Greetings. Welcome to the Acurx Pharmaceuticals Second Quarter 2024 Financial Results. At this time, all participants are in listen-only mode. A question-and-answer session will follow the formal presentation. Please note this conference is being recorded. At this time, I'll now turn the conference over to Rob Shawah, Chief Financial Officer. Rob, you may begin.

Thank you, Rob. Good morning, and welcome to our call. This morning, we issued a press release providing financial results and company highlights for the second quarter 2024, which is available on our website at acurxpharma.com. Joining me today is Dave Luci, President and CEO, who will give a corporate update and outlook. After that, I'll provide some highlights of the financials from the quarter ended June 30, 2024, 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 the forward-looking statements. Investors should consider these risks and other information described in our filings made with the Securities and Exchange Commission, including our quarterly report on Form 10-Q, which we filed on Thursday, August 08, 2024. You are cautioned not to place any undue reliance on these forward-looking statements, and Acurx disclaims any obligation 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, August 9, 2024. I'll now turn the call over to Dave. Dave?

Thanks, Rob. Good morning, everyone, and thanks for joining us to review our financial results for the second quarter of 2024 and also to hear some very exciting recent updates. First, I'll summarize some of our key activities for the second quarter or in some cases shortly thereafter. In April, we completed a successful End-of-Phase 2 meeting with the FDA confirming Phase 3 readiness for ibezapolstat, our lead antibiotic candidate to enter Phase 3 clinical trials for the treatment of C. difficile infection. Agreement with the FDA was reached on key elements to move forward with our international Phase 3 clinical trial program. Agreement was also reached with the FDA on a complete non-clinical and clinical development plan for filing of a New Drug Application or NDA for marketing approval. We've since continued activities to advance ibezapolstat into international Phase 3 clinical trials for the treatment of C. difficile infection. In parallel, we're also preparing to submit requests for regulatory guidance to initiate clinical trials in the European Union, United Kingdom, Japan, and Canada. Also in April, we attended the European Society of Microbiology and Infectious Disease or ESCMID scientific congress. Dr. Kevin Garey provided an oral presentation of our Phase 2 data entitled, 'A Phase 2, Randomized, Double-Blind Study of Ibezapolstat Compared with Vancomycin for the Treatment of C. difficile Infection.' Dr. Garey is Professor and Chair, University of Houston College of Pharmacy, and the Principal Investigator for microbiology and microbiome aspects of the ibezapolstat clinical trial program, and he is a Scientific Advisory Board member for Acurx. The oral presentation included additional analyses of clinical and microbiological data and is available on our website at acurxpharma.com. The complete Phase 2 results are being prepared for submission to a prominent scientific journal for publication. Also in July, results from the ibezapolstat Phase 2 clinical trial in patients with C. difficile infection were presented at the 17th Biennial Congress of the Anaerobe Society of the Americas by Taryn A. Eubank, PharmD, Research Assistant Professor, University of Houston College of Pharmacy, and her oral presentation was entitled 'Clinical Efficacy of Ibezapolstat in CDI, C. difficile Infection: Results from Phase 2 Trials.' Also in July, very timely given our late-stage development progress, the United States Patent and Trademark Office or USPTO granted us a new patent for ibezapolstat, which specifically encompasses the treatment of C. difficile infection while reducing recurrence of infection and improving the health of the gut microbiome. This patent expires in June 2042, and we think will provide an important downstream competitive advantage. And finally, some late-breaking news today. Following our successful End-of-Phase 2 clinical meeting with the FDA, which confirmed our Phase 3 clinical trial readiness, and according to FDA regulatory requirements, we submitted our request to the FDA for a meeting to review our manufacturing processes and specifications for drug substance and final product and packaging, typically referred to as CMC or Chemistry Manufacturing and Controls for our Phase 3 clinical trials. We anticipate the FDA will grant the meeting in the fourth quarter. So now we have further momentum as we continue to seek one or more strategic transactions for the further development and potential commercialization of our lead antibiotic candidate ibezapolstat territory or globally in parallel with ongoing preparation for Phase 3 clinical trials. We will provide a detailed update on our partnership transactions if and when we reach an agreement with a third party. Throughout the rest of this year, we'll continue to roll out our Phase 2 results in either oral presentations or scientific posters or in some cases, both, which will include results from new analyses as data becomes available at various prominent scientific conferences including the World Antimicrobial Resistance Conference in Philadelphia this September. Also in September is the 8th International C. Difficile Symposium in Bled, Slovenia, which is the premier global venue for the review of C. difficile research. In October, we'll be presenting at the annual meeting of the Infectious Disease Society of America or ID Week in Los Angeles. As we continually reported, ibezapolstat clinical results continue to outperform in a serious and potentially life-threatening infectious disease caused by C. difficile bacteria that the Centers for Disease Control categorizes as an urgent threat and calls for new classes of antibiotics for initial treatment that also have a low incidence of recurrence. Ibezapolstat also has FDA Fast Track designation for treatment of C. difficile infection. Additionally, we believe ibezapolstat, if approved, could make a favorable impact by reducing the cost burden of recurrent C. difficile infection on our U.S. healthcare system, which is estimated at $4.7 billion annually. We do believe the best is yet to come. And now back to our CFO, Robert Shawah, to guide you through the highlights of our financial results for the second quarter of 2024. Rob?

