Acurx Pharmaceuticals, Inc. (ACXP) Earnings Call Transcript & Summary

Greetings, and welcome to the Acurx Pharmaceuticals to discuss second quarter 2023 financial results and business update. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Mr. Rob Shawah, Chief Financial Officer. Thank you, sir. You may begin.

Thank you. Good morning, and welcome to our call. This morning, we issued a press release providing financial results and company highlights for the second quarter of 2023, which is available on our website at acurxpharmaceuticals.com. Joining me today is Dave Luci, President and CEO of Acurx, who will give a corporate update and outlook for 2023. After that, I'll provide some highlights of the financials from the quarter ended June 30 and then turn the call back to Dave for his closing remarks. Joining me to -- as a reminder, during today's call, we'll be making certain forward-looking statements. These forward-looking statements are based on current information, assumptions, estimates and projections about future events that are subject to change and involve a number of risks and uncertainties that may cause actual results to differ materially from those contained in the forward-looking statements. Investors should consider these risks and other information described in our filings made with the Securities and Exchange Commission, including our quarterly report on Form 10-Q, which we filed on Friday, August 11, 2023. You are cautioned not to place undue reliance on these forward-looking statements, and Acurx disclaims any obligation to update such statements at any time in the future. This conference call contains time-sensitive information that's accurate only as of the date of the live broadcast today, August 14, 2023. Acurx undertakes no obligation to revise or update any forward-looking statements to reflect events or circumstances after the date and time of this conference call. I'll now turn the call over to Dave Luci. Dave?

