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Acurx Pharmaceuticals’ Ibezapolstat Takes Center Stage After Summit Therapeutics Misses Phase 3 C.Diff Trial Endpoints (NASDAQ: ACXP)

Abbreviated trading weeks have a way of keeping potentially transformative news under the radar. And it's happened again. This time, investors are overlooking just how important Summit Therapeutics (NASDAQ: SMMT) topline miss in its Phase 3 trial to treat C. difficile can be for Acurx Pharmaceuticals (NASDAQ: ACXP). Of course, cut some slack in these giving times, especially since it takes a bit of dot-connecting to get to the residual effect. But, as a late holiday gift, and after boiling down all the minutiae related to SMMT's topline fail, here's what investors should do- consider buying ACXP stock as fast as you can.

There's plenty of cause to justify that action. After all, ACXP is now the best and closest-positioned biotech for all intents and purposes to bring an effective C. diff treatment drug to market. Better still, with SMMT apparently faulting in its mission, ACXP can literally aggressively pursue front-line therapy position in this > $1billion dollar market, with nary a competitor in sight. And not only that, they can do so with a C. diff (CDI) treatment drug that proved 100% cure and 100% sustained cure through its Phase 2a trial. Its current Phase 2b trial is advancing to confirm those stellar results.

Keep in mind, too. ACXP's ibezapolstat is already showing data to best SMMT's candidate. But, that doesn't mean thinning out the competitive herd is a bad thing. On the contrary, it's a gift that can keep on giving. And once investors evaluate the changes in fortune, ACXP could earn a similar premium late-stage valuation once enjoyed by Summit. There was a time, in fact, that SMMT had a market cap above $800 million before announcing that FDA had rejected their attempt to change endpoints in their ongoing Phase 3 trials. Since then, after announcing a miss on the primary endpoint in their Phase 3, Summit’s market cap has been reduced to hold $277 million.

Thus, with ACXP now the lead company to bring relief to potentially millions of people suffering each year from CDI, having a market cap of only 1/5th of SMMT makes little sense. But, with data that supports its case and a Phase 2b trial accelerating enrollment, that disconnect may be short-lived. And deservedly so.

Here's why.

SMMT Shows Some Good, But Mostly Bad

First off, from a humanitarian perspective, no one's overly joyed by the fact that SMMT missed its trial mark; there are patients in dire need of a better drug. But, with that said and from an investor's standpoint, especially those believing in ACXP's C. diff treatment candidate, it's excellent news.

And keep in mind, attention given to ACXP's ibezapolstat is well-deserved. In fact, impressive results from its Phase 2a trial have earned every line of positive coverage past and current. Expect more of the same going forward. While it may come on the heels of Summit Therapeutics announcing, for the most part, disappointing topline Phase 3 data evaluating ridinilazole to treat patients with CDI, it really doesn't matter.

What does matter is that investors, treating physicians, and patients will be learning more about what ACXP plans to deliver. Phase 2a data, by the way, should have each group excited. Moreover, with ACXP accelerating enrollment in its Phase 2b trial, the change in leadership is timely.

Not only is it timely regarding an advancing ACXP trial, but the news from SMMT may have opened the door wide to revenue-generating opportunities for ACXP as they target the massive and unmet CDI treatment market. After all, until last month, SMMT was considered a part of the front-line competitive landscape. After topline data, not so much. It remains to be seen what other endpoint data comes out of the failed SMMT trial including importantly how well SMMT’s ridinilazole performed against vancomycin at the end of treatment which for some reason did not make it into SMMT’s press release.

Still, give some credit where it's due. The SMMT data wasn't entirely bad. The trial data showed that ridinilazole resulted in a higher observed SCR rate (sustained clinical response) than the current vancomycin standard of care. However, by trial design, those results did not meet the study's primary endpoint for superiority over vancomycin. For those familiar with the trial, its setup may have been too ambitious. Even so, other details suggest that the drug may have been equal, at best, to the current standard of care.

And since that means it can treat, not cure, that's not very good.

