Acurx Pharmaceuticals (NasdaqCM: ACXP) earned a bullish analyst update from respected H.C. Wainwright & Co. Following its earnings call, the analyst affirmed his BUY rating and $14 price target for the stock. Reasons cited included that ACXP's Phase 2b study evaluating ibezapolstat as a frontline treatment against C. difficile is nearing 70% enrolled, assuming the trial is early terminated by the Independent Data Monitoring Committee (IDMC) at 36 patients enrolled, with ACXP noting during the call that 25 patients have been entered into the trial. Full enrollment is expected to be 36 patients assuming the IDMC recommends early termination of the trial due to success.
While shy of the mark ACXP expected to reach, the analyst noted that despite Acurx not reaching the previous target of 50% enrollment (or 32 patients of the originally targeted 64 patients) in "the first half of March," they believe management is still on target to provide the study's interim analysis to by mid-2023. Importantly, positive results from interim analysis could facilitate Acurx terminating the study early if the response is overwhelmingly positive. That determination, or recommendation, would be made by the IDMC after its review of interim analysis, as part of a protocol amendment to ibezapolstat's IND that was filed in January 2023. Furthermore, ACXP provided information highlighting that the IDMC was assembled in January, and includes experienced microbiologists, doctors and statisticians, who would be entrusted to determine and recommend whether the Phase 2b study could be terminated early, or to continue as designed. If allowed to terminate early, similar to its Phase 2a arm, it could accelerate the Company’s Ph3 intentions and business development strategies.
Also in its update, the Wainwright analyst detailed the study. It's a double-blind, active-controlled Phase 2b study designed to enroll 64 patients randomized 1:1 to either ibezapolstat or the current CDI standard of care (SoC), vancomycin. The primary endpoint is Clinical Cure rate versus vancomycin with a 25% non-inferiority (NI) margin. Given the impressive 100% response rate in the Phase 2a study, the analyst regards the Phase 2b study's interim readout in mid-2023 as the next major milestone for ibezapolstat and Acurx, noting that a positive dataset would enable ibezapolstat's entry into a Phase 3 pivotal program as early as 1H24. With that, he confirmed a BUY rating.
Justifying His Bullish Model
While the Phase 2a dataset was small, results were impressive. In that Phase 2a study, 10 of 10 patients achieved the study’s Clinical Cure endpoint, defined as the resolution of diarrhea in the 24-hour period 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. Ibezapolstat was overall safe and well-tolerated, with no reported treatment-related serious adverse events (SAEs). Please see the analysts report published 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 full analysis.
There was more to highlight. From the call, a CARB-X grant could provide $11.3M non-dilutive funding, with Acurx announcing that it has applied for that grant funding in October 2022. Specifically, Acurx is now in the final round of consideration for this grant, with a decision expected in April 2023. This 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 a period of 5 years as long as Acurx also contributes about $5M of the $16M total program cost.
Additional news supporting Acurx's pipeline strength could come during the company's ECCMID presentation next month, outlining ibezapolstat's potential in CDI. Ahead of that meeting, Acurx announced an abstract presentation 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”. This abstract would be presented by Dr. Kevin Garey, Professor and Chair of University of Houston College of Pharmacy, who is also the Principal Investigator for microbiome aspects of the ibezapolstat clinical program.
Reaffirming A BUY Rating And $14 Price Target
All told, the analyst found enough in the call to support affirming his bullish target and BUY rating. The PT is made using an rNPV valuation model to estimate the value of ACXP shares, arriving at its $14 PT based solely on U.S. and EU royalties on net sales of ibezapolstat in the treatment of CDI, with royalties to Acurx on $3.2B global peak sales in 2037. The valuation model also employed a 12.5% discount rate, which the analyst believes adequately 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. ACXP shares are trading at $3.14 at press time on Wednesday, putting the analyst price target roughly 344% higher than current levels. Content in this article is attributed to H.C. Wainwright & Co. analysts.
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