Thanks, Rob. Good morning, everyone, and thanks for joining us to review our financial results for the second quarter of 2023 and also to cover some recent updates, then we'd be pleased to take any questions. In the second quarter of 2023, we continue to enroll more patients in the Phase IIb clinical trial of our lead antibiotic candidate ibezapolstat for the treatment of patients with C. difficile infection or CDI. We're pleased to report we now have enrolled 31 patients in the Phase IIb trial, so only 5 more patients need to be enrolled to trigger interim data review by an Independent Data Monitoring Committee that we appointed in the first quarter of '23 for this purpose. The IDMC will review the data upon the 36 patients being evaluated for the primary endpoint of clinical cure at the end of treatment and properly provide its recommendation either to early terminate the IIb trial as we had done with the Phase IIa trial or alternatively to continue enrolling. We'll report the IDMC recommendation after the interim review of the data. If the IDMC recommends early termination of the IIb trial, we'll promptly report the top line data on the primary endpoint and safety data when the 36 patients -- enrolled patient completes treatment. We anticipate completing enrollment of the 36 patients for the interim review in the coming month or 2. Operationally, we're pleased to report that the blinded observe data from the Phase IIb trial has been exceptional and the trial is proceeding as expected with no safety signals reported to date. The Phase IIb trial protocol includes an exploratory endpoint comparing the impact on the microbiome between ibezapolstat and standard of care oral vancomycin. And the event noninferiority of ibezapolstat to vancomycin is demonstrated, further analysis will be conducted to test for superiority. Due to slower than expected enrollment during the COVID-19 and again its aftermath, we did expand the number of trial sites participating in the IIb trial from the initial 12 sites up to 28 sites as we now have and have increased the support to higher enrolling sites, resulting in increased screening in the past couple of months. In March 2023, the FDA accepted our protocol amendment to our IND, which will allow an Independent Data Monitoring Committee to review the interim data. That's been precleared with the FDA. We remain particularly excited about the dual impact of ibezapolstat at the same time to treat the acute infection, the C. difficile infection while appropriately managing the long-term care of each patient's microbiome, which we believe is exceptional for antibiotic therapy. Other key highlights from the second quarter of '23 or in some cases, shortly thereafter, include the following: in April of this year, 2 presentations were made at the 33 Annual European Congress of Clinical Microbiology and Infectious Disease, or ECCMID in Copenhagen. First, the scientific poster entitled Novel Pharmacology and Susceptibility of Ibezapulstat against C. Difficile isolates with reduced susceptibilities to C. Difficile directed antibiotics" who was presented by Dr. Kevin Garey, Professor and Chair University of Houston College of Pharmacy and the Principal Investigator for microbiome aspects of our ibezapolstat clinical program. Dr. Garey's work demonstrated that ibezapolstat mechanism of action is not only bacteriocidal towards -- to C. Diff but also could inhibit some of its viral mechanisms, meaning it's capability to cause disease. Dr. Garey also noted that C. Diff strains with reduced susceptibility to any of the other antibiotics used to treat C. Diff, metronidazole, vancomycin or fidaxomicin, those C. Diff strains were susceptible to ibezapolstat. So just to say it again, ibezapolstat is able to successfully kill C. Diff bacteria that, in many cases, is resistant to all the other antibiotics used to treat C. Diff currently. Ibezapolstat has the antiviral effect, namely reduced flagellar movement of the C. diff organism was a positive unexpected finding, reflecting the unique mode of action in inhibiting DNA pol IIIC. In the second of 2 presentations at ECCMID, Acurx Executive Chairman, Bob DeLuccia, presented an update regarding the company's preclinical systemic oral and IV program for the treatment of other grant-positive infections caused by MRSA, VRE and DRSP in the Pipeline Corner featured session at ECCMID, organized by Dr. Ursula Theuretzbacher, a world-renowned microbiology expert in [ modern ] antibacterial drug research, discovery and development strategies and policies for clinical and public health needs. Bob summarized the progress of the company's brand positive Select Spectrum Program. Both posters are available on our website. Additionally, in the third quarter, we were notified by CARB-X that we did not receive funding approval in their recently closed '23 omnibus funding round for our second antibiotic candidate, ACX-375C, which is in preclinical development. We did appeal this decision based on certain modifications to the scope of our program. However, CARB-X governance structure did not allow for acceptance of an appeal process. CARB-X noted that the '23 round of funding was very competitive and that their Scientific Advisory Board was enthusiastic about [ pol IIIC ] as the bacterial target of our molecules and that a sufficiently good PK and safety properties of the compounds that we have justified the proposed lead optimization plan. CARB-X encouraged us to reapply for future requests for proposals or RFPs that CARB-X will continue to promulgate from time to time for funding consideration. While this news was disappointing, we will continue to monitor and apply for grants from all funding sources as they become available. Now just -- now looking forward just a bit. The upcoming Antimicrobial Resistance Congress is next month. It will convene its annual meeting in Philadelphia where experts in the fields from both the public and private sectors weigh in on the latest innovations to address antimicrobial resistance. This is the world's largest conference for all stakeholders combating antimicrobial resistance and our Executive Chairman will speak at the innovation showcase section of the conference on September 7, and we'll present an update entitled "Novel DNA pol IIIC Inhibitors for gram-positive bacterial infections preparing for the next pandemic." After the presentation, it will be available on our website. In addition, we have IDWeek coming up. The Infectious Disease Society of America will convene its annual meeting called IDWeek in Boston, October 11 to 15. Acurx will be featured at 2 scheduled events. First, an oral presentation by Dr. Kevin Garey, will be given on October 14 entitled "Elucidating the gram-positive retrospect and activity of ibezapolstat secondary analysis from the Phase IIa trial." And secondly, Acurx will present at the symposium entitled "New Antimicrobials in the Pipeline" on October 12. At the symposium, Acurx presentation will be entitled "Novel DNA pol IIIC inhibitors for gram-positive bacterial infections." After this presentation, it too will be available on our website. Now to the PASTEUR Act. As we've discussed in the past, that bipartisan PASTEUR Act continues to generate news and enthusiasm in Washington, D.C. On April 27, U.S. Senators Michael Bennet and Todd Young reintroduced the PASTEUR Act to encourage innovative drugs -- drug development, targeting the most threatening infections, improve the appropriate use of antibiotics and insure domestic availability of antibiotics when needed. On July 11, a Senate subcommittee hearing was convened led by Senators Markey And Marshall, highlighting the need to address antimicrobial resistance to Superbugs, including MRSA and C. diff. Accordingly, we're quite enthusiastic about the prospects of the PASTEUR Act being passed into law on the bipartisan support, significant national spotlight and dire need for new classes of antibiotics to treat serious and life-threatening infections. And now back to our CFO, Rob Shawah, to guide you through the highlights of our financial results for the second quarter of 2023. Rob?

