undue reliance on these forward-looking statements and Acurx disclaims any obligations to update such statements at any time in the future. This conference call contains time-sensitive information that's accurate only as of the date of this live broadcast today, March 18, 2024. I'll now turn the call over to Dave Luci. Dave?

Thanks Rob. Good morning, everyone, and thanks for joining us to review our financial results for the fourth quarter of 2023 and also to hear some very exciting recent updates. Then we'd be pleased to take any questions. First, I'll summarize some of our key activities for the fourth quarter of 2023 or in some cases shortly thereafter. On October 2, 2023, we ended enrollment in our Phase IIb clinical trial of ibezapolstat, our lead antibiotic candidate for the treatment of patients with C. difficile infection or CDI. On November 2, 2023, we reported top-line data from the Phase IIb clinical trial including overall results from the full Phase II study, demonstrating an ibezapolstat clinical cure rate at the end of 10 days of oral treatment or EOT of 96%, 25 of 26 patients, which included 100% cure in Phase IIa and 94% cure in Phase IIb compared with vancomycin control arm, the standard of which was 14 for 14 or 100% at the end of treatment and 94% was sustained cures. No safety concerns were reported in either arm of the Phase IIb clinical trial and ibezapolstat was well tolerated in all patients in both the Phase IIa open-label trial and the Phase IIb vancomycin control segment. In consultation with our scientific advisors, the company determined that based on a review of aggregate blinded data, the Phase IIb vancomycin control trial segment was terminated early due to success showing high observed clinical cure rates with no emerging safety concerns; clinical comparability was established. We also stated that further data would be provided as it becomes available on secondary and exploratory endpoints for the Phase IIb trial segment, including sustained clinical cure data at 30 days after EOT and extended clinical cure data at 94 days after EOT as well as comparative data on the impact on the patient's microbiome. On December 11, 2023, we announced the sustained clinical cure data. These data showed that in the Phase IIb trial segment, 100% or 15 out of 15 of our advantaged patients who were cured at EOT remained cured with no reinfection 30 days later, while vancomycin experienced a reinfection rate of 14.3%, with 2 of 14 patients being reinfected. On January 17, 2024, we announced positive comparative microbiology and microbiome data for ibezapolstat in CDI patients from the Phase IIb clinical trial segment. Ibezapolstat outperformed vancomycin, showing eradication of fecal C. difficile at day three of treatment in 15 of 16 treated patients versus vancomycin, which had eradication of fecal C. difficile in just 10 of 14 treated patients. Additional data from the Phase IIb clinical trial showed that ibezapolstat, but not vancomycin, consistently observed and allowed regrowth of key gut bacterial species believed to confer health benefits, including prevention of recurrent C. difficile infection. We anticipate that additional data from the secondary and exploratory endpoints will provide further favorable separation of these two therapeutic options in our Phase III clinical trial program and ultimately in the marketplace if approved. Additional analysis regarding other secondary and exploratory endpoints will be forthcoming as data become available. We remain particularly excited about the dual impact of ibezapolstat to treat acute C. difficile infection while appropriately managing the long-term care of each patient's microbiome, which we believe is exceptional for antibiotic therapy. Having robust clinical and manufacturing data to date, we submitted a formidable information package in early February to the FDA along with a request for an end-of-Phase II meeting, which was granted by the FDA on February 26, and is scheduled to occur in April. We anticipate discussing our Phase III clinical trial mandate at this meeting and would expect documented meeting minutes from the FDA sometime in the second quarter this year. We also announced that the European Medicines Agency approved our application to be designated as a small to medium-sized enterprise or SME in Europe, which provides for certain benefits including fee reductions and other support from the European Medicines Agency for seeking marketing authorization in Europe. In November 2023, we filed an amendment to our shelf registration statement with the Securities and Exchange Commission and established a $17 million at-the-market or ATM facility with alliance global partners acting as sales agents to the company. Proceeds from the ATM will be used for general corporate purposes going forward, including our plan for Phase III clinical trial mandate. In October 2023, at ID Week, Dr. Kevin Garey presented on our behalf with selective spectrum of activity data from our Phase IIa clinical trial. Many of you may recall that Dr. Garey is the Professor and Chair at the University of Houston, College of Pharmacy, and the Principal Investigator for our microbiome aspects of the ibezapolstat clinical trial program. Also at ID Week, Bob DeLuccia, our Executive Chairman, presented our new class of novel DNA pol IIIC inhibitors in our preclinical pipeline at the symposium entitled 'New Antimicrobials in the Pipeline'. Now that's a lot of activity to digest. So I'll summarize further as to where we are today. As we speak, we're preparing to advance ibezapolstat into Phase III clinical trials and anticipate a favorable outcome from our upcoming FDA meeting regarding readiness to proceed and also to obtain agreement on the regulatory pathway for a new drug application filing for marketing approval in the U.S. once Phase III is completed. We've also officially started the regulatory process in Europe and will add other territories to the list later this year. The Phase III trials will include U.S. and international sites to enhance overall enrollment and to support international regulatory filings for marketing approval. This will save us a lot of time and money, and allow us to expand our ultimate commercial reach. To ensure the Phase III clinical trial and enrollment occurs as quickly as possible, we're adding substantially more clinical trial sites, well above the number we used to conduct our U.S.-only Phase II trials. We're now getting our arms around the costs and timelines, but our plan is to conduct the required two Phase III registration trials consecutively, not concurrently, given the size of our company and the need to use our financial resources most efficiently. The timeline for conducting our Phase III trial is not a concern since ibezapolstat will have a rolling 10 years of regulatory exclusivity in the U.S. from the FDA approval date, with similar legislation in Europe, the U.K. and Japan. We will continue to seek strategic transactions for the company, including a potential partner for the further development and potential commercialization of ibezapolstat as well as a potential sale, merger, third-party ex-U.S. territory or licensing arrangement or our strategic transaction alongside in parallel with our preparation for Phase III clinical trials. At this time, we have no commitments from potential partners or others to provide the company with capital, but we started this initiative only recently in February after our Phase IIb data was released. So basically, we have two formidable plans going forward, and we're equally excited about partnering M&A and Phase III enrollment as the next steps over the next 12 months. As we've consistently reported, ibezapolstat continues to outperform in a series of potentially life-threatening infectious diseases called C. difficile, which the U.S. CDC categorizes as an urgent threat, and there's a need for new classes of antibiotics for initial treatment but also has a low incidence of recurrence. Ibezapolstat also has FDA Fast Track designation for the treatment of C. difficile infection. Additionally, we believe ibezapolstat, if approved, could make a favorable impact by reducing the cost burden of current C. difficile infection in our U.S. health care system, which is estimated at $4.7 billion annually. We do believe the best is yet to come. And now back to our CFO, Rob Shawah, to guide you through the highlights of our financial results for the fourth quarter and full year 2023. Rob?

