Acurx Pharmaceuticals, Inc. (NASDAQ:ACXP) shares took a beating, opening 25% lower on January 17th after the company’s public relations announcement. This was in the wake of the revelation that its novel C. diff antibiotic outperformed the standard of care, vancomycin, in restoring the gut microbiome during treatment. Despite the positive press release, which left out details to be unveiled at the Gulf Coast Consortia Antimicrobial Resistance (“AMR”) Conference in Houston, Texas a day later, the shares plummeted. This left investors confounded and anxious regarding the ~20% share price decline since then. Nevertheless, there is a silver lining in this sell-off, providing another opportunity to acquire shares before Acurx releases additional ibezapolstat data.
The Decline: Separating Fact from Speculation
There are only a few reasons for the share price decline that I can think of. Bad data is certainly not the case as most of the efficacy data is out. The gut microbiome headline was good and it’s just icing on the cake. The company does have an ATM facility that they could have been tapping into the day of a press release—this was a likely scenario; however, the company confirmed to me that they were not using the ATM last week. So the only other explanation is that investors somehow had misaligned expectations as they had been anticipating the release of 94-day efficacy: sustained clinical cure rates. If this is the case, that data should be released in the coming weeks.
Anticipated Data Release
The reason the data release only included an overall statement of success was because the company was saving the details for a presentation at a conference. Acurx CEO David Luci has indicated that data is coming out as it is received. As such, investors should be expecting 94-day sustained clinical cure rates to be released in the near future. This, along with the company’s gut microbiome study, may set ibezapolstat apart as a preferred or first-line antibiotic for C. diff.
Comparison with Rival Products
Another C. diff antibiotic, ridinilazole, developed by Summit Therapeutics (SMMT), recently failed a phase 3 trial. Ridinilazole was tested for superiority against vancomycin, but the results showed the compound to perform roughly equal to vancomycin while halving the recurrence rate. On the surface, this seems similar to Acurx’s ibezapolstat with phase 2b results showing vancomycin had a 100% clinical cure rate. However, the ibezapolstat data presented may suggest a different story.
Phase 3 Potential
If Acurx can focus on ibezapolstat’s perceived strengths in the upcoming phase 3 trial—such as the preservation of the gut microbiome and extended cure rates—it may gain a significant advantage. This approach may diminish the significance of numerically superior but statistically insignificant improvements in initial cure rates and be more positively received.
Key Milestones on the Horizon
The most significant catalyst will be the confirmation of efficacy with the release of 94-day extended clinical cure rates. While other datasets may be released, the extended clinical cure rates are the most important. Furthermore, M&A or licensing could occur at any point given Acurx’s CEO’s prior success in conducting business development activities with less robust data.
Financial Considerations
If Acurx is going to undertake a phase 3 trial by itself, it will need significant additional funds, which raises some concerns given its relatively small market cap. There is a possibility the company will not be able to execute a licensing deal or be sold altogether, so investors should consider that dilution is always possible.
As of September 2023, the company had $7.1 million in cash with $12.7 million in TTM net income. The company might have been using its $17 million ATM facility in the past few months to bolster its cash balance, which could be a good financial move if the company anticipates successful business development activities to wrap up.
Understanding the Risks
Biotech companies are subject to dilution from fundraising and Acurx has a relatively low cash balance. Additionally, biotech company stocks are subject to binary outcomes, where clinical data can make or break a company’s lead drug asset. Investors must be aware of these high risks.
Closing Thoughts
Acurx shares had no fundamental reason to sell off last week. The company still has the best C. difficile data in existence at this point. While the antibiotics space is challenging, the company has good insider ownership, a dealmaking CEO, fantastic phase 2 data, and upcoming catalysts that could further prove out ibezapolstat’s value proposition in C. diff treatment. ACXP should be worth $224 million, roughly 4.5x the current levels.
Editor’s Note: This article covers one or more microcap stocks. Please be aware of the risks associated with these stocks.
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