Thanks, Dave. Our financial results for the second quarter ended June 30 were included in our press release issued earlier this morning. The company ended the quarter with cash totaling $6.4 million compared to $7.5 million as of December 31, 2023. During the second quarter, the company sold an additional 133,066 shares under its ATM financing program, with gross proceeds of approximately $0.3 million. Research and development expenses for the three months ended June 30, 2024, were $1.8 million compared to $1.7 million for the three months ended June 30, 2023. The increase was due primarily to an increase in manufacturing-related costs during the quarter of $0.4 million, partially offset by a reduction in consulting fees of $0.3 million. For the six months ended June 30, 2024, research and development expenses were $3.4 million compared to $2.8 million for the six months ended June 30, 2023, an increase of $0.6 million, primarily due to a $0.8 million increase in manufacturing-related costs offset by $0.2 million decrease in consulting-related fees. General and administrative expenses for the three months ended June 30, 2024, were $2.3 million compared to $1.7 million for the three months ended June 30, 2023, an increase of $0.6 million. The increase was primarily due to a $0.3 million increase in professional fees and a $0.2 million increase in non-cash share-based compensation-related costs. For the six months ended June 30, 2024, general and administrative expenses were $5.1 million compared to $3.6 million for the six months ended June 30, 2023, an increase of $1.5 million. The increase was primarily due to a $1 million increase in professional fees, $0.4 million increase in non-cash share-based compensation costs, and a $0.1 million increase in legal costs. The company reported a net loss of $4.1 million, or $0.26 per diluted share, for the three months ended June 30, 2024, compared to a net loss of $3.4 million, or $0.28 per diluted share, for the three months ended June 30, 2023, and a net loss of $8.5 million, or $0.54 per share for the six months ended June 30, 2024 compared to a net loss of $6.3 million, or $0.53 per share, all for the reasons previously mentioned. The company had 15,996,168 shares outstanding as of June 30, 2024. With that, I'll turn the call back over to Dave.

Thank you, Rob, and thanks to all of you for joining us today. I'll now turn the call over to Rob, our operator, to open the call for questions. Rob?

Thank you. We'll now be conducting the question-and-answer session. Our first question today comes from the line of Jason McCarthy with Maxim Group. Please proceed with your question.

Hey, David. Good morning. Thank you for taking the questions. Have you provided any information on what the Phase 3 could look like in terms of its size and scope? And also, is the plan to try to seek a partnership and/or grant funding for some non-dilutive capital to advance that program or will the company look to fund that trial itself?

Thank you for the question, Jason. Yes, we have provided guidance on the Phase 3 program. There will be two required Phase 3 registration studies set up as international trials, each involving 450 patients in an ITT population. The patients will be randomly assigned one-to-one to either ibezapolstat or oral vancomycin. We aim to raise funds non-dilutively to cover as much of the Phase 3 program as possible, with equity offerings only if necessary. For instance, if we secure a royalty finance partner, it could potentially fund an entire Phase 3 trial. We are also exploring territorial partnerships in regions like South America, Europe, and Japan. If a comprehensive deal is reached, the Phase 3 could be conducted by the purchasing entity. Additionally, we are planning to apply for non-dilutive government or quasi-government grants, but I won't disclose their names to maintain our competitive edge. These approaches are completely separate from equity financing. Recently, we've also started considering more creative avenues, including engaging with SPACs that may still have interest despite recent challenges.

Okay. Are you also looking at the potential for new antibiotics? That space is getting active. Any thoughts on that?

Iterum Therapeutics, I'd have to check with our team to see if we've reached out to them. I don't think we have, but certainly, we'd be wide open to a conversation.

Yeah. Just in terms of activity in the space, it’s getting busy, maybe an opportunity for Acurx to benefit tangentially. Just last question, what do you think the cost of both trials combined with the two Phase 3s will be?

So the two together should be $25 million each. So together, they should be $50 million. But we are in this advantageous position that when you think about dilution, we can run the trials consecutively instead of concurrently. Then with the positive data from the first Phase 3, and that's released, theoretically, our share price should see a significant rise, and then we could raise money at much higher prices to do the second Phase 3. The reason that's available to us almost uniquely is that we have 10 years of commercial exclusivity from the point of FDA approval, with similar regulatory protection in Europe, the U.K., and Japan and Canada. So that would actually work for us. We also have this new patent going out to 2042, which is, if not unique, very unusual for an antibiotic to get a patent on antibiotic-related things.