Thanks, Dave. Our financial results for the fourth quarter and 12 months ended December 31, 2023, were included in our press release issued earlier this morning. The company ended the year with cash totaling $7.5 million compared to $9.1 million as of December 31, 2022. Subsequent to year-end, the company sold an additional 1,121,793 shares under its ATM financing program with gross proceeds of approximately $4.5 million. Research and development expenses for the three months ended December 31, 2023, were $1.9 million compared to $1.4 million for the three months ended December 31, 2022. The increase was due to timing of Phase IIb trial-related costs and an increase in consulting costs. For the year ended December 31, 2023, research and development expenses were $6 million, an increase from $4.8 million for the year ended December 31, 2022. The increase was due primarily to the Phase IIb costs and an increase in consulting costs. General and administrative expenses for the three months ended December 31, 2023, were $3.2 million compared to $1.8 million for the three months ended December 31, 2022. The increase was due primarily to an $800,000 increase in professional fees, a $0.1 million increase in share-based compensation, and a $0.3 million increase in employee compensation costs. For the year ended December 31, 2023, general and administrative expenses were $8.5 million versus $7.3 million for the year ended December 31, 2022. The amounts reflect an increase in professional fees of $0.5 million, an increase of $0.3 million in share-based compensation, and an increase of $0.3 million in employee compensation costs. The company reported a net loss of $5.1 million or $0.37 per diluted share for the three months ended December 31, 2023, compared to a net loss of $3.3 million or $0.28 per diluted share for the three months ended December 31, 2022, and a net loss of $14.6 million or $1.15 per share for the year ended December 31, 2023, compared to a net loss of $12.1 million or $1.12 per diluted share for the year ended December 31, 2022, for the reasons previously mentioned. The company had 14,468,229 shares outstanding as of December 31, 2023. With that, I'll turn the call back over to Dave.