Thanks, Dave. Our financial results for the second quarter ended June 30, 2023, were included in our press release issued earlier this morning. The company ended the second quarter with cash totaling $9.1 million compared to $9.1 million as of December 31, 2023 -- 2022. Research and development expenses for the 3 months ended June 30, 2023, were $1.7 million compared to $0.9 million for the 3 months ended June 30, 2022. The increase was due to an increase in Phase IIb trial related costs. For the 6 months ended June 30, 2023, Research and development expenses were $2.8 million versus $1.7 million for the 6 months ended June 30, 2022. The increase is due primarily to Phase IIb trial related costs and an increase in consulting costs. General and administrative expenses for the 3 months ended June 30, 2023, were $1.7 million, compared to $1.7 million for the 3 months ended June 30, 2022. The expenses reflect a slight decrease in professional fees of $0.1 million, offset by a slight increase of $0.1 million in employee compensation-related costs. For the 6 months ended June 30, 2023, General and Administrative expenses were $3.6 million versus $3.6 million for the 6 months ended June 30, 2022. The amount reflects a decrease in professional fees of $0.2 million, offset by an increase of $0.2 million in employee compensation-related costs. The company reported a net loss of $3.4 million or $0.28 per diluted share for the 3 months ended June 30, 2023 compared to a net loss of $2.6 million or $0.26 per diluted share for the 3 months ended June 30, 2022, and a net loss of $6.3 million or $0.53 per share for the 6 months ended June 30, 2023 compared to a net loss of $5.3 million or $0.52 per diluted share for the 6 months ended June 30, 2022 for the reasons previously mentioned. The company has 13,005,128 shares outstanding as of June 30, 2023. With that, I'll turn the call back over to Dave.

Thanks, Rob, and to all of you joining us today. We outlined advances in several areas that we believe will spur continued momentum and growth, build on our strong fundamentals. We look forward to sustaining this momentum even during these challenging times and sharing future updates and results in the coming months. I will now open the call for any questions. Operator?

Thank you. We will now be conducting a question-and-answer session. [Operator Instructions] Our first question comes from the line of Ed Arce with H.C. Wainwright.

Hi. Good morning, everyone. This is Thomas Yip asking a couple of questions for Ed. Ed will take the second half questions. Good to hear the update for Acurx. So back in March, the guidance for the Phase IIb interim review was anticipated midyear 2023. Can you -- why some major factors that are behind this shift in timing? And also, what are some remedies that you are implementing to address it?

Okay. Thomas, I mean, I think the question is about 180 degrees in the wrong direction. I'm sorry to say. If you check your notes, I think you'll find that on May 14 at the end of the first quarter, we guided folks that we would be done in the second half of 2023 with the IIb trial. And if anything, today, we've guided folks that were going to be done before that.

Okay. So the latest -- yes, I do remember the latest guidance was second half. So you mentioned in the coming months, so is that sounds more like a third quarter or early for events?

Yes, yes. So what I said before that, I mean, before the end of the second half. But yes, we do think that it will be in the -- as I mentioned, in the coming month or 2, we've had significantly better enrollment. We plugged a new CRO into special situations, and we're starting -- that's starting to bear fruit, including a substantial increase in the number of patients that are screened. So -- and maybe it's also in combination a bit with COVID being further and further behind us and maybe some of the behavioral patterns are changing back. So in any event, whatever the cause is, we're screening more patients in -- we don't think we have far to go.