That patent covers what again, one more time, so I missed it, as you mentioned it earlier?

Yeah. The treatment of C. difficile infection and the reduction in reinfection and protection of the gut microbiome. But Jason, I'd like to address something that you mentioned at the end of your first question regarding antibiotics picking up some steam. It's true antibiotics are picking up steam. We've seen a substantial uptick in cases of C. difficile. We think it's a result of what's happened with the COVID experience worldwide. At the World Antimicrobial Resistance Conference in September in Philadelphia, where we'll be presenting, we expect even more scientific push for the government to pass regulations like the Pasteur Act, which would have a tremendous benefit at getting new classes of antibiotics to the market because of the need. Now, I think what we have to do is find a way to satisfy that scientific need that's being enunciated at the Antimicrobial Resistance Conference and other conferences throughout the world, like in Bled because antimicrobial resistance has become a real hot topic. There's a scientific need, but we need to marry that up with the political tendencies not to want to do anything to benefit big pharma. So I think the Government and Congress needs to find a way to satisfy the scientific need without throwing a bone to the pharmaceutical companies.

Got it. Interesting. Good stuff, David. Thank you.

Thanks, Jason.

Our next question is from the line of Ed Arce with H.C. Wainright. Please proceed with your questions.

Hi. Good morning, everyone. This is Thomas Yip asking a couple of questions for us. I appreciate the kind of questions.

Thank you.

So, hi. Good morning. So, first question from us regarding the Phase 3 study in the U.S. You mentioned the CMC review schedule for the FDA in the fourth quarter. So just trying to figure out when we should expect this trial to start, especially regarding the first patient dosing? Would that be a fourth quarter event?

From where we are today, I think it would be unrealistic for me to be very optimistic. We might be fortunate to have the CMC cleared in the fourth quarter. The earliest we could possibly start would be in the first quarter of next year. I would adjust my expectations accordingly. Additionally, it's important to remember that these are international studies. We've discussed our plans to seek regulatory guidance in different international regions. We want to ensure that we meet with the European Medicines Agency before we begin enrolling patients in Europe. We can't submit a regulatory package to the European Medicines Agency until we finish the CMC review by the FDA. Once that's completed, we can move forward with our existing process for the European Medicines Agency submission, which must include all the CMC information and the FDA's assessment. We hope to submit this in Europe around November or December of this year.

All right. Got it. Thank you for the additional color. And then, you touched on it earlier in the prepared remarks regarding partnership discussions. Just wondering, what form of partnership do you consider to be the ideal situation for Acurx?

Our main focus is to secure sufficient funding to advance ibezapolstat into Phase 3 and bring it to market as swiftly as possible. That's our highest priority. Depending on the party we engage with, we may consider options such as a European license and co-development agreement or a Japanese license and co-development agreement. Typically, these agreements include an upfront payment, clinical and commercial milestones, and a royalty. We would aim to eliminate the clinical and commercial milestones and instead seek funding for the Phase 3 program that aligns best with our situation, though an M&A transaction is also a possibility. South America is currently an attractive market as well, where we are getting interest from a number of companies, though that would likely result in a smaller deal. A royalty agreement would be highly beneficial, potentially providing $20 million to $25 million in non-dilutive financing at closing, in exchange for a royalty based on the financial arrangements determined in our modeling, likely at a percentage agreed upon by our Board.

All right. Thanks for that. And then perhaps one last question from us side, kind of following up on your thoughts on the priority to start Phase 3 ASAP. Would it be possible to start the Phase 3 study at both U.S. and ex-U.S. sites simultaneously, or would it be possible to start piecemeal with U.S. sites first even with ex-U.S. agreement in hand, such as EMA? Would that be a possibility to roll out the Phase 3 study?

Yeah. I mean we have to talk to our R&D team to make sure that we’re not kind of stepping on any toes in Europe if we were to do that or to make sure that we’re not – by doing that, we don’t want to be stopped from some benefit in Europe that we could have gotten if we had it pre-agreed. So that is certainly something that we’re interested in. If we had the financing to do one of the two Phase 3s today, I’d say, we’d still be on target to start, at least piecemeal in the fourth quarter.

Understood. Thank you. Thank you so much again for taking our questions, and I’m looking forward to updates in the coming months.

Awesome. Well, thank you for your questions and participation.

Our next question is from the line of James Molloy with Alliance Global Partners. Please proceed with your questions.