High-Risk Trial Sets SMMT Back

Those investing in SMMT should have known that the trial study design brought with it a high-risk proposition and perhaps even a flawed strategy, given their Phase 2 data compared to vancomycin. After the results, the market cap implosion proved that point.

And while not a lot of data was disclosed in Summit's press release, it's undoubtedly a significant setback for SMMT that could quiet that program and at the same time open opportunities for others. As noted, the most apparent beneficiary to SMMT's misfortune is Acurx and its ibezapolstat candidate. In fact, there's now little in the way to impede ACXP's candidate from becoming a potential front-line treatment successor to vancomycin.

It's also worth mentioning that Summit noted that ridinilazole performed especially well in immunocompromised patients and in patients with COVID-19. Well, that may be so. But, a potentially better drug, like ibezapolstat, would likely fill that role as well. Thus, while SMMT may be looking to shift strategies and conduct additional Phase 3 studies in patients who are immunocompromised or have COVID-19, they would at the same time be potentially removing ridinilazole from contention as a front-line therapy going forward.

Although positioning ridinilazone as a specialty product to treat a subset of CDI patients is a compassionate response, its competitive standing as an alternative to an approved ibezapolstat is likely significantly, if not entirely, diminished. Of course, even their repositioning their candidate is pure speculation based on the language used in its press release. But, while intentions are good, redesigning a Phase 3 trial is a complicated process and requires FDA approvals, which aren't as easy to get this late in the game.

And even if the FDA bought into SMMT's hope, time is no longer on SMMT's side. Acurx is too far ahead, with a potentially better drug, at this point in the development cycle.

ACXP Accelerates Into Phase 2b Trial Treating C. diff

Stated more explicitly, way ahead. ACXP expects to complete enrollment for its Ph2b trial by the middle of 2022, followed by an end-of-Phase 2 meeting with FDA also in 2022. If all goes as planned, ACXP would be well-positioned to commence its Phase 3 trials in the second half of 2023.

Keep in mind, following what SMMT said in its release, even if SMMT re-positions its Phase 3 trial to target niche indications, assuming that can happen only after meeting with the FDA to present its entire phase 3 data set, commencing enrollment before the middle of 2023 is unlikely. Hence, ACXP is in an ideal spot to capitalize on others' weaknesses through the strength of its own drug.

Still, with that said, don't underappreciate what ACXP is doing. From all indications, they are developing a better drug than SMMT. And while SMMT may have had a head start in the market, their position as a front-line provider may have been more than short-lived; they may not reach the finish line.

Best-In-Class Treatment Data In Phase 2a

That's not the expected outcome for ACXP. Why? Because ACXP has already posted stellar Phase 2a results that showed a 100% cure and 100% sustained cure after follow-up. No other C. difficile treatment has done the same. In fact, results were so compelling that an independent Data Oversight Committee recommended the company stop its 2a trial early and head straight into its Phase 2b study. Enrollment in that study has begun.

But that's not all. Other regulatory agencies are on-board as well to help get a better drug to market, with the FDA granting QIDP and Fast Track Designations to prioritize review for its ibezapolstat candidate. The goal is consistent- replace the C. diff drug vancomycin that, at best, relieves symptoms short-term and in many cases with a 20-40% recurrence rate. ACXP's ibezapolstat, in sharp contrast, is showing it can do much better.

Moreover, if results from its Phase 2b trial confirm its potential as a front-line C. diff treatment, like shown in its Phase 2a arm, ACXP is likely to experience a potentially exponential surge in value. Part of those gains would come from investors recognizing ibezapolstat's market opportunity. But, a second potentially enormous contributor of the value proposition would materialize from opportunities on the financial side, with legislation like the Pasteur Act and a Big Pharma investment program a conduit to potentially millions of dollars in funding to help accelerate development.

Keep in mind, too. There's no shortage of interest in rooting on ibezapolstat, especially with the C. difficile bacteria high on the Centers for Disease Control and Prevention (CDC) Urgent Threat list. Thus, ACXP could potentially get plenty of help getting this life-saving drug to market.

That help could come as a by-product of an important consideration- results.