Got it. And then you mentioned for the Phase IIb interim analysis, there's a new IDMC Can you give some details on members on this board? And is it the same core members as the IDMC for the Phase IIa study?

Okay. Yes. No, so we don't give out the names of the members. But just to be clear, for the Phase IIa study, the IIa trial was early terminated on the recommendation of our Scientific Advisory Board, which is included in our slide deck and on our website. But the Phase IIb trial for it, we had to create a separate Independent Data Monitoring Committee and these are all independent scientific experts in infectious disease and in one case, statistician, none of which have shares in our company or get paid by our company, and they're doing this as a public service. That's the constituency of the IDMC. It's different people in every case than those who serve their side of the Advisory Board members currently for the company and who will find on the IIa trial.

Okay. Understood. Thank you for clarification. Perhaps one question regarding the CARB-X funding. Sorry to hear the [indiscernible] to the next round. And on to the eligible for patent grants, will you need a new program? Or do you continue -- be trying to continue [indiscernible] eligible?

So for each brand, whether by CARB-X or other folks like NIH, to be eligible, you have to look at the RFP, the request for proposal. So with CARB-X in particular, this was the first CARB-X grant RFP in years that allowed folks who are developing antibiotics that target treatment of gram-positive bacteria infections, not just gram-negative. So we were excited to see that the scope of the RFP had expanded to include folks sponsors like us. I mean we expect based on our conversations with CARB-X that will continue. And as we continue to develop our drug, get through lead optimization, we think our candidacy will become more and more compelling in these challenging times for money.

I see. Okay. Perhaps one last question from my side. This one is not financial. It sounds like, as you mentioned earlier, the interim analysis, it seems to be occurring really soon. So cash run rate should extend beyond that, but can you give us perhaps a more specific time frame for cash runway?

Sure, Thomas. I think our cash runway is sufficient through Q3 of '24 and kind of immense on. So we're burning $2.1 million, $2.2 million per quarter. And that's during the quite expensive IIb trial times. So once the IIb trial is over, we should eliminate probably $1 million of that $2.1 million, $2.2 million quarterly burn. So if you take $2.2 million, you flatline it for 4 quarters, that's $8.8 million. So even if the IIb for some reason, got extended enormously long, we have money through Q3. And given where we are, we probably have money all the way through '24 because the IIb will be over.

Okay. Thank you again for taking all questions and looking forward to the interim analysis for the IIb study.

No problem. If you have any other questions, just give me a call or shoot me an e-mail, and we'll connect.

Next question comes from the line of Jason McCarthy with Maxim Group.

This is Michael Okunewitch on the line for Jason. So I'd like to see if you could talk a little bit more about the specifics of the PASTEUR Act. Obviously, just the validation of the problem and that Congress is paying attention to this is huge in itself. But what specifics have been suggested that could aid in clinical development and uptake of new Anti-infectives and particularly as it relates to Acurx.