Good morning, David. Good morning, Rob. Thank you for taking my questions this morning. I want to follow up a little more on Jason's question about partnerships. It sounds like you're speaking a little more on this call, perhaps than you have or maybe my faulty memory, about outright acquisitions. Can you walk a little bit through how that environment may have changed over the quarter or how things may be looking? I know it's been a challenging space for biotech over the last year or so. But what do you see in the purchase levels? Are you able to disclose the number of people you may be talking to or the relative size of the companies you're talking to?

The companies we are in discussions with vary in size, but they are all significantly larger than us. Many are well-known brands that you would recognize if you looked in your medicine cabinet. It's a diverse range, and you didn't miss anything, James. We began this process in earnest around mid-May, coinciding with our last earnings call. I announced then that we were officially starting this process because we had all the necessary elements in place after completing our End-of-Phase II meeting with the FDA and were confident in our position. The timing was ideal, as I also signed up for the Bio CEO conference in late May, which offered a fantastic opportunity to connect with interested parties nationwide. I had about 29 meetings in San Diego, and we've engaged a renowned consultant specializing in M&A and business strategies. They have reached out to several companies on our behalf. We currently have several confidentiality agreements signed, ranging from more than five to less than twelve, which is more than I expected. However, until we finalize any deals, we have to be cautious. There has been significant interest, especially in the antibiotic field, which I didn't anticipate. This interest appears to be driven by several factors, including the rise in cases of Listeria and C. diff, as well as an increasing emphasis on social responsibility from regulatory bodies like the CDC and WHO regarding the urgent need for new antibiotics to tackle antimicrobial resistance. I hope this answers your question. As I mentioned to Ed Arce, we are taking the lead in these discussions aiming to keep ibezapolstat as broadly available as possible while minimizing dilution. We are open to various partnership structures. Some parties are interested in acquiring worldwide rights, while others may only be equipped to handle specific territories, such as Europe or Japan. We are also in talks with major companies in South America, which tends to align closely with Central America. That's the current status of our efforts. I'm doing my best to be transparent without breaching any confidentiality agreements.

No, absolutely not. As always, please share as much information as you can, I greatly appreciate it. Regarding the ATM, you have approximately $8 million utilized out of the $17 million total. What is the current cash run rate before using the ATM? How does that affect your negotiations with potential partners or non-dilutive funding options?

Sure. Yes. Go ahead, Dave.

Well, I was just going to say, with the ATM, we probably have sufficient funds without any trials going on until like the middle of '26. Without the ATM, it's probably the middle of '25.

Excellent. That’s all my questions. Thank you, gentlemen.

The next question is from the line of Jonathan. Please proceed with your questions.

Hey, David. How are you? Good morning.

Good morning, Jonathan.

Good morning, sir. I’d like to follow up on the ATM question. How many shares are still outstanding? Also, are there any shares still outstanding from previous financing?

Sure. The way an ATM is set up, there isn't a specific number of shares tied to it. We can withdraw cash from the ATM at an intraday price on any given day. The number of shares granted depends on the share price and how much we sold, so there isn't a fixed limit. What was your second question?

Are there any warrants still outstanding from previous financings?

Yeah. There are warrants outstanding from previous financings and from legacy warrants. The actual number is $6.1 million. $6.1 million warrants outstanding with a weighted average exercise price of $3.28.

Thanks, Rob. David, if you could you kind of walk through a bit of what this new microbiome patent is? How does that give ibezapolstat and Acurx such an advantage? Obviously, ibezapolstat, it's kind of a new fangled thing, if you will.

The first advantage is that we now have patent protection in the U.S. that extends until June 2042, allowing us to have slow enrollment for many years before the commercial value becomes a question. This is a significantly long timeframe. What's unique about it is that most antibiotics lead to dysbiosis, which is an imbalance in healthy gut bacteria. We have validation from the U.S. PTO confirming that ibezapolstat can eliminate C. difficile bacteria and reduce the chances of reinfection, which is part of the patent. Additionally, we are restoring the healthy microbiome. Therefore, anyone who typically views antibiotics negatively due to their potential to cause dysbiosis may reconsider with our antibiotic. They might conclude that instead of replacing antibiotics with alternatives because of dysbiosis, we should focus on developing antibiotics that do not cause dysbiosis and actually help restore a healthy microbiome. In this respect, it appears to be the only antibiotic of its kind that I am aware of.

Got you. Thank you. Kind of codifying what we've already seen in preclinical and clinical data regarding the specificity as well as the protective nature of ibezapolstat.

Yeah. And when you think about business development within big pharma, these big pharma companies tend to want to be associated with cutting-edge science, and they tend to want their reputations to be tied to cutting-edge science, and this just helps make our case.

Got you. Thank you.

No problem, Jonathan. Thank you.

Thank you. At this time, there are no additional questions. I'd like to thank everyone for joining us on our conference today. You may now disconnect your lines at this time, and we thank you for your participation.

Thank you, Rob.

Thank you.