Initiating Coverage on Acurx Pharmaceuticals Inc. (NASDAQ: ACXP)


May 9, 2024
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Acurx Pharmaceuticals Inc. (NASDAQ: ACXP) (“Acurx” or the “Company”) is a clinical stage biopharmaceutical company developing a new class of antibiotics for infections caused by bacteria that have been classified as priority pathogens by the World Health Organization (WHO), US Centers for Disease Control and Prevention (CDC) and the FDA. In 4Q’2023, Acurx completed the Phase 2 trial for the use of its lead drug candidate, ibezapolstat, for the treatment of Clostridium difficile Infection (CDI). The trial included a Phase 2a and Phase 2b component. The primary endpoint for the trial was to show Clinical Cure (CC) with the secondary endpoint to show Sustained Clinical Cure (SCC) and a positive impact on the
microbiome that reduces the recurrence of CDI. The Company met the CC and SCC endpoints in the Phase 2 trial with the head to head microbiome results with vancomycin and the Extended Clinical Cure (ECC) results expected to be released in January 2024.

Based on the Phase 2 trial results, ibezapolstat has a scientific basis to move to a Phase 3 trial. The Company intends to meet with the FDA in the 2Q’2024 to determine the size and scope of the Phase 3 trial. The Company is seeking to undertake an international trial comprising two arms to be completed sequentially. The initial arm of the program will form the basis for the continuation and financing of the
second arm of the study. Acurx is seeking to follow the design of the Phase 3 trial conducted by Summit Therapeutics for ridinilazole, an antibiotic for the treatment of CDI which did not meet the primary endpoint of superior SCC. While the drug candidate proved unsuccessful, the trial design allowed for accelerated enrolment.

Ibezapolstat has been granted QDIP and fast-track designation by the FDA. QIDP status is provided by the FDA under the GAIN Act and provides incentives for the sponsor, including priority review, eligibility for fast track status and extension of statutory exclusivity periods in the US for an additional five years upon approval. QDIP designation combined with ibezapolstat being a new chemical entity (NCE) means ibezapolstat will have 10 years of market exclusivity for the treatment CDI in the US from the date of FDA marketing approval.

The preferred first-line treatment for CDI, oral vancomycin, is a broad spectrum antibiotic with a high level of recurrence rates. Fidaxomicin, the other antibiotic recommended as first-line therapy for CDI, is associated with lower recurrence rates however comes with a high price tag that has limited its use. Recurrent CDI (rCDI) is an increasing concern which has seen the FDA recently approve two new treatments for rCDI. It is anticipated that the emergence of a new antibiotic that shows noninferior CC and reduced recurrence rates would result in vancomycin being removed from the guidelines and the new antibiotic being recommended as the standard of care to treat CDI. Given the Phase 2 trial results, ibezapolstat is well positioned to become a first-line treatment for CDI.

We have assigned Acurx a price target of $12.35 per share ($8.17 per share on a fully diluted basis and $9.34 per share using the treasury stock method). The price target is based on a risk-adjusted NPV methodology for ibezapolstat, which has recently completed a Phase 2 clinical trial. IIR views there to be significant upside for Acurx with a number of catalysts for the share price coming in the next 12-months, including the Extended Clinical Cure (ECC) results and microbiome head to head with vancomycin expected to be released in January 2024 and the outcome of the upcoming FDA meeting to determine the Phase 3 trial protocol. Ibezapolstat has shown strong Sustained Clinical Care (SCC) for the treatment of CDI with 100% of patients treated with ibezapolstat in the Phase 2 trial (both a and b) with Clinical
Cure (CC), showing SCC. The completion of the Phase 2 trial was a significant milestone for the Company and the results provide a scientific basis to progress to a Phase 3 trial. IIR views ibezapolstat to be an attractive target for big pharma with the drug candidate providing a novel target to extend the pipeline of antibiotics for companies and if the Phase 3 trial shows a significant decline in recurrence rates the Company may prove to be an attractive target for those who have invested in drugs focused solely on rCDI, a market which may be impacted if ibezapolstat is approved. We believe positive ECC results will heighten interest in ibezapolstat, although interested parties may be waiting for some initial results from the Phase 3 trial for further validation of the technology.

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