Sure. No problem, Mike. This is the transitional piece of legislation that would completely redefine the antibiotic sector in the United States. Just to be perfectly clear, this puts antibiotics back on par profit-wise, revenue-wise, with cancer drugs and diabetes drugs, neurological drugs for ALS and other neurological disorders. It's a game changer. So what the PASTEUR Act does generally, and there's also [ PASTEUR ellie ] I'll get to the PASTEUR Act, if approved, is a pull incentive like the -- similar to the pull incentive have already approved and made law in the U.K. a few years back. What the pull incentive does is it says, hey, sponsors of new antibiotics and those who invest in them, if you invest in an antibiotic, if you take your time to develop an antibiotic for a life-saving or serious clinical indication, that is a new class of antibiotics, not just a new generation of amoxicillin on an old class. If that's what you have, we'll pay for Phase III, including all the manufacturing for Phase III. And we'll give you between $750 million and $3 billion over a 10-year period of time in order to stockpile your antibiotic at public health facilities over a 10-year period of time under a license agreement with Health and Human Services [ PASTEUR ellie ] would be basically half of that. So it would be $375 million minimum up to $1.5 billion for each sponsor of QIDP, an antibiotic that treat serious or life-threatening infections and is a new class of antibiotics. Each sponsor can only get 1 designation under the PASTEUR Act. To get the designation, you get a letter from HHS after you apply and get accepted. And that's a critical need, antimicrobial designation letter. It will include a dollar amount, which will be under the current draft of the law of PASTEUR ellie at least $375 million over 10 years. And the amount between $375 million and $1.5 billion over 10 years under PASTEUR ellie be determined by HHS based on a formula to be provided in the law. And basically, that formula will try to get to the savings to the public health system in the United States by having your antibiotic approved to treat these serious and life-threatening infections. So in the case of C. difficile, the reinfection market in C. difficile has a price tag of $4.7 billion to U.S. public health every year. So patients that have recurrent C. diff infection with the cost -- the total cost of treating those reinfections from the hospitalizations to the medicines that are being used is $4.7 billion a year. So in our case, if we come out with an antibiotic that's front line capable, treating C. diff patients with anything close to 100% cure rate and anything close to 0% reinfections, I think that would have a significant value savings to public health in the U.S. at the full $4.7 billion that is the cost of the reinfection market for C. diff every year in the U.S., but it would be significant. But at the very least, it would be $375 million to us, $37.5 million a year for 10 years. So as a $30 million market cap company, you can see if we were designated as a critical need and a microbial under the PASTEUR Act it would be an absolute game changer.

Certainly, there's a lot of potential there. And just a follow-up on the Phase II. I'd like to see if you could provide then a bit more color on the potential to possibly stop it early on efficacy. What would need to be demonstrated? And then expand a little bit on how you can use changes in the microbiome in addition to the primary endpoint to support readout on that study.

Okay. Great. No problem. So the microbiome changes, that's the easier question. I'll answer it first. We see the rest of the full restoration of a fully healthy microbiome in our C. diff patients that we've treated by the end of the third day of a 10-day treatment regimen on our drug, and that's from the Phase IIa trial. We have no reason to expect that will change because of the scientific underpinning of no reinfections, why are there no reinfections because we're fully restoring the microbiome by day 3 of treatment. And how are we restoring the microbiome? Well, we have a very narrow spectrum antibiotic. It's only able to kill C. diff leaving all of the other classes of healthy bacteria in the -- alone, providing them an environment where they can kind of repair themselves. Unlike the normal antibiotic like vancomycin, the standard of care, which decimates the healthy microbiome while it's curing the direct C. diff infection, putting that patient at high risk for a reinfection. So based on that, the microbiome, we believe, is going to be a big part of the story because it's going to help us avoid reinfections. And although that's a secondary endpoint, it's a big part of the story. Now the primary endpoint of cures at end of treatment, 10 days of treatment measured plus or minus 2 days at day 12 or 11, those cures reflect the fact that we're getting over 100x the concentration of our medicine to the site of C. diff infection in the colon that is needed to kill the C. diff bacteria based on our MICs, Minimal inhibitory concentration studies. So that's why -- that's the underpinning for why we're so successful at killing the bacteria at end of treatment, and that's the primary endpoint. We expect that to continue in -- we read out the IIb data. The 31 patients that are enrolled are evaluated. The blinded observed data is tremendous. And our statisticians say if there are up to 2 patients who are not cures out of the 36 patients evaluated at the interim look, even if those 2 patients are on our side of the 2-month trial, we would still be able to achieve statistical noninferiority. So on that basis, and given we have [ 65 ] years of clinical trial data to look at for how back that was going to do in our trial, you see it never gets higher than 92%, and it's been as low as 70%. Over 65 years, it's going to be in the kind of low 80s. So we're feeling very bullish on our possibilities that getting through this binary endpoint. And then you have to ask yourself what's the intrinsic value of this drug in the C. diff market to big pharma, a $1.7 billion market. And with a clear shot at frontline therapy, you'd have to ask what's that worth. And when you're asking yourself what's that worth, you could reasonably look at, for example, the [indiscernible] Pharma acquisition of the EU rights to maximize in the last line in the U.S. for about $125 million in 2022, that would seem that's just European rights and we have U.S., Europe and Japan. And you could also look at the March '23 Sebela Pharmaceuticals deal to buy Destiny Pharma or in a structured deal totaling $570 million. And that was a much earlier stage development program than we have. So the intrinsic value is quite high. We've got to get through this binary Phase IIb trial readout and we're really excited about where we go from that.