Thanks, Rob, and to all of you for joining us today. I'll now ask Bob DeLuccia, our Executive Chairman, to provide his perspective, given Bob manages our R&D program, and when Bob is finished, operator, please open the call for questions. Bob?

Thanks Dave and Rob for updating our stakeholders and thanks to all for the continuing support as we advance ibezapolstat into Phase III clinical trials. It is a very exciting time and really it's the final step to commercialize ibezapolstat for patients in need of a promising new antibiotic with a novel bactericidal mechanism of action to treat CDI. Many of you will remember that approximately 30,000 people die each year in the U.S. alone from CDI, and the annual incidence is more than about 500,000 per year in the United States. The bottom line here is that if the outcome of our Phase III trials is consistent with our Phase II experience, we'll have an approvable new drug in our hands. The data are solid, the market is large and our manufacturing cost is low. We do have a robust preclinical and clinical microbiome safety and CMC evidence package that we've submitted to the FDA and as Dave mentioned, they've determined it acceptable to grant us an end-of-Phase II meeting next month to discuss trial design, patient enrollment targets, and to confirm our readiness to go forward. So to complete our Phase II and international Phase III trials, which will be done sequentially as Dave mentioned and as quickly as possible, we've already initiated steps to advance screen potential clinical trial sites, which, in addition to North America, will cover sites in about 17 other countries, including several in Eastern, Central, Northern, and Western Europe, totaling about 100 sites, which we believe will accelerate overall enrollment. We'll also be including several high enrolling trial sites from the fast enrolling Summit Phase III CDI trial, which was conducted during the height of COVID-19. In addition to the global scope of the program compared to Phase II and the strength of our Phase II data, the Phase III protocol will allow more flexibility for inclusion and exclusion criteria as a standard for CDI pivotal registration trials. So we anticipate faster enrollment. Once we have results from our FDA meeting and documented meeting minutes from the FDA, our next priority will be to submit our plans to the European Medicines Agency or EMA for conducting Phase III clinical trials in Europe. If approved, we'll have the first new class of antibiotics approved by the FDA in over 30 years, with only confirmatory Phase III trials between now and market introduction. Ibezapolstat, as Dave mentioned, is fast-tracked by the FDA, it's fully patented and has regulatory exclusivity of 10 years post-market introduction in the U.S., with similar opportunities for regulatory exclusivity in other geographies to pursue at the appropriate time. With recent focus on minimizing effects on the microbiome to lower recurrence of infection, we stand out from other antibiotics since we've shown no reinfection in Phase III patients who were initially cured of their infection. So, in my over 50 years of experience in antibiotic development and marketing, I can confidently say that we have a winner here for patients with CDI and for better public health as well as for our shareholders. Thanks for letting me comment, Dave.

Thank you, Bob. Melissa, we're now ready to go to Q&A.

The first question is from Jason McCarthy with Maxim Group.

This is Michael Okunewitch for Jason. I guess to start off, I'd like to see if you could give an idea of what sort of timeline you are expecting between getting those meeting minutes back from the FDA and actually launching the first of those Phase III studies?

So we think that we will be ready to enroll the first patient in the international Phase III in the fourth quarter of this year.

And then, I guess, regarding the international component to the study, could you talk a little bit more about the path to actually getting those sites online? And is this something that you would look to have in place ahead of the launch? Or would you start with what you have when you usually enroll in the study like you are in these international sites as they were approved?

We will be a little bit on both. We have a number of the sites already ready to go from the international list. There won't be any hold-up from the international aspect of it. We actually have a consultant who is extremely familiar with Phase III C. diff international trials who has been guiding us in this regard. But yes, clearly, when our manufactured product is ready, we'll be ready to go with a large portion, at the very least, of the hundred sites.

And then one last one from me, and I'll hop back in the queue. With regards to securing international partnerships, do you think this is something with your existing body of data that is compelling enough that you could really progress those conversations now and get a partner, or would you expect it to be more after you get that first slot of Phase III data?

