Acurx Pharmaceuticals (NasdaqCM: ACXP) announced completing a stock purchase agreement with a single institutional investor in May 2023, offering a mix of shares and warrants to provide ACXP with $4.0 million before fees and offering expenses at $3 per share. Ironically, shares traded lower on the deal’s announcement. But that’s not necessarily bad news. The weakness exposes opportunity, which, in this case, could be too good to ignore.
In other words, investors should not be misled by the recently out-of-character move. The fundamentals remain strong for the company as evidenced by their getting their financing completed. In fact, with a strengthened balance sheet, Acurx is presenting a value proposition worth seizing. That’s not overly bullish sentiment, either. It’s justified, supported by updates showing that its drug candidate ibezapolstat could become a superior first-line treatment against hard-to-treat and life-threateningC. difficile infection. Couple that data with a fortified capital war chest; the compelling case for investment consideration just got stronger. Analysts covering Acurx agree with the bullish proposition.
One at H.C. Wainwright & Co. has modeled for appreciable upside based on his expectations. By no small measure, either. He reaffirmed his BUY rating and provided reasons why he thinks ACXP stock can reach $14 a share within the next 12 months. Foremost is his belief that ACXP’s Phase 2b study evaluating ibezapolstat can lead to that candidate becoming a frontline treatment against C. difficile. And with the Phase 2b study nearing 70% enrolled at the last update, that progression could happen sooner than many think. Notably, 100% enrollment may not be necessary. Like its Phase 2a trial, this one also could benefit from early termination (a good thing!) by the recommendation of the Company’s Independent Data Monitoring Committee (IDMC), resulting from established statistical non-inferiority to the current front-line antibiotic treatment, , an excellent safety profile, and durability of the treatment.
That probability may be high given the impressive 100% response rate in its Phase 2a study. Speculative, yes, but based on the data published, the history of ibezapolstat, and an IDMC familiar with how ibezapolstat could potentially best any marketed C. difficile treatment, it’s a justified thesis to embrace.
Ibezapolstat Makes Its Case
Remember, the Phase 2a dataset needed no embellishment to impress. In that Phase 2a study, 10 of 10 patients achieved the study’s Clinical Cure primary endpoint, defined as the resolution of diarrhea in the 24 hours immediately before the end-of-treatment (EOT) and maintained for 48 hours after EOT. Importantly, all patients showed no sign of infection recurrence for 30 days thereafter, and no significant safety issues were noted. Therefore, ibezapolstat achieved a 100% response rate for the study’s primary and secondary endpoints of Clinical Cure at EOT and Sustained Clinical Cure of no recurrence of CDI at the 28-day follow-up visit. These data are incomparable in the history of development stage or marketed treatments for CDI. Ibezapolstat was overall safe and well-tolerated, with no reported treatment-related serious adverse events (SAEs). (Please see the analyst’s report on December 19, 2022; Ibezapolstat May Become the Standard of Care for C. Diff Infection; Phase 2b Data Likely in 1H23; Initiate Buy, $14 PT for complete analysis.)
Those results, particularly related to ACXP developing a new class of antibiotics, could lead to significant non-dilutive funding. In a recent update, ACXP management announced being a final candidate to receive a CARB-X grant that could provide $ 11.3 million. A final decision on that award is imminent (no later than October 2023). If earned, the grant would provide funding for ACX-375, Acurx’s second antibiotic program as a potential treatment of methicillin-resistant Staphylococcus aureus (MRSA) infections, for up to the start of Phase 2 studies over 5 years as long as Acurx also contributes about $5M of the $16M total program cost. In other words, ACXP could expand its clinical ambitions faster than expected. But there’s more to the value proposition.
Acurx published additional highlights supporting its pipeline strength, including presenting an abstract at the European Congress of Clinical Microbiology and Infectious Disease (ECCMID) 2023, titled “Novel pharmacology and susceptibility of ibezapolstat against C. difficile isolates with reduced susceptibility to C. difficile-directed antibiotics.” And there’s plenty more on its website that supports a case for significantly higher share prices ahead of the next data release.
Expected Milestones To Catalysts In 2H/2023
Keep in mind that the Wainwright price target, roughly 381% higher than the current, may not be the ceiling. Instead, it could be the precursor to higher prices, noting that an approved ibezaplostat could generate U.S. and EU royalties on net sales of ibezapolstat in the treatment of CDI expected to reach $3.2 billion in peak sales by 2037. Additionally, the $14 price target employed a 12.5% discount rate, which the analyst believes fairly reflects the overall risks of the ibezapolstat development program. Risks to its investment thesis and target price include (1) failures or equivocal data in the Phase 2b or Phase 3 trial of ibezapolstat; (2) failure to secure regulatory approval of ibezapolstat; (3) a smaller than anticipated commercial opportunity due to market size, competition, and/or pricing; (4) intellectual property opposition; and (5) inability to adequately fund operations.
The complete analyst report, including disclosures, can be found here. And it helps justify a simple “bottom-line” assumption: current prices, a potential catalyst in the queue, data showing its ibezapolstat as a possible best-in-class frontline treatment for C. difficile, and plenty of cash in the bank, make the valuation disconnect between ACXP intrinsic assets, inherent potential, and its share price, too wide to ignore. Shrewd investors won’t. (Content in this article is attributed to H.C. Wainwright & Co. analysts.)
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