ACXP Gets A Pass Directly To Phase 2b Trial

Results matter. And ACXP's were compellingly good. The completed Phase 2a segment of its trial enrolled, treated, and evaluated 10 subjects from study centers in the United States with diarrhea caused by C. difficile. Those patients were treated with ibezapolstat 450 mg orally, twice daily for 10 days, and each was followed for recurrence for 28± 2 days. Here's where it gets interesting. Per protocol, after 10 patients of the projected 20 Phase 2a patients completed treatment, the Trial Oversight Committee and Scientific Advisory Board assessed the safety, tolerability, and efficacy and recommended early termination of the Phase 2a study and a move directly to a Phase 2b trial. The Scientific Advisory Board includes the three infectious disease experts that write the IDSA treatment guidelines for C. difficile.

And it was a unanimous decision. The Scientific Advisory Board (SAB) and Trial Oversight Committee supported the early termination of the Phase 2a trial after evaluating results from just 10 patients of the 20 planned to treat. Better stated, they only needed to see half the planned enrollment to make a significant conclusion. Of course, give accolades where they are due.

The early termination was based on the evidence of meeting the primary and secondary endpoints of eliminating the infection (100%), with no recurrences of infection (100%) and an acceptable adverse event profile. Further, except for the enrollment size, the 2b trial is expected to do much of the same, and that's excellent news for ACXP based on prior data. There's even better news. The trial is a speedy one.

Treatment cycles are only about 40 days in duration, and topline data follows pretty quickly. Moreover, with this double-blind, randomized, active-controlled, non-inferiority, Phase 2b segment conducted at 12 U.S. clinical trial sites, total enrollment may come sooner than planned.

That would be excellent news for ACXP, investors, and patients. For those liking specifics, the trial design evaluates the clinical efficacy of ibezapolstat in treating CDI, including pharmacokinetics and microbiome changes from baseline. It will continue to test for anti-recurrence microbiome properties seen in the Phase 2a trial, including the treatment-related changes in alpha diversity and bacterial abundance and effects on bile acid metabolism.

Most notably, it's going head to head with the current standard of care and front-line treatment, Vancomycin. And that's why investors need to take advantage of an apparent valuation disconnect sooner rather than later. If ibezapolstat bests vancomycin, which 2a results showed, there will likely be little to no resistance by treating physicians to use the drug asap after approval. Not only that, from ACXP and its investor's perspectives, extraordinary revenue-generating opportunities will be immediately exposed.

It's a showdown that ibezapolstat can win.

Ibezapolstat Vs. Vancomycin- A Phase 2b Trial Showdown

The new trial arm is a double-blind, randomized 1:1 ratio to either ibezapolstat 450 mg every 12 hours or vancomycin 125 mg orally every 6 hours, in each case, for 10 days and followed for 28 ± 2 days following the end of treatment for a recurrence of CDI. The two treatments will be identical in appearance, dosing times, and the number of capsules administered to maintain the blind.

As noted, the Phase 2b clinical trial endpoints include results evaluating pharmacokinetics (P.K.) and microbiome changes and will continue to test for anti-recurrence microbiome properties, including the change from baseline in alpha diversity and bacterial abundance, especially overgrowth of healthy gut microbiota Actinobacteria and Firmicute phylum species during and after therapy. If the non-inferiority of ibezapolstat to vancomycin is demonstrated, further analysis will be conducted to test for superiority.

Admittedly, the trial language is challenging to understand. But what isn't is that Phase 2a data demonstrated complete eradication of colonic C. difficile by day three of treatment with ibezapolstat as well as the observed overgrowth of healthy gut microbiota, Actinobacteria and Firmicute phyla species, during and after therapy. That's not all.

Emerging data also show an increased concentration of secondary bile acids during and following ibezapolstat therapy, which is known to correlate with colonization resistance against C. difficile. A decrease in primary bile acids and the favorable increase in the ratio of secondary-to-primary bile acids suggest that ibezapolstat may reduce the likelihood of CDI recurrence compared to vancomycin.