And our next question comes from the line of Jim Molloy with Alliance Global Partners.

I had a question on the CARB-X. Can you walk through sort of what next steps are for 375C? Is there an opportunity to move forward absent the CARB-X funding? And when did CARB-X notify you guys that they weren't going to proceed forward with 375?

The CARB-X folks notified us kind of probably a couple of weeks ago, late in July, and we followed up with questions and appeal in that process like a couple of weeks kind of meander through. So the timing is purposed for this call, but the program never stopped. We continue to evaluate and work on the lead optimization process, which is why I say that as that process continues and gets to completion, we're going to have a stronger and stronger chance at the next CARB-X RFP that comes out that we get picked up within the scope of that RFP. If it includes gram-positive treating antibiotics will apply again with a more compelling package and we feel that because we were -- we weren't rejected back in April, like most others were, we feel we're like kind of on the bubble and we just have to kind of push forward, present a little bit more R&D, and then we feel that we'll be successful.

I Wouldn't anticipate the next opportunity to apply for CARB-X funding will occur? It sounded like it was a bit up in the air.

Well, they do an RFP every November. There may be other RFPs that they do, but pretty much every November, they seem to come out with an RFP that we've noticed. But the only question will be whether that R&D continues to include gram-positive treating antibiotics. If it does, we'll reapply in the fourth quarter and hope for positive reconsideration in April.

Got it. And then on the Phase IIb, how long from the sort of fifth and final patient -- 36 patients coming in to final data or final notification by the IDMC on what next steps are?

So if you assume the 36 patient came in today, that 36 patients would be out of the study 10 days from today. And they would be evaluated for the primary endpoint 2 days thereafter, so 12 days from today. After that, the IDMC will meet day 13 to 14 like that and come back with their recommendation. As soon as we have that record -- so basically a couple of weeks. As we have that recommendation from the IDMC, we'll put out a press release. Well, first, we'll put out a press release that we got to the 36th patient. The second press release will be the IDMC recommendation and the company's decision to take or not take their recommendation, of course, we'll probably take it. So that would be the second press release. And then assuming the IDMC recommends that we early terminate, then when that 36th patient is completely out of the trial, and we have a final study report, we'll put out a press release with all of the data on the primary and secondary end points.

And it certainly seems a positive sign for potential early termination given the historical data on Vanco and the data of the guys are seeing inwards it's still blinded. But at assuming you have to run the -- you get to a 36 and you're halfway through, presumably if we run to the 72nd patient, what -- what's the thinking going forward on that? And what's the ability of Acurx sort of fund that second half of this trial, if needed?

Yes. I mean if we have to go to the 72, we'll be able to continue to run the trial in the ordinary course, as I mentioned on, if we have to paying $2.2 million per quarter for our ongoing cost, that's fine. We could raise a tiny amount of money, $5 million, whatever the number might be, just to kind of pick up some international sites and pay for them, high enrolling Eastern European sites and Canadian sites. Just following up on how did Summit Therapeutics managed to enroll so quickly during COVID. And that's -- in our estimation, that's kind of how they did it. They opened up to international sites in high and rolling areas that weren't terribly impacted by the pandemic. So that's what we would do if we had to do another 36. It would be adding new trial sites, international trial sites and kind of expanding in that way to make sure it didn't take us long.