No, I would expect that the prime time for us to find, I'd say a European partner or a Japanese partner, would be when we start enrolling the first of the two Phase III trials. Once we have the Phase III trial mandate completed and we're ready to file a new drug application, if we haven't had a partnership by then, I think it would probably not occur until a year after the market introduction because folks will want to see how well we do. I think that the time is right now. I'll make one additional comment on the territorial partnerships to carry Michael's question response a little bit further. As we look at strategic alternatives, there's M&A and there's territorial licensing and co-development agreements that I have entered into in the past. With our share price being where it is, the territorial licensing is a bit easier to consummate because it's all about the intrinsic value of your drug, as opposed to M&A, which you can't, in my view, wholly divorce yourself of your NASDAQ share price. So it may be a more attractive option for our board of directors, but we'll see what term sheets present themselves.

Our next question comes from the line of James Molloy with Alliance Global Partners.

The Phase III trials, I know that obviously a lot to go here, but can you walk through the expectation which we should expect to see coming out of the end of Phase II? And then the trial designed to sort of length of time to run is about two years start to finish. So Phase IIb, I know we were dealing with COVID then as well. Does that seem reasonable to run these two Phase IIIs from start to finish?

So we're going to address one Phase III and then the idea would be to either do a strategic transaction after that first Phase III or, with positive data on the first Phase III, get a share price rise and then raise capital for the second Phase III. We're targeting a year and a half from start to finish for the first Phase III, and that would have us completing the first Phase III in the second quarter of 2026. Now I can tell you that we spent a lot of time looking at the Summit Therapeutics experience, and Summit enrolled about 750 patients in approximately two years' time, largely in Eastern Europe, where the behavior patterns weren't dramatically changed during COVID as they were here in the U.S. So, that's a public list on clinicaltrial.gov. We were able to see exactly the heat patterns from their enrollment. This has gone a long way to helping us get comfortable with fixing the enrollment issues we had during COVID with our U.S.-only trial.

I thought I'd heard you say earlier in the call that you're going to run the two trials at the same time. Obviously, I misheard that—you're running back to back.

No. Our going-in plan is to do them consecutively instead of concurrently for the financial reasons that we discussed. But if we get a partnership, say a European licensing agreement, that brings in enough money to make a change along the way, then we would certainly start the second Phase III accordingly.

Our next question comes from Ed Arce with H.C. Wainwright.

So a couple from me. Firstly, on the end of Phase II next month, and I apologize I joined late, so maybe you went over this already, but wanted to make sure to review sort of the key objectives in particular what do you not have agreement with the agency yet on that you would seek to get agreement on next month in that meeting? And then secondly, I think you mentioned a wider inclusion-exclusion criteria for the Phase III relative to the prior Phase II. I just wanted to get a little more clarity on that, particularly due to concerns there might be around the risk that you could change the sort of design of the trial, and there could be some disruption from a slightly different patient population.

Thank you, Ed. I'll answer the first part of your question and ask Bob to provide a response for the inclusion and exclusion criteria part of your question. So for the first part of your question, what we hope to agree on with the FDA is the overall protocol designed for our Phase III trial, including the number of patients to be enrolled, and the notion that we're going to have a vancomycin control arm like we had in our Phase IIb. Largely, the trial design is 90% plus of what the trial design was for our Phase IIb. So we don't expect a lot of drama, but it's a necessary step to move into Phase III, so we’re looking forward to our evaluation point that we have to get through. Bob, did you want to add some comments on the inclusion and exclusion criteria?

I think really two things, which is standard for going forward in Phase III is that we'll have additional patients beyond mild and moderate included in the trial. So this is not severe CDI, but a little bit more than moderate according to the IDSA criteria for patient entry into a trial in the study. We've already submitted a framework to the FDA in the meeting package. It's very straightforward. I'd even say a higher percentage than they've said at 90%. We're pretty much there with the design. It's the same design basically, as Phase II and very standard according to the FDA guidance from October 2022 as to what needs to be included in the Phase III clinical trials. So we'll be discussing the final numbers of patients, and the statistical analysis plan will be finalized at that upcoming FDA meeting as well. Anything else? Does that answer your question?

Yes, that's helpful.

Thank you. Ladies and gentlemen, that concludes our question-and-answer session. And this concludes our call today. We thank you for your interest and participation. You may now disconnect your lines.