It's an especially compelling feature because while C. difficile can be a normal component of the healthy gut microbiome; when the microbiome is thrown out of balance, the C. difficile can thrive and cause an infection. After colonization with C. difficile, the organism produces and releases the main virulence factors, the two large clostridial toxins A (TcdA) and B (TcdB). TcdA and TcdB are exotoxins that bind to human intestinal epithelial cells and are responsible for inflammation, fluid, and mucous secretion, as well as damage to the intestinal mucosa. Ibezapolstat inhibits and may even entirely shut down their survival.

Ibezapolstat temperament toward bile acids is also important. These bile acids perform many functional roles in the G.I. tract, with one of the most important being the maintenance of a healthy microbiome by inhibiting C. difficile growth.

Primary bile acids, secreted by the liver into the intestines, promote germination of C. difficile spores and thereby increase the risk of recurrent CDI after successful treatment of an initial episode. On the other hand, secondary bile acids, produced by the normal gut microbiota through the metabolism of primary bile acids, do not induce C. difficile sporulation and protect against recurrent disease.

Notable, too, ACXP highlights that since ibezapolstat treatment leads to minimal disruption of the gut microbiome, bacterial production of secondary bile acids continues, which may contribute to an anti-recurrence effect. Bottom line- ibezapolstat has an impeccable report card to date.

Ibezapolstat- Targeting A Massive Unmet Medical Need

Most importantly, its results can lead to a better treatment, which is desperately needed. According to a 2017 Update (published February 2018) of the Clinical Practice Guidelines for C. difficile Infection by the Infectious Diseases Society of America (IDSA) and Society or Healthcare Epidemiology of America (SHEA), CDI remains a significant medical problem in hospitals, in long-term care facilities and in the community. In fact, C. difficile is one of the most common causes of health-care-associated infections in hospitals, according to an article published in the New England Journal of Medicine. And the number of infections is substantial.

Estimates suggest C. difficile approaches 500,000 infections annually in the U.S. and is associated with approximately 20,000 deaths annually. Based on internal estimates, ACXP places the recurrence rate of two of the three antibiotics currently used to treat CDI at between 20% and 40% among approximately 150,000 patients treated. They also note they believe the annual incidence of CDI in the U.S. approaches 600,000 infections and a mortality rate of roughly 9.3%. Hence, it's a big problem that requires a better solution, and Ibezapolstat may be the answer needed.

If so, investors are wise to expect a more appropriate share price valuation to follow in tandem with trial updates. There is, after all, an enormous valuation disconnect when comparing ACXP to others working to bring a better C. diff drug to market. Here's a comparison that exposes the massive opportunity that could be in store for ACXP investors.

Again, turn to SMMT. Despite ACXP posting a substantially more compelling efficacy and Summit Therapeutics missing its primary endpoints for its C. difficile treatment candidate, SMMT still trades at a market cap more than 5X higher than ACXP's. Thus, investors are blatantly missing the mark when appraising ACXP's assets. But, call it a consequence of being under the radar.

Still, being lesser known doesn't equate to being inferior. It only means the markets are still learning about ACXP and its drug candidates. It also allows investors to capitalize on market imperfections and seize upon valuation disconnects that are justified by data on display. Not only is ACXP making its own bullish case with data that is overwhelmingly positive, that same data also exposes a valuation disconnect that's getting too big to ignore.

Ibezapolstat Positions ACXP For A 2022 Breakout

Thus, when an investment proposition gets too big to ignore, the best response is to do the right thing and pay attention. And when paying attention includes knowing that a side-by-side comparison can justify a more than almost 450% increase in market cap, in this case, using SMMT as a comparable, pulling the investment trigger certainly makes more sense than considering it.

Here's another thing to consider. There aren't many opportunities for retail investors to take a position in a late-stage biotech whose share price sits at under $5.00. Further, there are even fewer chances to take a position in one that has its Phase 3 trial already in the crosshairs. ACXP offers both. And knowing moving from a Phase 2 to a Phase 3 trial can add multiples to its share price, getting ahead of the move at the right time is crucial.

Therefore, considering its Phase 2b trial position, compelling data, financial strength, and potential to raise many millions in non-dilutive funding to accelerate a Phase 3 trial, the time for investment consideration in ACXP can be summed up in one word- NOW.


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