Understood. And then what -- on the PASTEUR Act, I know it's a bit out of your -- that was clearly out of our control. But what should we be looking for the next catalyst -- potentially give an idea of what might be coming out of this, if anything, on the PASTEUR or PASTEUR ellie.

Yes. I mean it's money. I mean, as you know, as investors are aware, when you're dealing with the government and the kind of movements in the -- cookies of the government, when things get approved, it's just extremely difficult to benchmark and to handicap. The antimicrobial working group meets every month and continues, which we're a member. They continue to kind of go back and forth on when it would be that PASTEUR would be passed and whether it would be PASTEUR or PASTEUR ellie. The best we can say is it's looking very positive for PASTEUR ellie, not for PASTEUR. PASTEUR ellie by itself is like a 6 run home run for us, and we think that public health needs it. And that's been made very clear by those in public health. It's already approved in the U.K., which paves the way for us. So we can't speak in the timing, but wouldn't it be ironic if this delay in the enrollment leads us to an M&A situation where PASTEUR is passed, and we can capitalize on it before we were able to do a transaction. That would be great.

Sorry, excuse me. [Operator Instructions] Our next question comes from the line of [ Nick Meyer ] with a private investor.

Quick question on the IDMC and the data readout. So does the FDA have to approve the IDMC's recommendation or are they left -- are they not involved?

Nick, thanks for the question. No, the FDA is not involved any longer. They had to approve -- well, they didn't have to approve. They had to accept our amendment to our trial protocol and related IND in order to provide for this IDMC mechanism, but that's it. The IDMC is free to make whatever recommendation that they feel is most appropriate. And the FDA won't review any of it until we get to an application for FDA approval.

Okay. And then the IDMC is only looking at the primary metric, which is clinical cure. They're not looking at the secondary metrics at all for the recommendation?

Well, they're only looking at [indiscernible] end of treatment, but also the safety.

Yes, that makes sense. And then the last question I have is what is the value pivot between if you were to do an M&A for Phase III or going to the -- an interim look on the first leg of Phase III? What is your consideration there?

Well, I would take that question and reference the bio-industry guys, what they have is like a blue book for personal injury lawyers, where they have a percentage likelihood of FDA approval when you're in preclinical Phase I, Phase II, Phase III for any disease indication, including infectious disease, right? So if you are able to get halfway through versus Phase III registration studies, and show consistent data with everything before it, you have about a 30% likelihood of failure in Phase III for all antibiotics. When you zero in on antibiotics that treat gram-positive infections instead of gram-negative, that's probably down to a 10% or 15% failure rate. And you could probably chop that failure rate in half when you present interim data on the first half of the first of the 2 Phase IIIs. So it would be a significant value enhancement and that might be offset by having an even worse stock market then than we have when we come out with the IIb data. It's hard to say. The biggest bogey will be if the PASTEUR Act is passed and we get designated as a critical need antimicrobial, that is an absolute game changer even under PASTEUR ellie that would have a dramatic impact on what we were able to sell for. Now we could sell before getting that designation. So hypothetically, if PASTEUR passed, and we're not yet designated even though it would seem that we would be one of the most qualifying potential candidates, it could be a contingent value right in a deal that could be negotiated prior to having the designation and we would just have to consider the various factors as we continue to talk to potential partners.

Okay. But is there a specific market value that you're looking for? Or is that going to be duly determined?

Yes, it's going to be -- it's all kind of [indiscernible] going to have to evaluate that [indiscernible] consider the intrinsic value of [indiscernible] and whether or not the offer is within a range that is acceptable. And of course, we'll have advice from the banking side, likely a fairness opinion would be involved to make sure that our bankers think that whatever terms are being offered and the Board accepts are fair to go into that acceptance by the Board, so it's all going to be kind of deal related and the Board doesn't -- if we're trading at a low valuation and someone was trying to undercut real value, the Board can say no.

Thank you. We have reached the end of our question-and-answer session. And with that, this will conclude today's teleconference. You may disconnect your lines at this time. Thank you for your participation.

Thank you.